Title: The Fundamental Problem With "Public Goods" - Foundation for Economic Education
Headings: National Defense and the Fundamental Problem With "Public Goods"
National Defense and the Fundamental Problem With "Public Goods"
Public Goods: Non-Excludability and Non-Rivalrous Use
The Problem of the “Free Rider”
No Way to Know a Free Rider’s Valuation of a Public Good
Central Planning Qualities of Government-Supplied Public Goods
The Politics and Economic Irrationality of National Defense
Costs of Public Goods Like National Defense
Richard M. Ebeling

Content: No Way to Know a Free Rider’s Valuation of a Public Good
The theory of the free rider assumes an ability to estimate or calculate the amount of undersupply there is of a particular public good. However, there is no accurate way of knowing by how much such a public good may be undersupplied since there is no way of knowing what value the free rider would have placed on this good if he had to actually pay for access and/or use of it. Of course, it would be possible to ask such free riding individuals what value they might attach to this good if they had to pay for it. But the problem is: talk is cheap. That is, a person could say anything in the abstract about by how much he values this good, and some hypothetical price he might be willing to pay for it if he had to gain access to it. How you imagine or publicly state you might spend a million dollars if you won it in a lottery and how you would end up actually spending that million dollars if you did win a lottery could be two very different things. There is no way of determining this because there is no market for the direct buying and selling of defense services or security against terrorist threats. An individual only demonstrates his actual valuation for a good when he is confronted with the need to make a choice and shows whether he really wants to buy this good and the price he would be willing to pay for access and use of a particular quantity. Contrary to how some economists think about such things, people do not formulate and walk around with a clear and formalized “preference map” of their wants and desires in their head that traces out all the possible exchange opportunities and situations that might confront them.