The reason we institute government is to get public goods created. Public goods are those things that are non-rivalrous, non-excludable, therefore difficult to near impossible to make money from. Therefore we rather expect private capitalism to underproduce such public goods. Let’s all chip into a pot which produces them for us instead then. And a wide reading of public goods would include things like the rule of law, drains and keeping the French at bay (usefully, those last two can be combined, afraid of drains are Frenchies as they imply washing).
Or, the internet was originally set up to provide a secure comms network when the bombs all went off — that routing in packets was the whole point, being able to route around the polished glass that used to be Indianapolis. GPS was funded by the Navy to have precise coordinates to lob our own bombs at. Both difficult things to profit from so government did them.
Then along came some entrepreneurs and they saw that it was good. Some use could be made of the existence of those things. And this is — it’s essential to understand this — exactly what an entrepreneur is. Someone who takes extant assets and resources, possibly combining them in new ways, and sets out to end up with hot and cold running Ferraris from having done so. We consumers then end up vastly richer than our starting point. One, wholly serious, measurement of the value of search and free email (so, roughly, Google) is $18,000 per person per year. No, there are not too many zeroes there, eighteen thousand of those big fat United States dollars per person per year.
OK. So we institute government to gain public goods. We get public goods from government. Entrepreneurs then do their job, picking up extant assets to use in novel ways that enrich all of us out there. Excellent, the system is working. The system is making us out here the richest society living highest on the hog that has ever existed.
Tim Worstall, “Mazzucato: ‘BUT WHERE IS MY SECOND DOZEN PAIRS OF LOUBOUTINS?'”, It’s all obvious or trivial except …, 2025-02-12.
May 22, 2025
QotD: Public goods
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