Public Goods and Public Ownership.
Most of the tools discussed in Idle Theory are relatively small simple goods, like knives and bags and bricks, that one or two people make and sell to other people for their own use. But there are some kinds of tools which, with perhaps only one or two of them in use, benefit almost everybody in society.
These "public goods" include roads which enable people and goods to move about more rapidly, bridges that allow people and goods to cross rivers more rapidly, water supplies that save journeys to springs or wells, sewerage systems to carry away waste.
For example, in a community which has a river flowing through it, which can only be crossed by ferry, and sometimes not at all, the construction of a bridge would benefit the entire community in many ways. The bridge would allow people and produce to cross the river in minutes rather than hours or days, and in far greater safety. The resulting fall in transportation costs would result in lower prices for many products. Thus while there would be direct benefits for traders and others who regularly crossed the river, there would also be benefits even for people who never crossed the river. The idleness of the entire community would rise.
But a bridge, it may be supposed, is a large-scale project, and not something that one or two people can build. It would require careful design of its arches and foundations, a great deal of stone and cement, and many man-days of work. And once it was built, it would need to be kept in good repair.
The first bridges probably were built by entrepreneurs who saw the possibility of making a profit. Without a bridge, crossing the river by boat was a slow process, waiting for a boat, and sometimes was impossible. A bridge would allow people, animals, carts, to cross the river quickly under almost all conditions. If, on average, it took a person an hour to cross the river by boat, and 5 minutes by bridge, then a toll charge of 15 minutes might attract customers away from the ferry boats. In fact, if the toll was set such that pretty much everybody used the bridge, it might put the ferries out of business, leaving the bridge owners with a monopoly. And then, using their monopoly, they might gradually raise the toll on the bridge and increase their profit from it. Only if somebody else built a second bridge alongside the first bridge would it have a competitor, and be forced to lower its toll charges. In the price war that followed, the bridge tolls would fall sharply. And at this point the entrepreneurial bridge builders would lose interest in the bridges, and either leave them them unattended and unrepaired, or sell them. And indeed, nobody might be interested in building a second bridge, because they could foresee that the result would be a fall in the bridge tolls, and a loss of profits - unless, perish the thought, both bridge owners secretly agreed to fix the tolls.
And here is one problem with public goods: that they generally have the character of monopolies. In part this is because the capital costs associated with building them are high enough to dissuade most people from constructing them. But it is also because, for the most part, only one of them is needed. One bridge across a river may be entirely sufficient for a community, just as one road suffices to go from A to B, or one set of pipes or cables is sufficient to supply all with water and gas and electricity. And wherever there exists a monopoly, there is the likelihood of high prices and charges.
Therefore once the value of roads and bridges and water supplies had been demonstrated by imaginative entrepreneurs, the resulting monopolies and high prices might drive the customers - the local community - to entertain the possibility of building their own bridge or buying an existing bridge, and operating it at minimum charge. That way, instead of most of the value of the bridge being passed on to one or two entrepeneurial owners, the value would be passed to its owners and customers - the local community.
In this case, the costs of building a such a bridge should be carried by the community. And since everybody in the community will benefit directly or indirectly from the bridge, the entire community should contribute to the cost of its construction. The larger the community, the smaller each individual contribution. And they would make their contribution to some trusted person or persons elected from the community, who would be paid to oversee the construction and maintenance of the bridge, and dispense public money as and when necessary. Using these public funds, these public officials would arrange for the bridge to be designed, the materials quarried and transported, and labour hired to construct the bridge. Thereafter, the community would have free use of the bridge, and the idleness of the entire community would rise. Furthermore, with the bridge in public ownership, the community would be assured of the continued repair and maintenance of the bridge, which might otherwise be neglected by an absentee private owner.
And what applies to a large scale enterprise like a bridge may also apply to other public projects. The construction of roads would speed travel and lower the costs of trade. The provision of a water supply might reduce the community's costs of acquiring pure drinking water. The construction of drains and sewers might save the costs of disposal of waste and soil, and increase the community health. There may be any number of public enterprises which could benefit the community.
And so a number of public servants, charged with governing the construction and maintenance of a number of public goods, and maintained by a tax revenue, would come into existence. This body of public officials, that governed public works of every kind, would form a government. This government would not be essentially different any other enterprise. It undertakes public works which, just like knives and bags and ropes, serve to increase the idleness of the entire community.
The value of public ownership of public goods is that, honestly run, it will provide better value for money - i.e. greater idleness - to the community than any for-profit enterprise.
However, regardless of who owns them, public goods continue to be monopolies. The transfer of a privately-owned monopoly into public ownership makes for a government monopoly.
And while the first publicly-appointed governors might carry out their duties diligently for little pay, their successors might come to view their posts as a means to enrich themselves. With little or no supervision to constrain them, they might demand both higher salaries and a multiplicity of assistants, and inflate the costs of constructing and maintaining public works, while cutting corners in carrying out those works.
And with this steady flow of taxes arriving in the hands of the governing officials - the government -, there must be a regular tendency for some of this money to be siphoned off for purposes which are of little or no public benefit. The officials might begin to reward themselves with high salaries, large houses, and lavish banquets. Or they might spend the money on reckless and impractical schemes. And in all of these, their response to corruption or incompetence might regularly be to simply raise taxes, increasing the annual levy upon the common people, until the point is reached and passed when the costs of taxation outweigh the benefits of public projects. At which point what was benign and useful becomes a burden and a luxury.
Thus, once in public ownership, the costs of maintaining and repairing the roads and bridges would tend to rise, while roads and bridges themselves would crumble and decay. Instead of paying high tolls to a private monopoly, the bridge users would pay high taxes to a public monopoly.
And furthermore, since the governing bodies would generally be made up of supervisors and managers, rather than inventors and entrepreneurs, there would be little likelihood of better and cheaper roads and bridges being built.
Furthermore there is the danger that, with substantial tax revenues flowing into their coffers, governments become extremely rich and powerful entities with their own internal culture and agendas, and which attract not so much philanthropists as power & money-hungry ideologues, such that instead of benefitting society, government becomes an oppressive burden.
And, although some of these abuses may be prevented by limiting the terms of office of public officials, and requiring them to face re-election, such elections may be of little value if all the candidates are equally corrupt, or if the electoral process is itself compromised by vote-rigging. For it must be the tendency of political corruption to gradually spread to every area of public life.
Worse, if the government begin to see the flow of taxes as being in some way theirs to dispense with however they see fit, then government acts not so much for the public benefit, but for its own benefit. Government becomes an elite organization with its own self-serving agendas. And in this way, governments cease to serve taxpayers, but instead to increasingly dominate them. The taxes flowing up from the base of the pyramid translate into arbitrary governmental power exercised from the top down. And in the extreme, taxation results in over-worked taxpayers below supporting a leisured government elite spending tax revenues however it chooses.
But then, where a government ceases to provide public goods, like roads and schools, but instead spends its revenues on itself, or on grandiose theatres and and stadiums, it ceases to benefit society, and the net effect is that the value of the tool of government becomes less than the cost of the tool of government. Instead of benefitting society, it becomes a burden upon it. Social idleness falls. And when social idleness falls, a society begins to disintegrate, and becomes unable to support a leisured elite. One might suggest, of ancient Rome, that its government acted for the real improvement of Roman society when it built bridges, roads, and aqueducts. But that it simply wasted public money when it began building triumphal arches and the stadiums and amphitheatres. Because triumphal arches are vanities, and theatre is entertainment, and neither make practical everyday life one iota easier. In the first case, the idleness of Roman society rose. In the second case, it fell. And with it, perhaps, the whole Roman empire collapsed.
Author: Chris Davis
First created: 3 Jan 2004