Friday, July 5, 2013

Fireworks and the Free Rider Problem: A Libertarian Thought for July 4th

As I write this I am with my wife at my in-laws beach house in Newport Beach watching a fabulous collection fireworks being sent off in honor of July 4th. It bears consideration that fireworks represents an example of the classic free rider problem in economics. Even more so than schools and a military, fireworks are the sort of positive externality that is impossible to prevent other people from taking advantage of. People will simply free ride off the generosity of those who buy their own firecrackers and watch the fireworks show for free without paying. One cannot exactly light firecrackers in one's basement. Therefore one has no choice but to light them out in the open where every selfish person in the neighborhood too cheap to buy their own, such as me, can watch them. Now if every person behaved logically and was as selfish and cheap as I am, no one would buy firecrackers. Everyone would just try to watch someone else's fireworks. We would be left with a July 4th without any patriotic explosions.

For this reason it is obvious that, just as the government provides education and protection, which no one would ever pay for on their own, the government must provide fireworks for the public and tax the public to pay for them. Wait a second! The fireworks shows I am watching are all privately produced. In fact it is illegal to light firecrackers in Newport Beach. So not only are anonymous strangers providing me with free entertainment, they are also risking punishment at the hands of the government. If people are willing to provide free services, despite the free rider problem, for something as relatively silly as fireworks than might people agree to provide other free services when they believe that the future of civilization is at stake?  

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