Some more on those ‘ecological’ public goods

With the departure of Andrew Leigh from the blogosphere and from the AFR, the AFR have asked me to step into his outsize shoes.  So I’ve got a fortnightly column for six months.  That suits me very well, as once a week can be a bit taxing after a while.  And I think all columnists should be put out to pasture regularly, as one only has so many decent ideas.

Of course there’s nothing wrong with a bit of repetition so people can see the way a particular perspective plays out in different contexts, but time on the interchange bench recharging one’s batteries is a good thing.  It’s a pity that ‘journalism’ is regarded as a profession in itself.  Actually I’ll rephrase that – journalism is a fine and worthy profession, but it’s a pity that so many columnists are (just) opinionated journalists – sometimes with a particular ‘beat’.

IMHO there should be more columnists – with Paul Krugman being the obvious exemplar – who come with views from a discipline and from their own reading and interests who have mastered the art of journalism to a sufficient extent to get their views expressed lucidly, and in an interesting way – as Andrew Leigh did until he became a public servant for a while.

Be that as it may, below the fold is my first column – or my third if you count the last two columns I’ve done for the Fin before this arrangement was formalised. Readers of this blog will find the theme familiar.

What’s in the public good

You know how generals always fight the last war? Trouble is, knowing that doesnt tell us how to fight this war. The world is always playing those tricks on us.

Weve had a generation of economic reform based on the idea that wed taken collectivism too far. Indeed we had.

The new broom thats gone through the Australian settlement has spruced the place up. But the increasing importance of information and expertise, and most particularly the rise of the internet gives rise to a panoply of new collective or public goods.

ABC broadcasts have always been public goods for Australians tuning in at the right time. But now ABC podcasts are public goods for the whole world. So also is open source software, like Linux and Firefox, which is maintained by unpaid volunteers whether theyre individuals or corporations coding software patches to solve their own computing problems. Do they donate their code back to the project from the goodness of their hearts? Perhaps, but they also want their code built into the next version of the software so they dont have to rewrite it back in. And lets not forget Wikipedia which is driven by a million altruistic know-it-alls and obsessive compulsives who cant resist the urge to tell people what they know or to correct others’ mistakes.

Given that these are public goods, shouldnt the government help fund them?

Thats what the economic textbook says, but its not that simple. Certainly there are some lessons for governments here, like those we learned from when we stopped the Australian Bureau of Statistics charging for its data. Its now freely available and more widely and intensively used, so were better informed. That makes up for the $5 million of revenue foregone.

Likewise, if the ABC needed a few extra pennies to meet the bandwidth costs of keeping all its podcasts up on its site as a permanent archive, they should get it (though peer to peer distribution could virtually eliminate all its hosting costs for podcasts!).

But thats not a very rich menu of actions for governments on these new public goods.

Thats because many of them dont require central or collective funding like those public goods in economics textbooks like lighthouses and defence forces. Theyre an organic product of human interaction.

These kinds of public goods have always been with us. They include things as simple as the side of a path or road we walk or drive on and the currency unit that evolves. And they extend to complex standards like the mores that govern social and economic interaction and indeed language itself.

Modern economists havent given much thought to these kinds of public goods. But intriguingly enough, the founder of modern economics, Adam Smith put them at the centre of his thought. Smiths first book, The Theory of Moral Sentiments, which heavily outsold The Wealth of Nations in his lifetime focused on the emergence of ethical systems and social expectations. Smith was also proud of a treatise he wrote on the evolution of language.

Three quarters of a century before Darwin, he was preoccupied with the paradox that social structures all around him were wrought by human action, but not by human design.

Governments have got involved in enforcing aspects of many of these standards. They now mandate the currency and the road rules and regulate to ensure minimum standards of ethical conduct in markets. Even so, these are public standards rather than public goods to be financed.

And many of those public goods that are up there burgeoning on the net are similar. Blogs, wikis, open source software, and citizen journalism of various kinds run on the enthusiasm of their contributors.

The lesson from all this? Well were learning as we go. Governments can lend a hand here and there. Id like to see more support for open standards, better access to and perhaps funding of publicly generated information and content, and greater government purchasing preferences to open source software. And the internet subtly changes the demarcation between what is most competitively provided by the private and what by the public sector in a few areas. But thats a topic for another column.

In the meantime, beware of simple ideological recipes from the last war. There are not many magic bullets around.