Is there such a thing as a "public good"?

On Taxpayer’s League Live this past Saturday (AM 1280), David and Margaret had great discussion about the legislative session and the state budget with King Banaian, of the Department of Economics at St. Cloud State University (SCSU Scholars). I find it interesting when King talks economics because he has the ability to talk about macro economic issues, like the state budget, and bring it down to the level of individual incentives; in other words, why are programs in the budget going to achieve, or fail to achieve, their objectives.

King did however, make one statement that surprised me; that is, King stated in passing that there is no such thing as a public good. To the pure libertarian, that's true, but sticking to that "truth" as a matter of policy leaves the door open for politicians to step into the vacuum and define “public good” anyway they want to -- with usually disastrous political and economic repercussions.

Although I lean well to the libertarian position, I’ll argue that politically it is a much better strategy for those of us that believe in limited government to force government to set standards for defining a “public good” that necessitates government intervention.

For example, I am a firm believer that a health issue becomes a “public” health issue only when three criteria are met -- 1) a person is exposed to a risk to which he did not consent; 2) the risk is widespread and can affect everyone or anyone; 3) a reasonable person cannot avoid the risk.

Looking at those criteria, government does have a role in assuring clean air and water (one can always argue the “how” of the way they fulfill that role, but not dispute that clean air and water meet the criteria of government intervention). However, applying those same criteria, government has no business implementing a smoking ban on private property that reasonable people patronize voluntarily. Criteria make the difference.

For an action to be a public good, I submit these criteria for consideration (HT to Charles Murray “What it Means to Be a Libertarian“):

1) A public good must be non-exclusive, similar to second criteria above. A public good benefits everyone or anyone. Think national defense. Everyone benefits. (Again, one can argue that money spent on discrete national defense initiatives is wasted, but national defense is clearly a legitimate government function.)

2) A public good can be consumed by one person without diminishing its availability to others. Clean air is a good example. My breathing clean air doesn’t impact your ability to breathe clean air. Street lights are another example. I would also argue education as a public good, something some libertarians would not. It’s also a classic example where there is plenty of opportunity to argue the “how.”

3) A public good has a substantial neighborhood effect that is difficult to charge for. For example, roads benefit people that do not drive in that most goods delivered to retail outlets arrive by truck. Therefore, using general fund dollars to pay for roads can be a “public good.” On the other hand, light rail has a very limited neighborhood effect beyond actual riders.

In order to be public good, something that can be funded by government through coercion (i.e. taxes), an action or program must at least meet all three of these criteria.

The point is, it’s unrealistic to assume government can ever be convinced to abandon the idea of “public good” -- and I’m not convinced that it should. But there definitely has to be some criteria for judgment. I think that’s the road we ought to pursue.