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Archive for the ‘collective goods’ Category

Does a civil war in Mozambique significantly affect my interests? I say no. Most of my students seem to think yes. On my intro IR final essay exam, I asked a question about what the theory of hegemonic stability would predict about future environmental and human rights politics. I wanted to see whether students could differentiate between the public-goods characteristics of those two sets of issues. The theory of hegemonic stability says that the existence of a global hegemon is a necessary condition for the provision of global public goods.

To review, a public good is a good that is non-excludable for all those who enjoy it. In other words, you can’t exclude a non-contributor (“free rider” in the jargon) from enjoying the benefits of the good. (There’s also a non-rivalrousness condition, but it is irrelevant to the “problem” of public goods.) Because it is non-excludable, people have an incentive to free ride, and the good won’t generally be provided unless individuals can be somehow coerced or otherwise incentivized to contribute. Since the world is an anarchy, there is no power that can coerce sovereign governments to contribute to global public goods. But if there is one very large, powerful state in the world, it may derive disproportionate benefits from the public good, making it willing to contribute something (probably still less than optimal) toward its provision.

So are there any global public goods? I think so. Preventing the ozone hole is a pretty clear example. CFC emissions depleted the earth’s ozone layer, resulting in more harmful ultraviolet radiation on the earth’s surface. Everyone in the world derived significant benefit from banning CFC emissions, but individual countries had no incentive to enact bans on their own, so the U.S. government successfully led the way toward global cooperation in banning CFCs.

But what about human rights? If a government is repressing its subjects — killing them extrajudicially, torturing them, “disappearing” them without trial — are subjects of other governments harmed as well? Possibly. Repression might create refugee flows across borders, or raise the risk of a civil war that could threaten neighboring states. More instability might reduce economic output, marginally negatively affecting trade relations and prosperity in other countries. But at most, human rights protection is a regional public good, not a global one. Moreover, the “externalities” (spillovers) are small relative to the direct, private benefits of human rights protection. The people who lose the most from repression, by far, are those actually being repressed.

Since human rights protection is not a global public good, the existence of a hegemon should make no difference as to whether the good will be provided. Currently, the U.S. government does take an interest in protecting human rights abroad, via the “responsibility to protect” doctrine. (Cynics may say the U.S. takes more of an interest in protecting human rights abroad than it does protecting them at home.) Would China do the same if it were hegemonic? Doubtful, to say the least. Moreover, while the U.S. still enjoys military hegemony around the globe, it is not even close to being an economic or demographic hegemon, so its military hegemony is unlikely to explain the government’s interest in promoting human rights abroad.

The broader lesson: the mere fact that something is a good, even a normatively desirable good, does not make it a public good, one subject to market failure.

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The Coase Theorem, which tells us that the social optimum may be reached by exchange no matter how property rights are assigned if transaction costs are zero (and not if transaction costs are high enough), has relevance to the problem of zoning.

In much of the U.S., zoning is excessively strict, pricing moderate-income households into bad dwellings or out of the local market altogether. Yet zoning has defenders in the logic of externalities. More development makes people worse off in some ways: more traffic, etc. (Contrary to popular belief, zoning does not prevent a factory from opening up next door to you and polluting your airspace. The common law of nuisance torts prevents that. Zoning instead centrally plans the residential and commercial uses of particular pieces of land throughout a jurisdiction. Developers can appeal a prohibited use to a “board of zoning adjustment.” But such boards often deny requests.)

One simple reform to local zoning laws in the spirit of Coase would be (more…)

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At the Economist‘s Democracy in America blog, R.A. makes some good points in favor of skepticism on the question, riffing on Robert Fogel’s research on the economics of the railroad. Excerpt:

Highway construction generated some positive effects and some negative effects. We tend to focus on the positive effects and remark on how constrained the economy might have been without a highway boom. But absent a highway boom something would have been built and markets would have optimised to that something. It’s not clear that the savings from highways are so substantial that the American economy is clearly better off as a result of the system’s construction.

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