What Free-Rider Problem?

Steven Horwitz of The Coordination Problem writes:

This is an absolutely fascinating article by Laura Vanderkam at City Journal … that explores the role of private donations and private management in caring for Central Park and other green spaces in New York City.  Central Park remains public property, but the Central Park Conservancy that manages it relies overwhelmingly on private donations for its revenues.

But perhaps the most amazing thing about Central Park is how little tax money goes into maintaining it. Though it is still ultimately the city’s responsibility, the park has been managed since the 1980s by the nonprofit Central Park Conservancy, and it relies on private donations for most of its budget.

These are, to use a phrase from the article, “privately funded public spaces.”  It’s also worth noting, as the article does, that the condition of the parks has improved tremendously since the private organizations took over managing them.

This is consistent with my objection to the idea that there are “public goods”:

Public goods are thought to exist because certain services benefit “free riders” (persons who enjoy a service without paying for it). It is argued that, because of free riders, services like national defense be provided by government because it would be unprofitable for private firms to offer such services.

But that analysis overlooks the possibility that those who stand to gain the most from the production of a service such as defense may, in fact, value that service so highly that they would be willing to pay a price high enough to bring forth private suppliers, free riders notwithstanding. The free-rider problem isn’t really a problem unless the producer of a “public good” responds to requests for additional services from persons who don’t pay for those services. But private providers would not be obliged to respond to such requests.

Moreover, given the present arrangement of the tax burden, those who have the most to gain from defense and justice (classic examples of “public goods”) already support a lot of free riders and “cheap riders.” Given the value of defense and justice to the orderly operation of the economy, it is likely that affluent Americans and large corporations — if they weren’t already heavily taxed — would willingly form syndicates to provide defense and justice. Most of them, after all, are willing to buy private security services, despite the taxes they already pay.

I conclude that there is no “public good” case for the government provision of services.

With respect to defense, however, I continue with this:

It may nevertheless be desirable to have a state monopoly on police and justice — but only on police and justice, and only because the alternatives are a private monopoly of force, on the one hand, or a clash of warlords, on the other hand. (See this post, for instance, which also links to related posts.)

But I conclude with this:

You may ask: What about environmental protection? Isn’t it a public good that must be provided by government? No. Read this and this. Which leads me to “market failure.”

“Market failure” is another excuse for unnecessary and costly government intervention into private affairs. Go here and scroll to item 16 for more on that subject.