Simple Reason why Not Even Street Lights are Public Goods
To be classified as a public good, two criteria must be satisfied.
First, the good must be non-rivalrous, meaning that consumption of the good by one person does not diminish its availability to anybody else. An apple is obviously rivalrous, because if one person eats an apple, another person can no longer eat that same apple.
Second, the good must be non-excludable, meaning that it is impossible to exclude someone from consumption of that good unless they have paid for it. This is exemplified by the free rider problem.
Let’s consider street lighting, a classic public good… or so we’re told.
IS STREET LIGHTING A PUBLIC GOOD?
On the surface, it appears as though consumption of street lighting by one person does not diminish its availability to another. Now, an argument could be made that were sufficient people to simultaneously stand under a street light, it would become possible to reduce consumption of the good to others.
However, I do not need to make such an argument, for street lighting is rivalrous on a far more elementary level.
The materials that go into the construction of a street light are scarce. The energy that is expended by keeping the light on is also scarce. Thus, it is impossible to have street lights everywhere. Inevitably, certain roads will be prioritized over others.
Thus, by the decision of where to build a street light in the first place, some people are deprived of their ability to consume the lighting at the expense of others. Put another way, the consumption of street lighting on some roads necessarily precludes consumption of street lighting on other roads.
There is therefore a clear rivalry between where the street light is placed in the first place, and hence where the subsequent light will shine.
The non-rivalrous provision of all public goods, with the possible exception of air (which until it is scarce is not even an economic good in the first place), fails because materials are scarce.
We don’t even have to talk about the various ways in which street lighting and other allegedly non-excludable goods could be provided. (That is another post in and of itself, and will include discussions of threshold pledge systems.)
Remember that the entire plethora of public goods arguments have been nothing more than alleged exceptions to the economic laws that otherwise apply to all other goods – laws that say the goods are at their lowest price, highest quality, and most efficient production when they are provided within a competitive framework.
The public goods arguments have sought to create exceptions, as a justification for the necessity of a coercive government. As I proceed to destroy the rest of the public goods arguments in further posts, you will see that their nature and content is entirely political, and lacks in any economic merit.