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Among the many non sequitors and illegitimate characterizations, John Bice makes a particularly short-sighted argument about education in the Michigan State News. The self-proclaimed Liberal insinuates that unfettered markets fail in providing the "public good" of education to the masses. He writes:
Bice commits the classic governmentalist fallacy of neglecting to account for both the seen and unseen effects of public spending. We see the government providing disadvantaged youth with education much as we see the government building parks for recreation and operating the postal service. Every day we are directly inundated with the outlay of taxes, which indeed provide a semblance of value to people. What we don't see, however, are the countless unrealized projects foregone by government spending. These unseen alternatives constitute a sizable opportunity cost that should not be discounted merely because they cannot be depicted pictorially. My thesis is that we would be far better serviced if those expenditures instead came from private sector. Consider a thief, for example, that steals money and spends it on various goods and services. With every transaction we see how the looter "supports" commerce and employment. But we don't see the foregone path of those funds if the theft never occurred. Moreover, imagine the thief held the only gun in town and operated such an entrenched extortion scheme his victims mailed him the loot at regular intervals. Awash in money, the thief spends large amounts and props up entire industries. The Joe Bice's of the world claim these industries and jobs would disappear without the thief. But these assertions fail to appreciate the subtleties of opportunity cost. Whether conducted by a government or any other thief, the expenditure of coerced funds only take the place of voluntary spending. Plunder does not create wealth. It simply shifts supervision of how wealth is spent. Absent government spending, will the education industry fall by the wayside? To answer this question, it is appropriate to consider the private schools that don't exist now because public schools do exist. Public spending on education crowds out competition in the industry. It's quite arduous for a business reliant upon voluntary patronage to compete with those subsidized from compulsion. Hence, private industries appear inadequate to provide crucial services when coercive enterprise enters the business. But this does not mean that private schools couldn't flourish to meet the needs of rich and poor. We just cannot see this service provided presently because of government distortions in the market. Furthermore, the public spending crowds out qualitatively superior industries. With an invariable inflow of funds, our thief (government in this case) has little incentive to economize their spending. The institution of taxation insulates the thief from competition and the obligation to extract the greatest utility out of the earth's scarce resources. The system invites the misallocation and stagnation of critical resources when it pushes competition off the horizon. This is precisely the organization of industry that Bice proclaims necessary. My contention, however, is that a free market will deliver better so-called public goods privately. If people sufficiently value parks, education, or a postal service (among other government products), the demand for them will summon a supply. Merely because the government commandeers certain industries today does not necessiate the inference that private industry is incapable of meeting this demand tomorrow. Private enterprise has an impeccable track record of coordinating demand and supply. Unless we look beyond the services in front of us to those foregone, however, it's impossible to appreciate the eminence of the marketplace in fulfilling the wants of consumers within the context of scarcity and asymmetric information. |
| Term Papers November 16, 2009 07:01 AM PST A great constructive article will help to understand the issue. | ||
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