Privatize everything!

In Jennifer Burns biography of Milton Friedman, the famous economist is portrayed as affable and polite even under duress.

Still- he had many detractors. People in this camp, I suspect, might have been turned off by the thought that every service or enterprise is done better in the private sector.

Here is a section from Milton Friedman, the Last Conservative explaining how easy it would be to charge to enter the National Parks. And there is a small fee to access the park, as there is the cost of a stamp to post a letter.

“The entrances to a national park like Yellowstone, on the other hand, are few,” continued the Friedmans. It would be easy to set up tolls at the entrance. “I the public wants this kind of an activity enough to pay for it, private enterprise will have every incentive to provide such parks,” they concluded. Similar logic extended to the post office, public housing, toll roads, and even Social Security. Each of these could be more efficiently handled by private enterprise, the Friedmans proposed, enumerating a list of fourteen “activities currently undertaken by government in the U.S.” that could not be justified by their principles. “This list is far from comprehensive,” the authors noted.

But haven’t you ever wondered why some things remain in public hands while some are replaced by private alternatives?

Why are most parks public? Why is USPS still around after all the alternative forms of communication have evolved? Why do toll roads exist only in limited markets?

History continues to challenge the Friedmans’ view that all goods and services respond best in traditional private markets.

Louis and Clark Caverns, Montana

Time- according to Alfred Marshall

Marshall proposed thinking in one of four blocks of time. The first would be a market period, where demand determines price because there is not sufficient time to alter supply. The short run, Marshall’s second period, introduced a new wrinkle: by responding to demand, firms could increase supply, but only by spending more money. So prices might go up, set by the cost of supply, working in tandem with demand.

The third period, the long run, during which firms had time to develop new efficiencies, introduced a further complication. Now rising demand might trigger falling prices as businesses benefited from economies of scale and better organization.

The fourth period, secular time, was Marshall’s nod to history it-self. Secular time was generational time, which might see huge shifts in demographics, knowledge, or political organization, completely refiguring the dynamics of supply and demand. Marshall had found a way to integrate the glacial movements of the ages, the lurches and accelerations of the present, and the universalizing clarity of economic abstraction.

Lifted from Jennifer Burn’s book Milton Friedman: The Last Conservative. She narrates Friedman’s encounter with Alfred Marshall’s book Principles of Economics.

Time in real estate is yet on another schedule.