Categories Explained

Audience. The audience is an important player in the public goods marketplace.  Members of a group cajole, nudge, support, applaud, coo and cluck at the activities at hand to shift and influence behavior, thus avoiding confrontation. Think of this undertaking as gently steering a large ship to avoid storms and pirates.

Corruption.  For the purposes of this blog, corruption occurs when an individual or a group is portraying their actions as transacting business in one sphere when, in fact, they are engaging resources in the other. Let me clarify. The classic example of corruption occurs when a political official, an agent of the public, uses their office for private gain, often of a monetary nature. It can also occur when private business draws on the demand for a public objective, say clean energy, and engages public resources for their private enterprise with fictious results.

Duality.  This is a key concept. There are two aspects to it. First, an individual is both a private actor as well as a participant in than more than one group. The groups also have a duality in that the activity within the groups respond to the public mechanism, whereas when groups function to the exterior, their activity behaves in a private fashion. This morphing from private to public is described by Mancur Olson on page 101 of The Logic of Collective Action while referencing its identification in the writings of Hans Ritschl.

Exit. Please see Exit, Voice, and Loyalty, by Albert O. Hirschman

Externalize/Internalize. These terms describe the movement of economic value between the two spheres. The first term is well established, especially in the example of a private firm externalizing pollution to the burden of the surrounding community.

Groups. Identity. Associations. Family. Nationality. PTA. Religious Affiliation. The list is endless. Groups are not an aggregation of individuals. There is no individual in a group, as there is no drop of water in a river.

Household Formation. A household is the most basic public group.

Public-Education.  The dichotomy between a good being provided by private markets versus being provided by government is prehistorically simplistic. The prefix ‘public’ is necessary as a place holder for which group of people enjoy the good at hand. For example, the education provided by a school district in one part of town is not the same as in another. Thus, the public in this case needs to be identified by the residents residing within neighborhood boundaries of their district.

Public-Parks. Parks appear to be public to anyone, as anyone can stroll in. The geographic reality is that the park will primarily be used by the population within a certain mile radius. Parks can also be captured by a limited group. If neighbors avoid a park due to crime, then it has been effectively privatized by gangs and hoodlums. The technical ownership of the land doesn’t always convey the reality of the group who dominates its use.

Public-Health. Public Health is provides the best illustration that these types of goods are participatory. The greater group can create (tobacco) smoke free environments, but for those who refuse to quit smoking cigarettes there is a failure to deliver the desired outcome. Throwing additional resources at this objective, without a demonstrated preference by the receivers, will have a null effect.

Public-Safety Street Safety. Safety is the oldest of public goods harkening back to the days of walled cities and knights pledging allegiances to kings. There is much to say.

Public Transportation. Public transportation, from the provision of roads to busses to subways and even trains and air travel, offer the keenest insight into the staggering obligations of nested groups. As it’s provision is similar to a pay-as-you-go service such as city water, the inclination is to charge users. But the matching of users to costs is not always clear. Hence considerable thought has been put into the varying degrees of benefit each user group receives.

Regulation. When a norm is deemed significant enough to be formalized, it appears as a regulation within the political system.

Spheres. Our economy operates in two spheres: the private sphere and the public sphere. Each is driven by the ambition of value creation, but each operates under different structures of actors, exchanges, and value retention.

Time. The public sphere offers several new perspectives on time. First, the time period in which an activity occurs is relevant to its economic analysis, as societal norms are active and ever-changing. Second, the cycle of transactions can be very long, even generational. This is at complete odds with the immediate transactional nature of private market transactions.

Transaction. The parties to a transaction in the public sphere are the providers and suppliers of resources, goods and labor, and the receivers of said resources. Both need to engage in the exchange, as intended by the social contract, for a successful transaction.

Voice. Please see Exit, Voice, and Loyalty, by Albert O. Hirschman

Work. Work is done in the private sphere in return for payment. It is fungible. Work is done in the public sphere to advance a social contract. It is not fungible. It is often voluntary, unpaid, and exerted with the group objective in mind. Without a money trail, work can often be hard to identify. Simply overlooked. Whereas work in the private sphere is often performed to build and grow, work in the public sphere is often exerted to prevent an undesirable outcome. For example, you feed your kids a healthy diet so they are less likely to suffer health concerns; you watch your neighbors’ house to prevent crime from entering the neighborhood; you petition for a stop sign to prevent traffic injuries and so on. The amount of work done to set in motion the objectives of the group is the most significant indicator of the worth of its outcome.