Balance Expenditures, Perspective

 

America, circa 1958, according to JK Galbraith:

The family which takes its mauve and cerise, air-conditioned, power-steered and power-braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, blighted buildings, billboards and posts for wires that should long since have been put underground. They pass on into countryside that has been rendered largely invisible by commercial art. (The goods which the latter advertise have an absolute priority in our value system. Such aesthetic considerations as a view of the countryside accordingly come second. On such matters we are consistent.) They picnic on exquisitely packaged food from a portable icebox by a polluted stream and go on to spend the night at a park which is a menace to public health and morals. Just before dozing off on an air mattress, beneath a nylon tent, amid the stench of decaying refuse, they may reflect vaguely on the curious unevenness of their blessings. Is this, indeed, the American genius?

The point he's making is about a social imbalance caused by differences between private and public spending. In America, a society of affluence, where the production of comic books and pornography count as valuable economic output, the outlaying of money on roads, parks, policing, education, and other public services is considered nearly valueless and unpalatable.

America is still often considered a land of crumbling infrastructure, but compared to the America described above, some things have improved. The countryside is largely visible, our parks no longer a menace to morality, and the air has been mostly purged from the stench of decaying refuse.

Our private consumption has has also made progress over the decades, seeing as we've developed the good taste not to continue buying our autos in the colors of Wild Berry Skittles.

DAS KARNTOL

Penmanship has never been my strong suit, the doodlings of my pen having been described both blandly as chicken scratch and more memorably as looking like those of a serial killer. Little did all my critics realize this little "flaw" of mine would give me insight and empathy into one of history's most influential minds! From The Worldly Philosophers, a thus far great book:

Marx had no work--except his never-ending stint in the British Museum from ten o'clock every morning until seven o'clock at night. He tried to make a little money by writing articles on the political situation for the New York Tribune, whose editor, Charles A. Dana, was a Fourierist and not averse to a few slaps at European politics. It helped for a while, although it was Engels who bailed Marx out by composing many of his pieces for him--Marx meanwhile advising by letter as follows: "You must your war-articles colour a little more*. " When these articles stopped, he tried to get a clerical job with a railway, but was rejected for his atrocious handwriting.

p. 150

'Tis true, however, that my horrid handwriting is sometimes a burden. The wine business for example requires me to make several bank transactions every week, and all the forms must be handwritten. How the tellers interpret my name, which I both print and sign on most of the forms, can be amusing:

Jeff Molmes indeed!

The interpretation can also confound:

That rogue Mr. Ildnes--my Moriarty

That last one had me puzzled for longer than I care to admit as to who exactly this Jeff Ildnes was and how he had gained access to the account.

*German syntax much?

The Wrong Path

Everything reminds Milton of the money supply. Well, everything reminds me of sex, but I keep it out of the paper.

So said Robert Solow of Milton Friedman. I'll beg Solow's and your indulgence, Reader, for these days I have wine on my mind, and I can't keep it out of the blog.

A few days ago I read the following passage in The Alchemist, which I've now finished:

Page 60

The old man continued, 'You have been a real blessing to me. Today I understand something I didn't see before: every blessing ignored becomes a curse. I don't want anything else in life. But you are forcing me to look at wealth and at horizons I have never known. Now that I have seen them, and now that I see how immense my possibilities are, I'm going to feel worse than I did before you arrived. Because I know the things I should be able to accomplish, and I don't want to do so. '

A fun coincidence, reading this when I did, as it came just after a disappointing meeting with a restaurant owner. Despite a drawn-out conversation, the owner to the end held the position that while our wines were better than her limited selection and reasonably priced, she thought her customers were content with what she had and couldn't be bothered to care about something better. Perhaps she was right, but to me her position smacked of a certain cognitive dissonance, as if she felt she would be better off by denying a choice existed rather than having to make one.  Even still, I doubt this business owner, unlike the one in the book, felt worse afterward.

***

As for my thoughts on the book itself, in short, I didn't like it. Too easy, simple, trite, thoughtless, contradictory. It reminded me of this bit of data showing Americans, particularly better off ones, like to use the metaphor of a journey to describe their lives. Like Tyler Cowen, I wonder if just reveals "our tendency to impose a false or misleading narrative on events."

Mmm Mmm Goods

One of the most important features of a system of property rights is excludability. That is, if I own something--a fruitful avocado tree, say--I can exclude you from eating my delicious avocados unless we come to some mutually agreeable arrangement. Because I can capture as much of the tree's benefit as I choose, I have a much stronger incentive to grow and maintain the tree than if people could pilfer the fruits of my labor at will. Some things are however non-excludable by nature, meaning that it is prohibitively costly to prevent others benefiting from them. A classic example economists have long used is a lighthouse: With a lighthouse, there's no way an owner can exclude ships from navigating by the boat-saving beam. Because free-riding would be easy, no one could ever hope to make any money from it and wouldn’t bother building the lighthouse, despite the obvious value of the service.

Non-excludability is the main feature of “public goods,” or those goods and services that seemingly can’t be produced (or aren’t produced enough) in private markets. Because public goods are still valuable, the government usually becomes their purveyor. Often public goods are nonetheless provided privately in creative ways. I happened to come across a Rwandan example last night in the book A Thousand Hills:

The two-lane highway that winds northwest from Kigali toward Lake Kivu qualifies as a fine one by African standards...It also has a feature rare in Africa and unique in Rwanda: a short stretch of it is illuminated by streetlights. At night you drive through the unbroken dark, always slowly in order to avoid hitting people. Suddenly the road is bathed in light. A couple of miles later, as you are still marveling at this wonder, it is over and you pass back into blackness.

The first time this happened to me, I wondered: Of all the highway stretches in Rwanda, why did the government choose to illuminate this one? Friends gave me a startling answer. The government did not choose this stretch, nor did it erect these streetlights, nor does it pay the electric bill. It is all Gerard Sina's work.

(...)

The reason Sina illuminated a two-mile stretch of highway is that he owns a strip of businesses there. He has a grocery store with its own bakery, a sit-down restaurant, a snack bar that offers take-out service, a motel, and a pair of clean public restrooms. It is the only highway rest stop in Rwanda. Cars, trucks, and buses are always parked out front (pp. 318-319).

Charging for streetlights is a fool’s errand, but that’s not to say compensation can’t be had—just bundle the service with things for which you can charge, like Sina did. In 19th century England, private operators tied in the lighthouse service with the port fees, to varying degrees of success.

Gerard Sina has offerings throughout Rwanda, and I enjoy very much his pili-pili, often to the exclusion of other condiments.