I wanted to jot down a couple of thoughts.
I was thinking about my earlier example (i.e. toll roads instead of public roads) and realized that the problem is even worse than I originally described. After all, some places are just too far away to justify the expense of a road. In normal conditions.
Yet we all benefit by having those roads. Consider El Paso, Texas. El Paso is hundreds of miles away from any other city, and the roads to and from El Paso pass through mile after mile of desert. If the government didn't keep the roads up to date, how much would it cost for a private company to maintain that much roadwork? Just to get to one city - albeit a fairly large one, with direct access across the border to Ciudad Juarez.
Good roads make it easier for businesses to make money, because they don't have to worry as much about whether or not they could get their product to that location. Would Wal-mart be able to service El Paso, if the roads weren't maintained? Probably not. How much lost revenue would they see, if they lost their business from all the places that were too out of the way to justify building a road? (If we didn't take on that expense as a public good, that is.) Africa has seen an extreme version of this, where farmer's produce rots in fields because there are no roads to take it to market.
These, as I tend to repeat myself on, are examples of public goods. We all benefit, albeit indirectly sometimes, by having reliable and efficient means of transportation. And you don't get to pick and choose who benefits by them.
So when we elect officials and say "we want infrastructure", we should acknowledge that we are also saying "we give you the authority to raise funds from us in order to build better roads". They can't pick and choose who they charge for it. You can't have someone say "well, I never use the roads so I shouldn't have to pay for them". Maybe you don't personally use the roads...but do you buy groceries? I bet the groceries traveled on a road. Do you order things online? I bet they get delivered on a road. At least, until drones are more commonplace.
Everything that you own or use that did not get made by you, or by someone close by that you know doesn't use roads...all required a good method of movement to get to you.
There's a similar challenge with national defense. I remember a few years back someone said Berkeley wanted to waive off the protection the US gave them...said they didn't need it. For obvious reasons, you can't really do that. (If you don't find them obvious, let me know and I'll go into more detail.)
So anyways. I think there are other public goods that we all benefit, and that help build a strong economy. Take education. In Afghanistan the literacy rate is horrible...which is a disadvantage when you need workers who can read, or type. Most of our white collar, cubicle desk jobs? Good luck finding that.
When I talked about comparative advantage before, I think we should distinguish between the geographical ones - i.e. what's located near a particular resource - vs. what's more flexible. So many places are trying to figure out how to be the next Silicon Valley, for example, because there isn't a particular reason why the high-tech industry has to be there. That is, the reasons are more socio-cultural than having to do with good soil for growing wine, or good mineral deposits, or other reasons that are rather fixed. (Though once it's established, it can draw better quality people and maintain that distinction).
The US, btw, has a great advantage simply because so many people want to work here. And think about what it says, that certain countries have to restrict their own citizens from leaving. (That gives us a distinct comparative advantage.)
So anyways, to compete with human capital you need a good education system. It's a public good that has benefits in ways that are hard to capture.
But these are not exactly a challenging claim to make. Most Americans support education, just as most support better roads. (There is some debate over whether it has to be 'public', and whether privatization can get the job done. In certain cases I think privatization could be the way to go. But I think I've made myself clear that infrastructure is not one of those).
What is challenging is to argue that those exact same arguments can be applied to some other areas. Consider internet access. Some of my relatives had dial-up internet for years because it wasn't worth it for cable to run internet out to such a rural area. How many other places are unable to shop online, unable to participate in the digital economy...simply because it's not really profitable to build a connection?
Or think of it another way - in a digital world, how many businesses could move to a place with a lower cost of living if they could only guarantee they'd have a good internet connection?
Or consider public health. We just went through a big whole debate about this, and in some ways I'm disappointed with how the debate has gone. I know, again, that it's hard to quantify the benefits of having a healthy population. But they are there. Not just in terms of less sick days, better preventive medicine. And not just as a way to draw more human capital (who wants to live in a society where people are abandoned to die for lack of funds? Since we have laws saying hospitals have to treat people even if they can't pay, I think it's safe to say we really don't. So how can we pretend that we're not already paying for the uninsured? Hospitals make a profit basically by charging insurance companies more for their services, to make up for the ones who can't pay at all. Which then translates into higher insurance rates for the rest of us.)
The thing is, these don't come free. Some of them will make themselves up in other ways (Tim Harford had a nice bit that discussed the spending multiplier here). Yet at the end of the day we will need some way of funding these. Maybe we'll run the numbers through, figure out how much it would cost, where the money would come from, and get a big ol' dose of sticker shock and decide it's not for us. Or decide that it's worth it, who knows? It's not the sort of thing any of can truly predict unless or until we tried it, and even then it'd be pretty hard to quantify.
Some days I kind of wish it were that simple.
I was thinking about my earlier example (i.e. toll roads instead of public roads) and realized that the problem is even worse than I originally described. After all, some places are just too far away to justify the expense of a road. In normal conditions.
Yet we all benefit by having those roads. Consider El Paso, Texas. El Paso is hundreds of miles away from any other city, and the roads to and from El Paso pass through mile after mile of desert. If the government didn't keep the roads up to date, how much would it cost for a private company to maintain that much roadwork? Just to get to one city - albeit a fairly large one, with direct access across the border to Ciudad Juarez.
Good roads make it easier for businesses to make money, because they don't have to worry as much about whether or not they could get their product to that location. Would Wal-mart be able to service El Paso, if the roads weren't maintained? Probably not. How much lost revenue would they see, if they lost their business from all the places that were too out of the way to justify building a road? (If we didn't take on that expense as a public good, that is.) Africa has seen an extreme version of this, where farmer's produce rots in fields because there are no roads to take it to market.
These, as I tend to repeat myself on, are examples of public goods. We all benefit, albeit indirectly sometimes, by having reliable and efficient means of transportation. And you don't get to pick and choose who benefits by them.
So when we elect officials and say "we want infrastructure", we should acknowledge that we are also saying "we give you the authority to raise funds from us in order to build better roads". They can't pick and choose who they charge for it. You can't have someone say "well, I never use the roads so I shouldn't have to pay for them". Maybe you don't personally use the roads...but do you buy groceries? I bet the groceries traveled on a road. Do you order things online? I bet they get delivered on a road. At least, until drones are more commonplace.
Everything that you own or use that did not get made by you, or by someone close by that you know doesn't use roads...all required a good method of movement to get to you.
There's a similar challenge with national defense. I remember a few years back someone said Berkeley wanted to waive off the protection the US gave them...said they didn't need it. For obvious reasons, you can't really do that. (If you don't find them obvious, let me know and I'll go into more detail.)
So anyways. I think there are other public goods that we all benefit, and that help build a strong economy. Take education. In Afghanistan the literacy rate is horrible...which is a disadvantage when you need workers who can read, or type. Most of our white collar, cubicle desk jobs? Good luck finding that.
When I talked about comparative advantage before, I think we should distinguish between the geographical ones - i.e. what's located near a particular resource - vs. what's more flexible. So many places are trying to figure out how to be the next Silicon Valley, for example, because there isn't a particular reason why the high-tech industry has to be there. That is, the reasons are more socio-cultural than having to do with good soil for growing wine, or good mineral deposits, or other reasons that are rather fixed. (Though once it's established, it can draw better quality people and maintain that distinction).
The US, btw, has a great advantage simply because so many people want to work here. And think about what it says, that certain countries have to restrict their own citizens from leaving. (That gives us a distinct comparative advantage.)
So anyways, to compete with human capital you need a good education system. It's a public good that has benefits in ways that are hard to capture.
But these are not exactly a challenging claim to make. Most Americans support education, just as most support better roads. (There is some debate over whether it has to be 'public', and whether privatization can get the job done. In certain cases I think privatization could be the way to go. But I think I've made myself clear that infrastructure is not one of those).
What is challenging is to argue that those exact same arguments can be applied to some other areas. Consider internet access. Some of my relatives had dial-up internet for years because it wasn't worth it for cable to run internet out to such a rural area. How many other places are unable to shop online, unable to participate in the digital economy...simply because it's not really profitable to build a connection?
Or think of it another way - in a digital world, how many businesses could move to a place with a lower cost of living if they could only guarantee they'd have a good internet connection?
Or consider public health. We just went through a big whole debate about this, and in some ways I'm disappointed with how the debate has gone. I know, again, that it's hard to quantify the benefits of having a healthy population. But they are there. Not just in terms of less sick days, better preventive medicine. And not just as a way to draw more human capital (who wants to live in a society where people are abandoned to die for lack of funds? Since we have laws saying hospitals have to treat people even if they can't pay, I think it's safe to say we really don't. So how can we pretend that we're not already paying for the uninsured? Hospitals make a profit basically by charging insurance companies more for their services, to make up for the ones who can't pay at all. Which then translates into higher insurance rates for the rest of us.)
The thing is, these don't come free. Some of them will make themselves up in other ways (Tim Harford had a nice bit that discussed the spending multiplier here). Yet at the end of the day we will need some way of funding these. Maybe we'll run the numbers through, figure out how much it would cost, where the money would come from, and get a big ol' dose of sticker shock and decide it's not for us. Or decide that it's worth it, who knows? It's not the sort of thing any of can truly predict unless or until we tried it, and even then it'd be pretty hard to quantify.
Some days I kind of wish it were that simple.
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