Last week, I attended a Liberty Fund conference on “Liberty & Diversity,” where I met historian David Beito and conspirator David Bernstein, among many others. Interestingly, I was the only economist in the bunch, which may have given me a peculiar perspective (it usually does). These are some of my thoughts, which I expressed at the conference, on the question of whether the interests of cultural groups might justify some kind of state involvement in meeting them. (Just to be clear, I don’t claim these thoughts are terribly original; this has been Tyler Cowen’s bailiwick for quite a long time.)
Many forms of cultural involvement have the form of an investment, since they involve some personal expenditure of time, money, or effort in return for the benefits of group membership. Examples include becoming fluent in a language that’s not in everyday use, learning how to perform a certain dance or make a particular food, or relocating in order to live in closer proximity to other members of the group.
The simple laissez-faire argument for keeping the state uninvolved is that individuals can decide for themselves whether the benefits of cultural involvement are great enough to justify the costs. If a culture withers, it’s because individuals aren’t gaining enough from the culture to make it worth their while – in which case the culture should wither, just as unwanted consumer products get discontinued.
The problem with that argument is that there may be some cultural products that involve positive externalities, perhaps even rising to the level of public goods (in the economic sense of that term). Suppose my investment in a cultural product – say, relocating to a certain neighborhood – produces benefits to everyone in the group, including myself. But if my private benefit from relocating is smaller than my private cost, I will choose not to contribute, even though the total benefits to everyone involved exceed my private cost. I might choose to free-ride by visiting the neighborhood from time to time, enjoying its ethnic ambience, and then heading back home. If too many people follow their private incentives in this way, the community never develops (or doesn’t develop as much as it could), and we are all worse off.
The standard ECON 101 remedy for a public good or positive externality problem is to propose some form of state support, such as subsidies for cultural activities (perhaps in the form of a rent discount). But taking ECON 102 reveals some important objections to the standard remedy:
First, there is the problem of distinguishing between free riders and honest hold-outs. If I refuse to contribute to the community, maybe it’s because I’m selfishly collecting the benefits while dodging the costs – or maybe I don’t actually value the community that much (or at all). Many people seek to escape their cultural backgrounds, partially or completely, because they actually prefer aspects of other cultures. In some cases, the alleged public good might even be regarded as a “public bad” by subsets of the group (e.g., women in a male-dominated culture). Also, the proposed policy might burden people who were never members of the culture in the first place; this would certainly be true of a subsidy financed out of general government revenues.
Second, it’s not true (as some textbooks claim) that public goods never get provided privately. People can be incredibly clever in finding ways to provide public goods without coercion. Probably the best known example is the financing of broadcast TV through advertising. Private housing developments, which create a means of excluding non-contributors, transform public goods into “club goods.” The open-source software movement (which, admittedly, I know little about) is arguably yet another example of private provision of public goods. The absence of state intervention need not spell the death of a cultural public good, as long as people are clever enough to search for other institutional devices.
Third, there’s the public choice objection: any potential market failure in production of cultural goods has to be weighed against potential government failure if the state becomes involved. There is no reason to think state actors will be neutral arbiters of the value of cultural goods; rather, they will be influenced by the all-too-familiar phenomenon of special interest rent-seeking. Even if a cultural practice does not meet the criteria for being a true public good (say, because non-contributors can be excluded from the benefits), that will not prevent group members from lobbying for subsidies and special protections at the expense of the rest of society, including other cultural groups.
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