27 Nov 2013

PuBliC gOOds?

I was shocked recently to hear a professor of economics say that "ports are a public good because they receive goods that are distributed all over the country, for the benefit of consumers and producers." This nonsensical definition makes sense to port operators seeking subsidies -- a common problem -- but it's false when we remember that those ports are handling private goods, the cost of which consumers are willing to bear.

There's no non-excludable, non-rival public good involved, only private goods that are shipped for profits.

Would producers like more profits? Would consumers like to pay less? Sure, but subsidies to them create private benefits to them -- not public goods.

Bottom Line: Public goods benefit everyone, regardless of capitalization.