To illustrate how things might have been better, consider again our beekeeper and his neighbors. In other words, the problem is that, if not for the nonexcludability of the good, things could potentially have been even better. Rather, it is a "problem" only when compared to what might have been done instead-a problem of allegedly inefficient underproduction of the good in question. It is not even that anyone has suffered any detriment at all. It is not that anyone's rights have been violated. This may seem like a fortuitous event-even something to be celebrated.Īnd yet, there is a "problem"-or, to be more precise, a free rider "problem." The problem is not that anyone has aggressed against anyone else. Moreover, as an unintended consequence of his purchase, surrounding property owners also find themselves enjoying a benefit from the bees, at no cost to them. The beekeeper chooses to buy the bees because he expects to be better off by virtue of this action. Observe that this situation involves no detriment to anyone, let alone any violation of rights. Thus, the "good" provided to surrounding property owners is nonexcludable. 4 Nor is there any practical means by which the beekeeper can produce his honey without conferring this benefit on his neighbors. However, an ancillary effect of this activity-an externality-is that the bees will pollinate flowers in surrounding properties, benefiting the owners of those properties at no cost to them. This occurs in situations where the beneficial effect of an action is "nonexcludable," meaning that the benefits cannot be withheld from people who had nothing to do with the action.įor example, a beekeeper may keep bees solely as a means of producing honey. The "free rider problem" occurs in situations in which a person derives a "positive externality" from the actions of another-that is, a benefit that he did not pay for. One of the most blatant examples of this non sequitur occurs in discussions of the "free rider problem" and the alleged solution of government provision of so-called "public goods." 3 This is a particularly insidious economic theory that bears a great deal of the responsibility of derailing economics into the ditch of statism. Chief among these is the persistent non sequitur from externality to coercion-that is, the bogus conclusion that coercion is a proper means to solve problems involving economic externalities. So commonplace are fallacious economic arguments advocating state control that it sometimes seems that refutation of all of these arguments has become a case of cutting the heads off the Hydra-a tiring and fruitless endeavor.īut if economics is to become an instrument of freedom and prosperity instead of an instrument of statism, 2 then there are certain fundamental fallacies that must be continually challenged and discredited. With the almost constant statist apologetics we hear from many government and academic economists 1 it is hard to believe that the discipline of economics was once a thorn in the side of the state and its political elite.
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