If I produce automobiles and pollute the air, and the citizens own the air, but I don't have to pay them even though I am polluting, then I will tend to inefficiently OVERPRODUCE cars, because I won't take into account the spillover cost of polluting the air. So we have an argument for government coercion of polluters (for example taxing them) to prevent them from stealing property (the air).

On the other hand, if I administer a live vaccine that jumps from person to person and causes immunity in many, not just the patient who received the vaccine from me; in administering the live vaccine, people other than the recipient benefit, but don't have to pay. So I don't capture the full benefits of what I produce when I vaccinate. So I will tend to inefficiently UNDERPRODUCE vaccine because I don't take into account the spillover benefit of administering live vaccines to those who don't get the shot, but nonetheless become infected by a live virus vaccine, and so get immunity.

(By this argument, the descendants of Albert Einstein, and possibly David Deutsch and his friends, should be far more wealthy, according to free market principles, than Bill Gates. But the free rider argument [we all benefit from brilliant people but don't pay them] does possibly explain why we are willing to fund public universities. But it also explains why people don't think and learn as much as would be socially optimal)

I'm not paid by those who benefit from my work (giving live-vaccine shots) -- so I won't work hard enough, if I am a purely self-interested individual. Voluntary cooperation won't solve the problem because there is too much incentive for a given individual to "shirk". After all, if everyone gets vaccinated, it is likely the "free rider" will catch the vaccine virus, from everyone else. But this is everyones reasoning! So few people get the shot. Voluntary cooperation won't work.

So there is an argument for citizens to (voluntarily) vote to have everyone "coerced" by the government to pay taxes, and then use the tax money to subsidize live vaccine administration to get me to work harder, to get the efficient amount of vaccine administered.

We voluntarily coerce ourselves by mandating that if one person pays, so must the other! And theoretically, in certain situations, it is logical for 100% of the population to (voluntarily) vote to be coerced! And the government which gets 100% of the vote (unanimous rule) to force everyone to be taxed, should be considered to be operating perfectly!

Unanimous rule is unanimous rule...a perfect libertarian situation. A voluntary group of rational but selfish individuals, simply cannot create this optimum outcome without government assistance, because by many definitions, only the government has a monopoly on the use of force.

And those who would stop them (maybe like Gil?), would be willing on principle, to coerce 100% of the population, to force these individuals not to cooperate through their government. Now that is hatred of taxation! And reflects a complete misunderstanding of the free market principles that libertarians supposedly hold so dear.

Which is more important, hatred of taxation (ideology) or unanimous rule (principle and morality)?

Now, libertarians would properly say (as Gil did) that not only does one have to show that the market has not worked, leading to public goods and externalities, but rather that government intervention will efficiently solve these market "spill-over" effects, often a dubious proposition.

But, in both of the above cases, arguments can be made for government intervention to (financially) support administering innocuous vaccines which benefit whole sections of the population, and arguments can be made for government intervention to tax and therefore inhibit the production of cars, if this production pollutes the air.

Now, back to New Orleans. Let's say my neighbor gives a dollar to reconstruct New Orleans. Since I like New Orleans, too, my neighbor has benefited me by his contribution, but I have had to pay nothing. So I am getting something for free, a partially reconstructed New Orleans, and I have had to pay nothing.

Just like the person who gets free vaccine because he "catches it" from the person who paid the doctor, I get New Orleans reconstructed for free, without having to pay the donor. I am a "free rider", though I would have been willing to purchase an improved New Orleans, if my neighbor hadn't bought it for me and if we both had to contribute, together. I get something from the labor of someone else, and don't have to pay him. So he (the donor) won't work as hard (just like me, he will now become a "free-rider") In other words the donor will not donate as much and neither will I, though we both would VOTE to give more than we would give if no taxation were involved. We both would vote to give more, if we knew all our neighbors would have to give that amount, too. So voluntary cooperation won't work as well, we need to work through our government to cooperate, so we take a vote, or at least a poll.

So without government intervention, an inefficiently low amount of aid will flow into New Orleans, given the preferences of the citizenry, without government assistance in coordinating dollars, because of the "free rider" problem. We can't exclude those who don't contribute from enjoying New Orleans. So, just like with the live vaccines and with defense spending, you can't exclude people from enjoying the benefits of New Orleans, you can't exclude people from enjoying the benefits of a powerful defense, and you can't exclude people from enjoying the benefits of a live vaccine administration. In these cases, there is an argument for citizens to vote to impose taxes on themselves. Defense, live vaccinations, and possibly the reconstruction of a wonderful city after a hurricane, are examples of public goods in which, arguably, the government should be involved.

Unfortunately, when we voted (or sort of did through polls), there was not 100% agreement to coerce ourselves through taxation to help New Orleans. But the majority still would like to be coerced through taxation. And those who stop us, *are* coercing us, since we want to use our government to solve our "free-rider" problem, a classic argument for the use of the government. And that brings me back to the discussion in my previous post.(Please see that)

So what is the appropriate role of government? I think this is too complicated a question. But three major roles are:
1. Define and enforce property rights to goods (which includes developing defense and police forces since otherwise other countries and fellow citizens can take stuff from us)

2. Help solve "public good" problems, for example, possibly the reconstruction of infrastructure in New Orleans and

3. Help solve "externality" problems, like pollution.

Actually, if you think about it, roles 2 and 3 are subsets of role 1.

I would also add that Governments should decrease transaction costs....but that opens up a big can of worms!

Have a nice day.

Michael Golding