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Because the economics textbooks point out instances when market outcomes seem to produce outcomes that are less than optimal, people with a preference for government intervention use these as justifications for any and all government actions in the economy.

I would almost acquiesce to these sorts of desires if those proponents consistently applied this logic. Take the usual externality agrument. In cases when individual actions produce benefits for people beyond themselves, the textbook theory says that individuals tend to under-provide those services. For example, when I plant sunflowers in my garden, not only do I enjoy them, but so too do my neighbors and other passers-by. Since I cannot reasonably collect payment from everyone who enjoys the view, I cannot capture all of the benefits from planting sunflowers, and therefore from “society’s” standpoint, I tend to produce too few sunflowers.

In common parlance this is the free-rider problem. The textbook response to the free-rider problem is either for the government to subsidize the production of goods for which there are positive externalitities or to even produce those goods itself (e.g. national defense). I’ll leave to a future discussion whether in fact individuals cannot find private ways to produce these goods (e.g. lighthouses) or whether governments can in fact get the right amount produced anyway.

What I want to focus on is how arbitrary this rule seems to be applied. It seems to be applied only when the public good in question is the result of an activity that government activists favor. To wit, think of the benefits and costs of concealed carrying of weapons. When I choose to carry a concealed weapon, I am not only protecting myself, but I am also protecting my fellow citizens (not just directly). The protection from my fellow citizens comes from the fact that potential criminals do not know WHO is carrying a weapon, and that by me carrying a weapon, it increases the probability that a criminal will attack someone who is armed. As a result, we would expect crime rates to fall. Since there are benefits that accrue to the public at large, then according to the above theory, either people should be subsidized to carry concealed weapons, or the government should provide every citizen with a weapon.

So, why are there not subsidies for gun owners? After all, crime is one of the most important issues facing Americans. There are far less important activities which receive government subsidies on far shakier grounds? If proponents of government intervention wish to justify it on economic grounds (thinking that this legitimizes such intervention) then on what grounds can they selectively apply this logic – particularly from a welfare standpoint far greater gains can be made by subsidizing gun ownership than by subsidizing public transportation for example. And no, this gun ownership example is not to be trumped by saying that guns also produce negative externalities, the point is more general. If you object to guns as the good in question, pick something else, like religious participation or hiking or any number of things that produce positive spillovers to society at large.

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