– US President Ronald Reagan
Economists often talk of public goods as a reason why government still deserves to hang around and leech off our taxes.
Public goods and services are those that are best – or can only be – delivered by government for a variety of related reasons: Because the cost to deliver those goods exceeds the capacity of any private party to produce them (e.g. America’s space program), because the benefits (are intended to) accrue to everyone regardless of their capacity to pay for those benefits (e.g. public roads, the post office), and so forth.
All the above are true and yet, having said that, what we believe to be true inexorably yields every day to changing circumstances.
Consider that more and more rockets are now being launched into space under private financing arrangements. Consider that postal service has been invaded by DHL and Federal Express, and now is being rapidly undermined by e-mail and the Internet (itself a defense product of the US government before effectively being released into the commercial arena).
What makes "pay-for-use" impractical – except with the largest projects – are the costs of obtaining usage information, setting up the pricing and financing, and enforcing collection. Nonetheless, having said that, we should also remember that lower costs and better information are invariably the beneficiaries of most advances in technology.
Is law enforcement a public good? Privately-run prisons are a growing business especially in the American South. If any of our taipans were running the Bicutan prison where the Abu Sayyaf uprising took place, it’s very likely that security would have been tighter, conditions would have been better, and the incident would not have occurred at all.
Public schools? The school voucher approach in the States puts public money directly in the hands of parents in order for them to acquire private school education for their kids. This enlarges their freedom of choice and encourages the proliferation of private schools who compete to offer quality education efficiently. One can imagine how much fat could be trimmed from our Department of Education, starting with all those non-teacher bureaucrats who suck up all the money and make a lot more on the side.
Privatization of water supply in Metro Manila has seemed to produce a mixed message, with one company, Manila Water, doing well and the other, Maynilad, going south. In fact, the message is still the same and entirely consistent: With privatization, companies who deserve to fail do so and are quickly replaced, to the consumers’ benefit. Try doing that with any of the government offices that daily afflict us.
Indeed, there is literally nothing we now deem a "public good" that we cannot, with enough imagination, reconstruct under the right circumstances into a commercially viable commodity. And whenever that happens, that is one less thing we have to rely on government to do for us.
In few other places in the world are property rights under such a siege as in our country. This explains why human freedoms are so constricted, and also why markets, not being allowed to operate freely, have largely failed to play their liberating role in fuelling sustained development and the widening of opportunities.
The so-called Lina law practically turns over squatted-on government lands to the squatters atop them, provided they have managed to sustain their thievery over a long enough period of time. The agrarian reform law redistributes agricultural land to their tenants but prevents this land from being traded or mortgaged for leverage, thereby infringing on the full property rights that should have transferred with the land titles.
First, rent controls discourage new rental housing investment because they suppress the rates of return that private developers may require in order to commit their resources.
Second, rent controls encourage tenants to behave irresponsibly because they are effectively allowed to enjoy more benefits than what they have paid for.
And third, rent control is nothing more than price-fixing, which is anathema to any free market that must rely on freely set prices in order to determine what and how things get to be produced for which people. But price-fixing is always a bonanza for bureaucrats looking to line their own pockets by selling to the highest bidder their authority to set prices.
The most recent instance of this hypocrisy involves the two giant cell-phone companies who ganged up on newcomer Sun Cellular’s low-priced, unlimited-calls offering. Poor Sun was accused of predatory practices – as if its measly five percent market share really threatened the two giants, and as if one of them hadn’t also launched its own "PriceBuster" and "BillCrusher" promos years ago.
Sun was also accused of substandard service quality – as if the two giants had not gone through their own teething phases, and as if the quality of their own service isn’t already beginning to suffer from the bandwidth-hogging characteristics of TDMA-based text messaging.
This kind of behavior is understandable; after all, where you sit is usually also where you stand. The market doesn’t require businessmen to be saints; in fact, it requires them to be ruthless in the pursuit of self-interest.
For the rest of us, the challenge is to see through the self-serving pietisms of market practitioners, and to maintain – despite much seeming evidence to the contrary – our faith in the innate superiority of an economic system that is the worst one in the world – except for everything else.