Katie ([info]kitkatlj) wrote,
@ 2007-04-04 10:29:00
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Economic External Benefits

I just introduced a conservative coworker ("we need K-12 education to be privatized!") to the economic theory that private markets don't work as well as collective sponsorship of goods in situations where there is very, very little control over who gets the benefits of the good (no matter who paid for the good).

"Wow. That's very interesting. I'd never heard of that before."

My jaw just about dropped to the floor that he could be so opinionated on privatization without anyone having ever mentioned external benefits, but hey...it was kind of fun to get to be the one. :-)


I hope it sticks.


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[info]brandonmason
2007-04-04 08:51 pm UTC (link)
I have to confess confusion here. I'm familiar with the market problems inherent in non-rival and/or non-excludable public goods, but I don't quite see how it is an argument against K-12 privitization. Don't get me wrong--I don't agree with this coworker of yours. But I just don't get your argument, so I'd love a little clarification.

First, I don't think collective sponsorship and privatization is mutually exclusive. In fact, I haven't heard any advocates of privitization suggest they should be. Second, although schools do have positive externalities, they are not the sort of non-rival, non-excludable goods like national defense, police, broadcast television, etc. Sure, industry and society benefit from education, but the average kid can't really freeride off other people getting educated. Am I missing something?

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[info]miyabo
2007-04-05 02:55 pm UTC (link)
I think Brandon is talking about Philadelphia-like public schools run by private contractors (a monopoly like public utility companies), while Katie is talking about some kind of uberlibertarian fantasy in which all parents pay directly for their kids' education. I think....

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[info]brandonmason
2007-04-05 04:18 pm UTC (link)
Geez, there are actually people who want to complete eliminate public funding of education? I think that ranks among the worst ideas I've ever heard. Yeah, I was picturing either a private contractor or a voucher system. I don't have an opinion on either one, I just don't think the public goods market problems don't apply with those two scenarios.

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[info]miyabo
2007-04-05 06:02 pm UTC (link)

The wealthy retirement community of Troon, Arizona has 450 school-age children and no public funding for education.

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[info]kitkatlj
2007-04-06 12:08 pm UTC (link)
Wow. What a proof of how selfish people really are (markets really do fail to provide certain goods on account of human self-interest, with no overriding by selflessness!)

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[info]kitkatlj
2007-04-06 11:40 am UTC (link)
Daniel's right--this guy was talking about the whole shebang.

So just saying, "But what about the notion of external good?" was where I started my counter-argument, and he cut it short by saying, "Woah. I've never heard of that. That's interesting."

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[info]code65536
2007-04-06 06:26 am UTC (link)
I think you bring up a valid point, and I think there needs to be a clearer and more careful distinction when we talk about education's effects and which of them can be classified as being public goods.

I had a really long thing that I was going to write, but it became too long and wouldn't fit in an LJ comment, so I dumped it here instead:
http://www.kailiu.com/public/2007-04-06_4615e56b.xhtml

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[info]kitkatlj
2007-04-06 11:41 am UTC (link)
Right, right--though I wasn't clearn enough. See http://kitkatlj.livejournal.com/379254.html?thread=949878#t949878

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