Do you ever use public transportation without paying for it? No? Then it is not a public good. You cannot benefit from public transportation unless you use it. And in order to use it, you have to pay a fare.
Now, if I was a more enlightened person, I might say, “Hold on, everyone benefits when I use public transportation. I’m making the air cleaner for you, I’m supporting dense urban development that you can enjoy, I won’t be able to harm you in a collision with my car-weapon, I won’t be depleting precious energy sources, I’m supporting a vital infrastructure that can be accessed by our poorest and most vulnerable citizens…”
Are those claims true? Who cares! Let’s say they all are…and so are the countless other claims of public transportation’s virtues.
Is anyone made worse off when I use public transportation? Of course not. There is no downside. It is all benefits.
At this point, my more enlightened self might say that public transportation is a public good because even though its users benefit, its non-users would benefit even more if there were more users. But since non-users are not able to coordinate to pay others to use transit, they need to be taxed. For their own good.
Non-users can have two possible reactions to being taxed so others can use public transportation:
- “This is great! Taxation is the only way we can benefit when other people use public transportation.”
- “This sucks. Why should I pay taxes for something that doesn’t benefit me?”
Group #2 is obviously ignorant; they don’t understand why their representatives seem to be treating them so poorly. Some of these fools might even object to being “represented” by people who they didn’t even vote for.
Is public transportation unique in benefiting people who don’t use it? Well, healthcare is a good example of another public good (albeit with a private-good component). It’s why many people feel that taxes should pay for keeping healthy; you can’t have too much health, right?
Exercise is very important to maintain good health. (And let’s not forget that public transportation encourages walking.) Biking is good exercise, too. Sure, there’s a private gain to biking, but we would all be better off if other people biked. Bicycle purchases should be subsidized, no?
Nutrition is important, too. But how can everyone’s nutrition be monitored? That takes money. Right now, you can go to the supermarket and buy almost anything. If you don’t know which foods are healthiest, or if you don’t have the discipline to eat right, we will all pay the price for your negligent behavior. Solution: Taxes to control the types of food that people can buy.
Are there other activities besides public transportation, exercise, and good nutrition that affect people who are “non-users”?
Are there any activities that don’t have externalities?
Maybe you could think of a few; I can’t.
So then the problem becomes: “How much of X is being underproduced or overproduced?” And the corollary is, “How can we tax/control/nudge/force others to achieve the right balance of everything?”
The answer to that question is not “markets”. Remember: Markets caused these under- and over-production problems to start with.
The alternative approach, as any planner will tell you, is…planning. And to coordinate all these different activities, you need central planning. (Has that ever been tried?)
How do planners…central plan? Well, they look at markets and….wait…no they can’t…planners don’t use markets; they correct markets. Remember: Planners are a substitute for markets. Could you be a planner? Probably not. You might want to plan, but very few people get to do that. But you will be allowed to listen to planners, give them “feedback”, and then do as they plan for you. Sort of like when you were five years old and your parents did your planning. Except these planners don’t have quite the same interest in you as your parents did (notwithstanding the planners’ rhetoric of concern).
Clean air is a pretty obvious public good. Unless you’re among the few who enjoy filthy air, you might be quite happy that every car has a catalytic converter. Left to your own devices, you might not want to purchase one for your car, thinking (correctly) that your single vehicle’s contribution to pollution is, to put it generously, at most “non-zero”. But when we all do it together, we all win. And the only way we will all do it together is through forced taxation. (Or at least, so it seems.)
Even then, there are probably people who might value clean air…but who might place an even higher value on some other public (or private) good. Maybe they would be happier with a bigger military and dirtier air. For those people, an option to put their taxes towards whatever public good they choose seems like an improvement over the present system of central planners deciding which public goods should get priority.
Better still: Recognize that there are very few things that are pure public goods. Once something gets put into the category of public good, you can pretty much say goodbye to the benefits of markets.
Of course, people who think that markets produce poor results would welcome that. Hence, their motivation to categorize private goods as being public. (Related: Categorizing privileges as “rights”.) Why do they think like this? My guess is that they enjoy having a vicarious sense of control. But real control can only happen with the ability to spend your own money elsewhere — as opposed to being taxed by politicians whether you use the goods or not.
Which is exactly how the problem of public goods is now resolved: You pay whether you use them or not. It’s a lousy way of doing things because there’s almost no connection between what you, as an individual, pay — and what you, as an individual, receive. If you don’t like the price for air quality, you can’t simply decline to pay. And even if you could decline to pay, it would have almost no effect on what you receive. There is no “air choice”; you still have to breathe what everyone else breathes.
If public transportation was treated as the private good that it really is, it would be paid for entirely by people who ride on trains and buses — at least nominally. And non-users who benefit would pay indirectly. For example, businesses that rely on their employees using public transportation would need to adjust employee compensation, under the penalty of bankruptcy if their employees couldn’t get to work.
Treating public transportation as a private good would also solve the question, “How much should be spent on transit?” If you use transit, you might say “More investment is needed”. If you don’t use transit, you might say, “It’s waste of money.” Well…how much “public investment” is needed for…fishing rods…music production…celery…etc? And yet, very few people are upset that there isn’t enough celery, or that “we” waste too much money on producing celery.
It’s very hard to determine how much tax money should be spent on public goods. The optimal amount determined by political (i.e., non-market) processes is a function of concentrated-interest support & quid pro quo — and to some extent, perhaps majority voting. There is no mechanism for determining an economically efficient way of slicing a political pie. And so…there’s always “not enough of what we need” or “too much waste” or some problem or other. Public school quality is not good enough, the air should be cleaner, there’s too much waste in the military…and…and…
… “There should be more buses.”
One of government’s few benefits is that it can provide a (flawed) way of addressing public goods. And the problem with the notion of public goods is that you then get too much government.