I spend a lot of time criticising neoliberal policy here, and rightly so. But I also accept that the real right wing libertarian neoliberals argue that we have nothing like a neoliberal world right now and that we really live in a pretty left of centre social democratic environment. I suppose it's to some degree all a matter of perspective: if you're on the economic far right even the Tories seem like dangerous left wingers because they accept that government has a role beyond creating and enforcing private property rights which is all the hard nosed libertarians think it should do, bar waging war.
For some reason I was musing on this earlier this morning when well before dawn I was out walking with my dogs and a simple question occurred to me, which was who pays for street lights in the right wing libertarian model of society?
It's not such a daft question. After all, street lights are a near perfect example of a property which will always be subject to free riding if paid for privately. Suppose for a moment a private supply model was created. So suppose, when I left home this morning I had to put 20p in a meter on a street lamp for a limited period of lighting, and repeat the process every time I turned a corner. Even if I'd done that there would have been no way I could have stopped the couple of other early risers I met this morning enjoying the benefit of the lighting I had paid for. Nor the occasional car that went by doing so either, come to that. It would be inevitable that in this case positive externalities would arise. But in that case resentment would (in neoliberal eyes) likely follow and as a result each and every person might opt for darkness rather than share the light. And that would mean that the street lighting might then not 'pay' and so would be removed, and we'd all be worse off.
Who knows where this could lead, or how grossly inefficient such a model would be in terms of massive admin cost and failure to supply an effective service. It's hardly surprising is it that we came up wiuth a model of local government to do such things? And yet there is no doubt that the model of local government deeply offends neoliberal thinkers. This collectivism is an affront to market perfection.
Now the point may seem facile but I really don't think it is. The argument against government involvement in the economy being put forward almost constantly now has little more logic to it than the argument I have just presented about private street lighting. Of course we can have private sector involvement in health care, for example, but the moment we do disputes about who does and does not benefit from a payment, who is entitled to what and where boundaries are drawn become prevalent. Indeed, if the Health and Social Care Bill becomes law expect a staggering proportion (in the US up to 50%) of all health care spending to be absorbed in boundary disputes about who has contractual obligation to do what and a right to be paid, or not, as a result; all with the aim of stopping free-riding. But wouldn't it be so much better that we pay communally and require cooperation? As we do with street lights? Isn't it glaringly obvious that the model of collective supply on a coordinated basis is vastly more efficient than any private alternative?
And in that case why are the Tories destroying the NHS?
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I guess the answer is that the owner of the land, who one assumes you’d have to pay should you want to walk on or across it, may choose to light it (in which case you should expect to pay more) or leave it unlit (in which case the money you save on your cheaper, unlit dog walk or commute could be spent on a powerful torch).
The idea that there could be any ‘public’ land suitable for ‘public’ street lighting is nonsense under libertarian economics. Unless you’re standing on land you own, your every moment (waking or sleeping, wherever you choose to go) would be subject to rent (and you’d better pay it – fall into rent arrears and there would be no bankruptcy protection). That’s the real nightmare of libertarianism – take the example of a 10 year old child with (for whatever reason) no parental economic protection, of no net worth and owning no land: that child would be liable to imprisonment simply for standing on the (privately owned) ground, unable to pay the owner for the privilege. Libertarianism is nothing more than a mechanism by which the landed guarantee the indebtedness of the unlanded purely by virtue of them existing.
On a related subject, have you ever written anything on Henry George or Land Value Tax? I’d be interested in reading your take.
Start here …in haste
http://www.taxresearch.org.uk/Blog/2011/10/24/a-manifesto-for-tax-justice-3/comment-page-1/#comment-605418
Another example I’ve often used is unadopted roads. Many years ago I was unfortunate/stupid enough to buy a property on an estate with unadopted roads. They’d been tarmaced when the estate was built but had subsequently not been maintained and were in an increasingly bad state. The arguments between residents about what should be done had been going on for years because the costs per household were very high, certainly beyond what I could afford at the time.
Interestingly within five minutes walk of my current house there are three examples of unadopted roads. The situation is the same for all of them. The houses were built at various points between the 1900s and 1960s, And yet the roads remain gravel ‘tracks’ where as far as I can see householders occasionally fill in pot holes when they get so bad it’s likely they might cause damage to their cars.
Going by that description, most of the roads around here are not adopted !
I remember reading JK Galbraith. He forecast the outcome would be private affluence and public squalor. I didn’t believe him at the time.
I read him when still at school
I admit I did believe him
Then and now
Oh for more economists of his ilk
Street lighting in Naples when I lived there (1988 – 94) followed a similar trajectory, especially in the suburbs. The occasional massively over-lit villa/mansion (often highly defensible, which might give some clue as to the source of the funds that had built it) would glow out in the darkness, with often a properly repaired pavement just outside its walls – and nowhere else in the street. Otherwise lighting was inadequate or non-existent, and the streets full of hazards – potholes, cracked drain covers, etc.
I’ve read that the numerous faintly illuminated street shrines in the city were set up by a pioneering monk in the 19th century as a way of providing street lighting from religious donations. Previous attempts at street lighting had failed as ‘secular lights’ were constantly vandalised by street criminals who preferred the cover of darkness. The shrines remained unharmed, and also people did not use the corners where they were located as al fresco toilets, which was fairly common elsewhere in the city… you needed to see where you were stepping at all times.
So there you go – the perfect Big Society libertarian paradigm: crime (high level and street level), superstition, ostentatious consumption and a good measure of crap over everything public.
Sarah,
That sounds most unsatisfactory. But given that public spending in Italy was well over half of GDP around that time [1], your observations do not seem to be a great example of “the perfect Big Society libertarian paradigm”. It could even be argued that your story is an example of the quality of services under a state-dominated economy. My Polish friends certainly would agree with that.
[1] http://ec.europa.eu/economy_finance/publications/publication11902_en.pdf
You ignore tax evasion
Richard is correct of course. So let’s adjust for evasion: a summary of the research on Italian tax evasion seems to conclude that around 20% of the economy is ‘dark’ [1]. That implies Italian public exp/GDP falls to “just” 45%.
We can torture this data until it bleeds, but anyone will forever struggle to decribe Italy as “the perfect Big Society libertarian paradigm”, and in my own view would be better described as a mixed economy suffering from weak rule of law and endemic producer caputure of the State apparatus.
I remain astonished that the British Left has forgotten that the State is not, will not be, and cannot be, a friend of the people.
[1] http://fiorio.economia.unimi.it/res/tax_ev.pdf
Actually it’s about 27%. As a proportion of GDP spending is well within normal ranges
Indeed, the range required to keep society going
And the State is not just the friend of the people – it is their positive means of liberation from the oppression of neoliberalism – as I argue in The Courageous State
“‘The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.” The Communist Manifesto
Oh, and a position continued by one Mr R Milliband at:
1) The State in Capitalist Society: ‘Reply to Nicos Poulantzas’,
2) New Left Review 59, January-February 1970; ‘Analysing the Bourgeois State’,
3) New Left Review 82, November-December 1972; ‘Debates on the Slate’, New Left Review 138, March-April 1983.
etc
PS your arithmetic is flat wrong. To adjust, you must divide the 55% of notional state spending by 120 (to adjust for the dark economy) which gives you c.45%, not 27%.
To suggest social democracy is akin to communism is simply fatuous
27% is the size of the Itlin – shadow economy – something else you got wrong
Apologies if you think I was suggesting that social democracy was akin to communism. I wasn’t. Rather my point was as I expressed it already; the British Left had long understood the point that the State is not an entity distinct from Capitalism, but is an organ of it. A core function then of the State is to preserve Capitalism (see bank bailout), and with such an objective is not, will not and cannot be a friend of the people.
A perennial source of dissapointment that the British left has forgotten this basic point.