To be called a public good, that good must exhibit two traits:
E.g A lighthouse, or national defence.
Please check out the social goods page to see goods that could be provided privately but are treated as public goods.
examples national defence and atmosphere
PUBLIC GOODS argument - private sector would not provide
Non excludable and non rivalrous but most is actually excludable like toll boths, but light houses are not
non rivalrous means
Overall a weak argument
If government is providing them, we have no way of being sure that goods are in fact public goods or that they are being supplied at the socially optimal level.
If the state did not provide the goods the private sector would have a monopoly
Firms would overcharge, a single seller can raise prices at will. However if you charge too much there will be competition, from either substitutes or competitors who can now compete. Regulation creates barriers to and creates monopoly
Is state monopoly any better than a private one?EQUALITY
Privatising would exclude certain groups, the danger is - customers might not buy enough to make transaction viable for the seller. This argument doesn't hold
Government already protects big business and restricts choices for poorer people so are not really interested in equality.
Cures can be worse than the disease - as policy's can mis-price, and bow to certain industries, pushing the pollution overseas.
However risks don't disappear with government projects, just they are loaded onto taxpayers and consumers.
State authority needed to deal with holdouts - "why govt are needed"
Complexity of schemes means state more efficient
Transaction costs inflated by regulation - markets work to reduce transaction costs
Property rights threatened
Economic calculation argument - top down
Central planning v's entrepreneurial discovery
Elite preferences verses individual preferences -Voting with your money, more effective than once every election cycle
Special interests v's consumers
Poor maintenence and high accident rates
demand and supply mismatched
projects for political reasons
policy benefits special interests
Lack of innovation
costs pushed up
Policy becomes designed to stop people travelling!!! (bus lanes in, footpaths widened)
Investment reflects demand
Price mechanism can eliminate congestion
innovation and efficiency gains
Strong incentive to reduce accidents
Services reflect consumer preferences
market for poorer customers
Theft of land or people
Rigging markets to meet political goals
create artificial scarcity on enrich elite interests
Fostering a culture of dependency - people can't create their own infrastructure.
Social engineering/social cohesion
Makes taxation and regulation more difficult
Disperses control away from corrupt elites
Restores freedom of association
Strengthens private property and individual freedom.
Private sector are not just businesses, they can be non profit organisations.
Government sometimes do things the free market would do anyway but just claim the credit.
Don't need third party insurance, you can insure yourself that someone without third party will crash into you.
PPP removes debt from the govts books, and gets the public to pay for it later.