Friday, November 5, 2010

The Free-Rider Problem

[UPDATE] - Here's a more recent post on the subject...Libertarianism and the Free-Rider Problem


How many of you know what the free-rider problem is? For those not familiar with the concept here's a brief but decent overview which includes a few solutions...Free Rider Problem.

One solution not mentioned was...mind reading. Reason magazine wrote an article about the topic last year... A Solution to the Free Rider Problem — Mind Reading

The Reason article shares how Caltech scientists developed MRI technology to determine exactly how much somebody values a public good. The reason article itself is pretty useless...but it does provide 3 things...

1. evidence that Reason magazine acknowledges the free-rider problem
2. 84 comments on the free-rider problem.
3. a link to the Caltech press release... Caltech Scientists Develop Novel Use of Neurotechnology to Solve Classic Social Problem

The comments are useful in that they provide us an insight into how the typical libertarian addresses the free-rider problem. The comments are easy to summarize. Basically, most public goods do not fit the strict definition of a public good therefore they should be moved over to the private sector. 

How does a liberal interpret such comments? Like so...libertarians are willing to subject the public goods I value to the free-rider problem but they are unwilling to subject the public goods they value to the free-rider problem. Of course, the liberal cannot say the same thing about anarcho-capitalists. Anarcho-capitalists are willing to subject all public goods to the free-rider problem. 

It's perfectly fine to have a strict definition of a public good...but it's important to acknowledge that we live in a democracy and most of society has a broad definition of a public good. Promoting a narrow definition of public goods does absolutely nothing to address society's concerns that the public goods they value will be adversely affected by the free-rider problem.

While it's certainly easy to be critical of "mind reading" as a potential solution, at least it acknowledges the political reality of the situation...unlike most of the comments. Here's the most important part of the Caltech press release...

“But this result assumed that the group's leadership does not have direct information about people's valuations"

It's obvious that people will lie if undervaluing a public good will result in less of their money being taken. But if you take their money first...they would have absolutely no incentive to lie about which public goods their money should be used to support.  Pragmatarianism acknowledges that taxes are necessary to deal with free-rider problem but ensures that people do not financially support goods that they do not value.

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