Busting Myths about the State and the Libertarian Alternative by Zack Rofer

Author:Zack Rofer
Language: eng
Format: epub
ISBN: 978-1-61016-697-3
Publisher: Mises Institute
Published: 2018-12-05T16:00:00+00:00

How Much Must Be Supplied?

More broadly, there are two fundamental problems with the concept of the “public good” justification for state action. There is a practical problem and a moral problem.

First, the practical problem. The “public goods” argument implies that there is in fact a set, socially optimal amount of the good that must be produced. The theory runs that if, in the state’s estimation, the private sector would produce less than this level, then the state must step in. However, statists never ask, much less answer, how one could derive this “socially optimal production level,” and who has the omniscience to do this?

In the private sector, the “socially optimal production level” is pursued by individual entrepreneurs trying to anticipate individual consumer preferences based on pricing signals given to them in the market by individual consumers and the owners of factors of production. As noted earlier, those entrepreneurs who anticipate correctly and please voluntarily paying consumers would make profits, and thus would be able to bid for more scarce resources, and those who fail to do this would tend to go out of business, and thus would yield scarce resources. Note that this “socially optimal production level” continuously changes with consumer preferences and resource availability, so entrepreneurs must continuously adjust.

Practically speaking, it is impossible for individuals at the state, or their economists, to make a credible theoretical calculation in advance, or to adjust on the fly, regarding the “socially optimal production level” of any “public good.” State personnel cannot know consumers’ changing preferences, since they cannot know what is inside each consumer’s head, and nor does the state, as a coercive monopoly, get any actionable, market feedback from consumers, since consumers are not making voluntary purchases of state-provided “public goods.”

In addition, if state personnel get the production quantity or quality wrong relative to what consumers actually want, then the state does not go out of business, but rather continues to divert scarce resources into producing these goods away from goods that consumers actually want.

Accordingly, in justifying the state’s provision of “public goods,” the state can only rely on models produced by intellectuals, which models (like their intellectual creators) are entirely divorced from the real world.

Further, even if the state could know each individual’s preferences, how on earth could it reconcile them into one production decision (this is analogous to the “common good” issue discussed earlier)? Society is not a single consumer, but rather the aggregation of many individuals, and while the private sector can satisfy all individuals concurrently through competing products, the state (at best) can only satisfy a subset of individuals who are in favor of the single production decision made by the state.

Second, the moral problem. Any time the state produces a “public good,” it is charging every single taxpayer whether that taxpayer wants that good or not. Taxpayers do not have the opportunity to opt out. By what right can the individuals at the state tell each citizen that he must pay for those goods that state

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