So I hope everyone here has had introductory econ under their belts and knows that an externality doesn't mean that a market won't provide any of a good - it only means that given a particular definition of "optimal" a market won't provide the "optimal" amount of a good.
Why, then, do we get arguments like this from a professor of economics:
"If government failed to build highways to connect, say, Atlanta to
Pittsburgh, private firms almost certainly would. (It’s easy to collect
tolls from drivers who use highways.) And likewise for nearly any other
pair of cities in America. So in what way is any actual,
government-built highway necessary for any private entrepreneur’s
economic success? None — if (as is likely) private enterprise would have
done what government instead did by crowding out private efforts."
Private provision of infrastructure says nothing about the value of public provision, for the reasons I stated above.
But what in the world are we supposed to make of this?
Can I look at a private road (or a private just-about-anything-else) and say "if private firms failed to build highways to connect, say, Atlanta to Pittsburgh, the government almost certainly would. And likewise for nearly any other pair of cities in America. So in what way is any actual, firm-built highway necessary for any private entrepreneur's economic success?"
What an unhelpful way of talking about and thinking about infrastructure.
The Lonely Unicorn
1 hour ago