Economics Dictionary of ArgumentsHome
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| Government services: Government services in economics refer to public goods and services provided by the government to benefit society, such as education, healthcare, infrastructure, and public safety. These services are funded by taxes and aim to improve the welfare of citizens, promote social equity, and support economic stability. They are typically non-excludable and non-rivalrous in nature. See also Social policy, Transfer payments._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Murray N. Rothbard on Government Services - Dictionary of Arguments
Rothbard III 944 Government Services/Rothbard: "Free" services are particularly characteristic of government. Police and military protection, firefighting, education, parks, some water supply come to mind as examples. VsGovernment services: The first point to note, of course, is that these services are not and cannot be truly free. A free good (…) would not be a good and hence not an object of human action; it would simply exist in superabundance for all. >Goods/Rothbard, >Action/Rothbard. If a good does not exist aplenty for all, then the resource is scarce, and supplying it costs society other goods forgone. Hence it cannot be free. The resources needed to supply the free governmental service are extracted from the rest of production. Payment/taxation: Payment is made, however, not by users on the basis of their voluntary purchases, but by a coerced levy on the taxpayers. A basic split is thus effected between payment and receipt of service. This split is inherent in all government operations. Rothbard III 945 Police/school system: Many grave consequences follow from the split and from the "free" service as well. As in all cases where price is below the free-market price, an enormous and excessive demand is stimulated for the good, far beyond the supply of service available. Consequently, there will always be "shortages" of the free good, constant complaints of insuffciency, overcrowding, etc. An illustration is the perpetual complaints about police insuffciency, particularly in crime-ridden district, about teacher and school shortages in the public school system(…). Free market/Rothbard: In no area of the free market are there such chronic complaints about shortages, insuffciencies, and Iow quality service. In all areas of private enterprise, firms try to coax and persuade consumers to buy more of their product. Efficiency/Public sector/Rothbard: Where government owns and operates, on the other hand, there are invariably calls on consumers for patience and sacrifice, and problems of shortages and deficiencies continually abound.(1) Price/market: The same is true, to a lesser extent, wherever the price is under the free-market price. >Free market/Rothbard, >Government policy/Rothbard. >Rothbard III 950 Prices: Many "criteria" have been offered by writers as guides for the pricing of government services. Marginal cost: One criterion supports pricing according to "marginal cost." RothbardVs: (:..) this is hardly a criterion at all and rests on classical fallacies of price determination by costs. "Marginal" varies according to the period of time surveyed. >Marginal cost/Rothbard. Costs: And costs are not in fact static but flexible; they change according to prices and hence cannot be used as a guide to the setting of prices. Equilibrium: Moreover, prices equal average costs only in final equilibrium, and equilibrium cannot be regarded as an ideal for the real world. The market only tends toward this goal. Finally, costs of government operation will be higher than for similar operations on the free market.(2) Competition/efficiency: The ineffciencies of government operation are compounded by several other factors. (…) a government enterprise competing in an industry can usually drive out private owners, since the government can subsidize itself in many ways and supply itself with unlimited funds when desired. In cases where it cannot compete even under these conditions, it can arrogate to itself a compulsory monopoly, driving out competitors by force. This was done in the United States in the case of the post office.(3) >Competition, >Efficiency. Rothbard III 952 Calculation: (…) one cartel or one firm could not own all the means of production in the economy, because it could not calculate prices and allocate factors in a rational manner. >Calculation/Rothbard, >Factors of production/Rothbard. No government enterprise could be established on a "business basis" even i fthe desire were present. Thus, any governmental operation injects a point of chaos into the economy; and since all markets are interconnected in the economy, every governmental activity disrupts and distorts pricing, the allocation of factors, consumption/investment ratios, etc. Utility: Every government enterprise not only Iowers the social utilities of the consumers by forcing the allocation of funds to other ends than those desired by the public; it Iowers the utility of everyone (including the utilities of some government offcials) by distorting the market and spreading calculational chaos. 1. See Murray N. Rothbard, "Government in Business" in Essays on Liberty (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1958), IV, 186 ff. It is therefore characteristic of government ownership and "enterprise" that the consumer becomes, not a "king" to be courted, but a troublesome fellow bent on using up the "social" product. 2. Various fallacious criteria have been advanced for deciding between private and state action. One common rule is to weigh "marginal social costs" and benefits against "marginal private costs" and benefits. Apart from other flaws, there is no such entity as "society" separate from constituent individuals, so that this preferred criterion is simply meaningless. 3. See the interesting pamphlet by Frank Chodorov, The Myth of the Post ofice (Hinsdale, 111.: Henry Regnery Co., 1948). On a similar situation in England, see Frederick Millar, "The Evils of State Trading as Illustrated by the Post Offce" in Thomas Mackay, ed., A Plea for Liberty (New York: D. Appleton Co., 1891), pp. 305-25. For a portrayal of the political factors that have systematically distorted economic considerations in setting postal rates in the United States, see Jane Kennedy, "Development of Postal Rates: 1845-1955 Land Economics, May, 1957, pp. 93-112; and Kennedy, "Structure and Policy in Postal Rates," Journal of Political Economy, June, 1957, pp. 185-208._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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> Counter arguments in relation to Government Services
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