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Old 06-06-2007, 05:01 PM
goodsamaritan goodsamaritan is offline
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Join Date: Sep 2006
Posts: 1,465
Default It\'s a shame about my street

I live on street with 100 houses that are worth 1 million dollars each. Unfortunately, scientists have just discovered that the river near my street, previously though to have a 0% chance of flooding, has a 100% chance of flooding and destroying all the houses on the street in the next year unless a damn is built on the river. The dam will cost 75 million dollars to build, but no one seems to want to pay for it. Wouldn't we all be better off if we each paid $750,000 to build the dam? It's a damn shame that I don't live on Borodog's street:

http://forumserver.twoplustwo.com/sh...age=0&vc=1

where free riders and positive externalities don't exist. Why isn't my street like Borodog's street?


What I'm getting at here is that Borodog's post is an intellectually lazy or dishonest attempt to write off the economics of free riders and positive externalities. Borodog's neighbor may not understand economics, but she does not need to. All she needs to know is that she values a clean street enough for her to clean it herself. No economist would say that Borodog's neighbor is dumb or irrational for cleaning the street.

The issue of free riders comes into play when a group of people as a whole value a good or service enough that it would be efficient for them to purchase that good or service collectively, but they cannot come to agreement on doing so. Such cases occur when the cost of the good or service is less than the total value of the service to the potential buyers, but greater than what any one buyer or group of buyers is able to agree ob paying, such as in my dam example. In Borodog's example, the service is still performed because his neighbor values a clean street more than it costs her to clean it. However, that will certainly not always be the case.

Don't mistake my post as necessarily saying that someone should go around with a gun forcing everyone to pay $750,000 to build the dam. I'm merely pointing out the laziness and deceptiveness of Borodog's earlier post.

I'm picking on Borodog, but this is a larger problem in this forum as well as in any setting for debate. People often get lazy and make and use dumb examples and anecdotes to support their arguments. There are many good arguments that could be made for why government should not intervene to solve free rider problems, but to suggest, as Borodog's post does, that free rider problems don't exist is just flat out wrong.
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