As it becomes more and more accepted that government is not the sole purveyor of public goods, but just another actor in the economy with private interests, how do we then determine: What is a public good?
Here at Home Economic, we find that people associate with groups of individuals who share a similar interest. We’ve laid out a landscape of action based on whether a participant works towards their own interests or towards the interests of a group project. When work is done for the in-group, then it is a public good for all its members. When an individual takes action in an exchange with an outgroup, then it is private only to the individual. For instance, an inventor may, on one level contribute toward the project air travel, while still retaining a portion of the new technology in the form of a grant or a patent.
The private side is more visible as it is often compensated in fungible currency. Thus the flow of money can be traced and counted. But how do we see the public side?
In How Innovation Works, Matt Ridley tells the tale of the first attempts at air travel. People in several countries were working on this idea and it is safe to say that the information which transpired from these activities fall in the basket of a public good. The American government supported an individual, Samuel Langely, with grants of $50,000 (quite a sum in 1903). Although he internalized these funds privately, Langley was unable to come up with the goods for a successful technology. It was the Wrights brothers, with their zeal and voluntary efforts, who launched the Kitty Hawk on that successful day.
They tried to privatize their invention through the patenting system so they would reap a pecuniary reward, but to no avail. The information necessary was already out in the public sphere with no way to reign it back in.
In The Invisible Hook, Peter Leeson tells us about Pirates. He tells how pirates commandeer a vessel and then set out on the seas to pillage and steal. He calls the boat a “sea going stock company” as the boat crew operated it very must like a firm. I would say, however, that the boat was a public good to the pirates who shared the common interest of pillage and plunder. Here’s why. None of the pirates could sell their share of the boat. The ownership of the pirate endeavor was non-fungible.
A public good maybe identified if the the only way to access it is through membership to a group. You can’t sell a favor you are owed from one friend to another. You relinquish all rights and benefits to the good if you leave the group. When you exit.
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