I just stepped in from the pond; forgive me if this rambles.

A common epithet hurled as proof of the necessity of government is the free rider problem of public goods. In brief the free rider problem suggests that certain public goods, national defense for example, inherently benefit everyone while incentivizing each not to fund such a project personally as one will reap the benefits if enough of one’s neighbors elect to fund it. So it is claimed that an insufficient number will contribute, tending toward no public endeavor even though hypothetical, collective willingness-to-pay would suggest the project beneficial. The oft proposed solution is forced collectivism through government, triumphing over market failure.

Must this be so? This morning I set out for some early morning ice skating and, surmising I may be the first one on the ice for the day, brought with me a shovel. Indeed, when I arrived, there was a layer of snow on the ice that needed clearing. This was certainly a labor cost to me, but it allowed me to enjoy the rink enough moreso that I believed the benefit to exceed this. I was right and had a very fun time.

But what about the other skaters that will come through the day, surely they are free-riding off of me and owe me a transfer payment? Well, I do create positive externalities by clearing the ice as others will be saved the trouble and will be able to enjoy the ice as much (if not more) than I did, but this fact does not diminish my enjoyment. My benefit from clean ice simply outweighed the cost, so I cleaned it. One could imagine a system of transfer payments from future users who benefit to me to offset some of these costs–a puzzle often laid at government’s feet–but either scenario is Pareto efficient.

What I mean by that is: In the case of reality, I bare the costs and the initial benefits, which we have already established trump costs, and others then gain benefit of a certain level. Under a world with transfer payments, I would bare the same costs and the same initial benefits plus some amount of goods or services so I would generally be better off; however, these future users now gain the same benefit but their costs have risen from zero. Thus to make one person better off, others are harmed, or vice-versa, making the decision factor now a murky moral one and beyond scope.

The takeaway is that the presence of free-riders or positive externalities do not automatically discount one from performing a particular undertaking. The perfect ending to my story is that sometime after I had the ice cleared, the government hired-hand arrived in a bobcat to clean the surface. I told him it was done. As is always the case with publicly provided goods, we can never judge the true value, but it almost certainly seems that this gentleman was unneeded.