In
Even
under the most enlightened regimes it is sometimes hard to establish
clear property rights. Indeed, government regulators often justify
government interventions as corrections of ill-defined property rights
or "market failure." To ensure clean air or good roads, it's too
costly, they say, for markets to collect payments from those who enjoy
such benefits. As such, it is easier to fund them through taxes.
But
the costliness of transacting depends on the nuts and bolts of
exchanging money for services. New technology is making it easier to
transact, undermining the reasons for many government interventions. An
enlightened regime would periodically reassess its policies in light of
new technology.
Technology
has long altered conventional thinking about public policy and property
rights. Americans got wired for the first time not with the telephone
but with barbed wire. Prior to 1870, the American West found itself
abundant in rangeland and devoid of fencing materials. It was too
costly to mark property boundaries and prevent trespass. A common
practice was to let livestock roam and intermingle. But in the 1870s
the spread of barbed wire, an inexpensive and effective fencing
material, lowered the cost of delineating, protecting, and enforcing
property rights. New technology changed institutions and policy for the
better.
That same dynamic has great potential in areas of public policy today. Consider policy debates surrounding automobiles:
Motorways. Traditionally,
motorways have been financed by taxation and provided by government.
Old methods of toll collection involved inconvenience for motorists and
significant costs of toll collection. Though a portion of motorways are
toll roads, most of
Automobile Air Pollution.
Monitoring and controlling air pollution from cars has seemed such a
perplexing problem that few have advocated a property-rights solution.
However, exhaust-sensor technologies have changed that. The sensors can
be placed at roadsides and monitor the exhaust of passing automobiles.
If the sensors are coupled with electronic license plate readers, the
system can identify polluting motorists and send them "pollution
bills." Such an approach targets the actual polluters, a fairer and
more efficient program than traditional command-and-control methods
such as smog check programs, alternative-fuel requirements, electric
vehicles, and mandates on automakers.
Although
remote sensing is a program for regional governments to undertake, it
is nonetheless a property-rights approach to the problem. It protects
the public air from violation and leaves non-violators undisturbed in
the use of their own automobiles. It is like protecting public
buildings from graffiti by setting up video surveillance, rather than
by placing restrictions on who can buy spray paint at the local
hardware store.
Parking.
The inconvenience and unsightliness of the early parking meters helped
justify "free parking." But modern parking meters no longer require
motorists to pay with loose change for limited periods of time. For
instance, multi-space meters, now prevalent in parts of
Some
might argue that, just as technology enhances the capabilities of the
private market, it enhances that of public-spirited regulators and
officials to do a better job regulating. True, governments can become
more effective by virtue of technology. Government agencies, too, can
run highways as toll roads.
However,
if both free enterprise and the government are technically capable of,
say, producing tomatoes, Adam Smith's logic of incentives and local
knowledge argue for leaving the activity to private owners interacting
voluntarily. As Milton Friedman says, we spend money most carefully and
to best effect when it is our own money and we spend it on ourselves.
The government, on the other hand, lacking such incentives and local
knowledge, usually fails to match the market's capabilities.
In
many areas of public policy the old rationales for government
intervention are obsolete. Today's policymakers ought to pursue a
policy regime in which institutions can keep up with technology.