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Thursday, February 3, 2011

Socialism, Snow Removal, & Public Goods

The other day, I saw this on the Blogging Blue Twitter feed:
I say we do away with socialized snowplowing. Get the government out of my snowbanks!!!
I realize that socialism has been used as an epithet by those on the right, particularly during the healthcare debate, and that those on the left may feel the need to try and defuse some the word's power. The sentiment in this tweet may be designed to do exactly that, but both sides could benefit from some more clear-headed thinking when it comes to the use of the S word.

Socialism is typically defined in economics as "a centrally planned economy in which the government controls all means of production," a concept most of us can easily understand. As a means of administering an entire modern economy, this method has been thoroughly discredited by the example of the former Soviet Union. Obviously, there are current examples of specific countries or industries that resemble Socialism to greater or lesser degrees. For example, a healthcare system where a government only permits doctors in its employ to practice medicine would be described as having socialized medicine. (Note that this is distinct from allowing anyone who demonstrates minimum qualifications to offer medical services for sale.) Whether or not such a system is your preference, calling it socialized medicine is an accurate description, not a slander.

So is it accurate to say we have socialized snow removal?

While government entities are responsible for much of the snow removal that occurs, they certainly don't do it all. Many private enterprises offer snow removal services, though these services are generally limited to private homes and businesses rather than on public streets. The very existence of private snow removal services would seem to argue against snow removal being accurately described as socialized. At the same time, the primary role of government in providing this service is clear. So what, exactly, is going on here? Before we answer that we should think about another economic concept, public goods.

For a full discussion of public goods read this article, for our purposes, I will just focus on this aspect of the definition by Tyler Cowen:
Public goods have two distinct aspects: nonexcludability and...“Nonexcludability” means that the cost of keeping nonpayers from enjoying the benefits of the good or service is prohibitive. If an entrepreneur stages a fireworks show, for example, people can watch the show from their windows or backyards
Now I happen to live on a court, which is the name they give cul-de-sacs in areas with high property taxes, and, as such, my street is among the lowest priority for snow removal following a storm. Budding entrepreneur that I am say I hook a plow to my Chevy 1-ton van and start plowing my court ahead of the city after every storm. I would bet that my neighbors will appreciate this. It's not that far-fetched to think that some of them might even be willing to pay me for performing this service.

If the city gets wind of this and slaps me with a cease and desist, that would be pretty strong evidence that we are on the verge of a socialized snow removal regime. Supposing they don't and I am allowed to continue my small scale operation, would I?

It's doubtful that I could get all fifteen or so of the houses on my court to pay me for my quicker than the city snow removal, so what are my options? First, I could only plow in front of the houses that pay me, leaving a sort of patchwork quilt of unplowed street. This could quickly become a problem as my paying customers would rightly complain that paying for my service is only worth it to them if the entire street is plowed. If they still have to punch it in order to get through a drift every forty feet, why bother paying at all.

My response to this is likely to include plowing the entire street in order to keep my paying customers happy. This also means that everyone who didn't pay me gets to benefit from the plowed street. Unfortunately, this will quickly bring an end to my dreams of early retirement financed through snow removal efforts as my paying customers realize their neighbors are enjoying the benefit of the plowed street without paying. In economic jargon, the non-payers are free-riding. Once this is apparent, there is little incentive for anyone to pay and shortly after that there is no incentive for me to plow and all the residents of the court are left waiting for the city.

I hope this little illustration demonstrates the concept of nonexcludability and suggests that snow removal might meet at least this criteria of a public good. If so, that makes the means for producing snow removal on public streets easier to deal with. There is a broad consensus that public goods are most efficiently produced when financed by taxes and supplied by the government. So the real question is, which goods are public goods?

We won't always agree on the answer of course, but these days, I'm not sure if anyone is even asking the question.

To those on the right, I would suggest that we not cry "socialism!" at every government encroachment lest we end up like the boy who cried wolf and no one listens when we are confronted with the real thing. Additionally, there is a role for government to play beyond law and order, we should acknowledge those cases and endeavor to make government's operations there the best it can possibly be.

To those on the left I would remind you that not every outcome you don't like represents a market failure, begging for a government solution. Relative to other cultures, maybe the United States is more suited to a smaller government sector simply as a matter of temperament. And if some of us detect that some of your preferred solutions to our national woes may lead to government control over the means of production, we should be able to call that what it is, the road to socialism.

3 comments:

John Foust said...

BloggingBlue's tweet is entirely apt to ridicule the incorrect, overblown usage of the cry of socialism. Of course there is a tremendous lack of realistic, honest talk about health care and the panoply of public goods offering by the government, especially if you're listening to Charlie Sykes and not Wisconsin Public Radio. Where were the reasonable voices who said "Don't be silly, these are not death panels." You want honest talk about government interference in medicine? First we'd need to honestly recognize what is in place now. It would take hours. It's not a charming sound-bite. It would take study and thought. I doubt that anyone could call it "small". We already have a system where the government licenses and administers those who would practice medicine. We have a system where even a chiropractor gets to be called "Doctor", too. We have a system where emergency care is universal, so you need not worry that your children will die on the side of the road when they travel. You'd need honest assessment of the tremendous influence of insurance companies and hospital conglomerates over lawmakers and policy. Where to begin? It sounds too difficult. Let's just use scary sound bites instead.

Dad29 said...

this will quickly bring an end to my dreams of early retirement financed through snow removal efforts

There will be a faster ending: a 1-ton Chevy w/blade will NOT cut it on city streets before you suffer significant frame/plow connect problems.

Just buy a used dumptruck.

John Foust said...

(Dad29: He wasn't serious.)