It seems almost obvious to me that the whole argument that lighthouses are public goods and thus will not be created on the market is B.S. This is obvious when one takes into account the actual function of a lighthouse and how its function can be achieved in multiple ways, including lights mounted on individual boats and ships and sonar. So, am I right in thinking that the whole lighthouse argument is really a facade for making any argument for state intervention in the market?
Well, the supposed examples of public goods always coincidentally happen to be things that control public places. (Roads, lakes...) The one exception that I've seen was the meteor scenario, which not coincidentally I refuted as being an example of free rider problem.
There is an article in the Quarterly Journal of Austrian Economics by Larry Sechrest, "Public Goods And Private Solutions In Maritime History", which covered this exact topic: https://mises.org/journals/qjae/pdf/qjae7_2_1.pdf
Thanks both of you. So, what happened, like with so many other economic fallacies, was that a bad theory came out of bad history.
Are you aware of Coase's paper about this? For some information on the paper and the subsequent debate: http://en.wikipedia.org/wiki/The_Lighthouse_in_Economics
Yes, I haven't read it though. The paper that tex linked to cites it. I will read that as well.
What amuses me is that, while reading this article, it occurs to me that the public goods argument is that private entities won't be able to extract payment for their services, while at the same time, Coase describes how the government does exactlty that by charging fees upon arrival at ports.
Society Without a State - MNR
"A final caveat: the anarchist is always at a disadvantage in attempting to forecast the shape of the future anarchist society. For it is impossible for observers to predict voluntary social arrangements, including the provision of goods and services, on the free market. Suppose, for example, that this were the year 1874 and that someone predicted that eventually there would be a radio-manufacturing industry. To be able to make such a forecast successfully, does he have to be challenged to state immediately how many radio manufacturers there would be a century hence, how big they would be, where they would be located, what technology and marketing techniques they would use, and so on? Obviously, such a challenge would make no sense, and in a profound sense the same is true of those who demand a precise portrayal of the pattern of protection activities on the market. Anarchism advocates the dissolution of the state into social and market arrangements, and these arrangements are far more flexible and less predictable than political institutions. The most that we can do, then, is to offer broad guidelines and perspectives on the shape of a projected anarchist society.
One important point to make here is that the advance of modern technology makes anarchistic arrangements increasingly feasible. Take, for example, the case of lighthouses, where it is often charged that it is unfeasible for private lighthouse operators to row out to each ship to charge it for use of the light. Apart from the fact that this argument ignores the successful existence of private lighthouses in earlier days, as in England in the eighteenth century, another vital consideration is that modern electronic technology makes charging each ship for the light far more feasible. Thus, the ship would have to have paid for an electronically controlled beam which could then be automatically turned on for those ships which had paid for the service."
What I love about this passage is how it's so right, but "wrong'. It goes to make the point itself, over and over again. You can't predict what the future will look like. Even if you're Rothbard & in 1974.
GPS etc. has made the issue of lighthouses completely obselete & redundant.
Exactly Conza and I found this article which refutes the public goods theorists outright simply by showing that simply because a good is desirable does not lead necessarily to the conclusion that it should be built. The article says more than that though.
https://mises.org/journals/jls/9_1/9_1_2.pdf
This paper is also helping me to think more clearly about the Meiji Restoration in Japan.