When Should the Government Provide Public Good?

There is a lot of debate around whether or not the government should provide public goods. I believe a public good is one economic area where the government should get involved in private decisions because it represents a market failure. A pure public good is non-rivalrous, where the threat of another person utilizing it is zero, and non-excludable, where one cannot prevent another from consuming the good. However, this definition has some interesting qualifications. First, a good does not have to be both non-rivalrous and non-excludable to be classified as a public good. Some goods only meet one part of the definition and they are classified as impure public goods. Second, the public sector or the private sector can provide the public good. Finally, a public good is not valued the same by all member of society, even though everyone may utilize the same amount of the good. This is the most important qualification because it invokes an interesting question: when should the government get involved in providing a public good when it is not valued the same by everyone?

I think this question is interesting because it is extremely challenging to determine when exactly the government should begin utilizing money to provide a public good that may not be equally valued by all members of society. Since the Fourth of July is around a corner, lets examine the issue of fireworks provided by governments. In my local community, there is a lot of debate about whether the city government should pay for fireworks each year, especially since the city is struggling to maintain a balanced budget. Many people do not value the fireworks and believe they are a waste of city resources. However, others really enjoy going to the park and watching them with their family and community. They believe it is a great way to celebrate the holiday. I should also mention that you are not allowed to setoff private fireworks in my community; I think that is pretty typical of most cities though.

In the end, it is not a clear-cut decision on whether or not the government should use taxpayer money to setoff fireworks because not everyone is going to be happy. This is why it is so important for public administrators to truly understand the needs of the people and know how to perform cost-benefit analysis, especially when deciding whether or not to provide a public good.

What do you think?

When should the government provide a public good?