Tuesday, February 22, 2005


Public benefits are worth more to some people

The value of government services is not the same for all people.
Let's take a simple example. Suppose you own a property which is
worth $1,000,000 and someone else in a nearby area owns one which
is only worth $10,000. When you apply for insurance we expect that
your payments should be about ten times as much since the potential
loss is proportionatly that much greater.

Now suppose we create a civil guard service to safegard both
properties. If both properties were destroyed by acts of
civil disturbance, the loss on the more expensive property would be
ten times as much as on the other. Thus, the value of the services provided
by the civil guard is also ten times more valuable for the more
expensive property. However, since the costs of protection
are not assessed directly assessed upon the value of the property the
more valuable property owner gets a greater benefit.

Another example, assume a high priced lawyer who earns $500 per hour
and his secretary who earns $20 per hour both drive
from the same general suburb. A road improvement is planned that will cut
travel time by one hour per day for each of them. They both choose to
use the saved time to increase their income by working the extra hour.
The road improvement is worth 25 times as much to the lawyer as the
secretary, but the gas tax collected to pay for it is the same for each.

So, examine the Libertarian arguments about being forced to pay for
specific targeted programs critically. Seldom is any consideration taken
of the implicit benefits the better off receive.

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