For any particular public policy problem, a balancing test, called the Bridge, will not only help both sides understand the other side’s policy arguments, but also will turn circular political arguments into linear political arguments.
Individuals weigh six elements in a balancing test. The result tells that individual whether the political left or the political right solution will grow more resources for filling needs. The political left tends to see greater resources in building or protecting public goods. The political right tends to see public good creation and protection only taking tax money that citizens would invest to grow their own and the nation’s resources.
|Additional resources from creating or protecting a public good||Additional resources the untaxed income grows through the invisible hand|
|– Costs of administering the public good||– Costs of additional police and military|
|– Waste||– Losses from the tragedy of the individual|
|Total resource increase from the political left solution||Total resource increase from the political right solution|
I. The political left expects public goods to produce more resources.
A public good can generate more resources than each citizen contributes to develop it. Citizens can capture those additional resources and use them to advance their pursuits of happiness.
Initially, citizens banded together to protect themselves from other cities to prevent losing resources. Later, citizens found they could use governments to grow wealth through courts, fire departments, schools, and sewer systems. Those public goods grew the size of the pie by generating more resources for the nation than each citizen contributed.
But citizens would not contribute to public goods without something motivating them. Each citizen would prefer the other citizens pay for them. Governments encouraged their fellow citizens to contribute to public goods.
A. Public goods waste away if no one regulates or privatizes them.
Aristotle observed the tragedy of the commons: “what is held in common by the largest number of people receives the least care.” Each individual takes resources from a commons while expecting someone else to maintain it.
For the classic example, imagine a field held in common. Everyone wants to graze cows there. As a result, citizens graze more cows than the field can support and spoil it. Then, no cows can graze that muddy field, and the nation loses the resources the field could have produced.
Governments can respond to tragedies of the commons in two ways. They can regulate the commons or they can privatize it. Both solutions have problems.
Regulating the commons costs resources that decreases the benefits from public goods. And when the government gives a property right over a public good, the private owner can just sell it.
Every public good follows these dynamics. Sometimes, as with rivers and clean air, governments charge nothing and risks people polluting them. Other times, as with sewers, governments privatize public goods by charging user fees to privatize it. Implementing these regulations costs resources that detract from the public good benefits.
B. People inevitably waste public goods.
Even when governments regulate public goods, some citizens will waste some of the benefits. People will cheat on their social security disability insurance, and doctors will defraud Medicare.
Governments can add red tape and stop some cheaters, but at some point, more red tape does not save money. That inevitable waste undermines the benefits of creating or protecting the public good in the first place.
If a public good ultimately produces more resources, after costs of regulation and losses from waste, the government would grow resources by investing in it.
II. The political right expects the invisible hand to produce more resources.
The invisible hand drives political right solutions. Adam Smith described the invisible hand as a force multiplier for creating more resources in a nation when an individual seeks to grow more personal resources.
Smith observed that he never knew “much good done by those who affected to trade for the public good.” But argued that, when an individual pursues his own interest, he “frequently promotes that of the society more effectually than when he really intends to promote it.”
Among other ways, the invisible hand grows a nation’s resources when individuals start businesses. Producing goods and services cheaper than buyers could have produced them increases the volume of resources for filling individuals’ needs.
Whenever governments decide not to tax for public goods, the invisible hand grows the nation’s economy by leaving individuals to grow their own wealth.
A. Leaving people more money costs more for police and military.
As individuals seek to grow their own wealth via the invisible hand, they cost the nation more resources, as well. As inequality increases, wealthy people need more police and military to protect their additional property. Those additional costs decrease the resources the invisible hand produces.
B. The tragedy of the individual wastes resources.
Finally, leaving individuals more money does not guarantee they will use those resources to grow more resources for themselves. When individuals simply consume, the invisible hand does not grow the nation’s resources.
When individuals have enough resources, a promise of additional resources no longer motivates them. Then, they do not invest, but consume resources inefficiently at satisfying their needs. They waste those resources in a tragedy of the individual.
III. The Bridge Balancing Test Builds a Structure for Analyzing Public Policy Problems.
By weighing the six elements in the Bridge for a particular public policy problem, each citizen decides whether the political left or the political right solution grows resources. Both sides predict higher future values, although no one can know those future values for certain. Political arguments revolve around these six elements and their future values.
The political right often discounts the benefits of public goods because it believes the market will create those public goods. The political left often discounts the benefits from the invisible hand because it sees public goods growing wealth more effectively. The Bridge provides a structure for analyzing and discussing public policy beyond party.