Does the free rider argument...

Lyle — Sat, 12 Feb 2011 23:44:36 GMT

...turn government, as a joint stock company, into a failed insurance policy?

According to Gerard Radnitsky in chapter 5 of "The Myth of National Defense":

In an economic perspective, the state is conceived as analogous to a joint stock company. Hence, the criterion that suggests itself for the distribution of voting rights is how much somebody has invested, how much risk he takes, how much he contributes to the national income. Such a distribution is “just” according to the suum cuique rule. What a citizen has at stake is his property, and in this respect there are great differences among the citizens.

According to Larry J. Sechrest in chapter 7 of "The Myth of National Defense":

For many years, lighthouses were cited right along with national defense as an allegedly clear-cut example of a public good that required the involvement of government. Then Ronald H. Coase15 took the time to investigate the actual history of lighthouse operation in that nation where maritime issues have probably played a greater role than in any other: Great Britain. He found that the building and operating of lighthouses by private firms was quite common. By 1820, for example, 34 of the 46 lighthouses then in operation had been built by private individuals. Owners of these structures gained their revenue from fees paid by shipowners, the beneficiaries of the service. Nevertheless, by 1842, Parliament had eliminated all private ownership of lighthouses. Was this because private lighthouses were badly run? No. This change was effected due to lobbying from the shipowners, who hoped that the fees they paid would be reduced or eliminated if the government ran the lighthouses.

According to Jeffrey Rogers Hummel in chapter 8 of "The Myth of National Defense":

The free-rider problem, long presented by economists as a normative justification for the State, is in reality a positive explanation for why the State first arose and persisted. All the earliest governments about which we have any knowledge had relatively small ruling classes dependent upon wealth transfers from a much larger subject population.

Is it fair to say that government exists so that those who benefitted most from its services are be able to pay lower prices than the prices which would exist if such services were provisioned privately? Is it fair to say that government exists to justify the subsidation of prices through taxation at the expense of those who benefit least from said services? And is it fair to say that the free rider argument is the cause of government's failure as an insurance policy to secure life, liberty, and property of those who pay its premiums?

Political Theory

Does the free rider argument...