Public goods for rich and poor

July 19th, 2008

I’ve just put up a page on the Crossways community centre issue. The page contains a paper I wrote after hearing that "people like [me] are always against community assets", from a person urging me to avoid supporting Mt Victoria’s push to acquire its community centre from the Presbyterian Church.

Wadestown too seeks a better centre, and has been told that it is too close to the facilities of the City. I suspect that Wadestown rates too are subsidising activities that do little for Wadestown’s people.

I strongly support rates money being spent on what economists call public goods. I acknowledge the doubt about what are genuinely public goods (in my view sponsoring the stadium was sound, while sponsoring the promoters of events is likely not to be) but community centres will usually qualify.

I was told that Council officers had said that Mt Victoria was so close to the cafe district that it did not need a meeting place, and that poorer suburbs should have first go at any money for such purposes.

The informant with the weird assumption that economic rationalists always oppose public facilities knew nothing of Cathy and my long history in our local community activities. We are still the deliverers of the Mt Victoria newsletter for our local streets since it began, perhaps 25 years ago.

So I set out to record the case for public goods like community centres, in rich communities and poor. Indeed there is an argument that prosperous communities might need them more than poorer ones, precisely because of the risk that amidst prosperity, the wealthy and their neighbours might have fewer places where they meet on equal terms. I remember from our days of regular eating at Crossways the welcome and the usefulness it gave to single people who might otherwise have found their loneliness emphasized if they’d turned up for companionship to commercial cafes or pubs.

After the paper went to the Councillors I thought might be influenced several replied, pointing out other reasons for not supporting the Crossways project. They fear that it could become a white elephant, that it will be expensive to maintain, and that the young families that found it such a boon in the past were now less likely to participate in community initiatives.

Perhaps. I hope they’ll decide to take that risk. The selfless people who’ve been promoting the Crossways purchase look a safe bet to me.

Filed under Wellington Central

Comments

Stephen,

You’re invoking the economist’s definition of the term “public goods” to justify government spending on things that unambiguously do not meet that definition. Community centres and stadiums are excludable: you can lock the doors, you can charge entry fees. They consequently cannot be public goods as economist define the term. This matters because economists’ theories about why government spending on public goods can be efficiency-augmenting hinges critically on their meeting that definition.

It may well be nice to provide community centres, but they’re not public goods.

Eric
You’re correct of course in the classical economists’ definition. But there are goods that communities want to subsidise even though the primary benefit at least seems mostly captured by those who use them. There have been and will be individuals and families who are strengthened and supported by Crossways services they probably would not choose to spend their limited money on if the price was a full recovery of the cost of providing them.

Those who pay more for such goods may support the subsidies because they want that form of social inclusion in their neighbourhood.

I understand that form of good can be termed a ‘club good’. They are often supported by majority community votes (think stadiums) even when they do not qualify under the economists’ definition of public good.

I’ve no problem with their being called “merit goods” — goods that, for some reason, folks would like there to be more of regardless of economic efficiency. And I’d even support government provision of some merit goods. I just get irritated when things that are merit goods get called public goods as it implies an efficiency rationale for their provision when such rationale doesn’t in fact exist.