Sunday, September 11, 2005

Why Have A Government?

David Brooks, the wingnut windbag of the New York Times, has returned to his usual liberal-bashing after a couple of fairly thoughtful columns. The most recent one isn't thoughtful: it regards the failure of the Katrina rescue efforts as proof that governments fail. The logical conclusion then is to have as little government as possible. In the (sadly) unforgettable words of Grover Norquist (who is crazy) the government should be shrunk so small that it can be drowned in a bathtub.

Let us take these wingnuts at face value. Let's ask the question:"What would happen in the absence of a government?" The answer is chaos, and then a new government would be created. Because governments are necessary for human cooperation and human cooperation is necessary for survival. It's as simple as that.

In a little more detail, common activity is necessary to get certain types of jobs done. Suppose, for example, that you wish to build levees to protect a low-lying city from hurricanes. Once the levees are built they will protect everyone inside them. It's not efficient for each individual to build his or her own levees. But doing the building together means that one must also solve the question of funding the work. Sometimes the work is done together by the whole community, but mostly someone is employed to do the actual work while others just pay for it.

Now assume that I decide to settle in this city and I see the levees already built. There is then no real (selfish) reason for me to pay anything towards the levees. After all, they will protect me even if I pay nothing! But this same logic applies to everyone else: why would anybody pay for the levees if others can be persuaded to build them free? The outcome would be either no levees at all or the creation of a system where people are forced to pay for the levees. These forced payments are called taxes.

It is the power to tax that distinguishes formal governments from the kind of cooperation I described above. A market solution doesn't allow the power to tax, and can be shown to always produce fewer levees (or military troops) than the optimal level would indicate.

In econo-babble, some goods and services are said to be public in nature. In their purest form public goods and services have these two characeristics: 1) the amount I consume of the service or good does not reduce the amount you can consume, and 2) it is prohibitively expensive to exclude anybody from consuming the product. The usual examples of such pure public goods are lighthouses: the amount of guidance they provide to one ship doesn't reduce the amount they offer other ships and there is no inexpensive way of excluding ships from using the service. At the other extreme, a sandwich is an example of a purely private good. If I eat it you can't, and I can keep you away from my sandwich fairly easily.

Many goods and services have characteristics that are both public and private, but the closer a service comes to the public endpoint the less efficient a market solution will prove to be. Wingnuts who want the government small enough to drown in a bathtub will also drown large chunks of modern civilization, national security and disaster preparedness.

None of this means that governments are necessarily efficient, but then neither are the markets. The wingnut way of always suspecting the government of evil and always giving the markets free pass is stupid, but so would its opposite be. Markets and governments are nothing more than institutions which humans have created, and which to use and in which proportions is an empirical question about what works.