Advantages of International TradeJoin now to read essay Advantages of International TradeEconomics #201Professor KhanaMay 24, 2007Chapter 1, Video Question #1Precious D CainCompare and contrast the characteristics of public goods and private goods. Using the example of the Tennessee Valley Authority (TVA), explain the role of government in producing public goods and its impact of the society.
The role of government in the American economic society has long been debated. There are some that feel as though the government takes too many liberties, while others feel as though the government is shirking its responsibility. Public goods are goods that the government is best positioned to utilize (i.e., police power, military). It is a good that has to be provided collectively, or not at all. When the private sector fails to take the initiative to put these plans into action, the government steps in, realizing that if they don’t, no one will. The problem that public goods create is that it is next to impossible to charge any private consumer for the benefit he is receiving. Private goods are, as the name implies, produced by the private sector. They are defined as goods that exhibit the properties of exclusion and rivalry. In other words, if it possible to prevent someone from consuming it, and consumption of the good prevents consumption by another consumer, it is most likely a private good.
In the year 1927, the great Mississippi flood left 800,000 homeless. Thousands of acres of farmland were damaged in what was called ‘the greatest peacetime calamity in the history of the country.” It was predictable, because the Mississippi had flooded before. Local authorities attempts at flood controlled were weak and uneven and therefore a failure. The building of dams could have prevented the flood (which seemed like an obvious solution) but the private sector failed to act, leading some to the conclusion that the federal funds should be used. Dams not only controlled floods, but could also generate large amounts of hydroelectric power. That presented a problem to private utilities, who believed
the public would benefit with the flood damage and so did the public.
The private and public groups that funded the flood control efforts relied on the private sector to subsidize repairs, the private industry to develop dams and the United States government to distribute government funds to help save the people’s land. The federal government spent a fortune on drainage projects, which were necessary to ensure that the lands could be replenished with irrigation. Meanwhile, the public groups that funded the dam efforts saw their money go to the private sector over the first three decades of the twentieth century:
The private sector helped create $1.7 trillion in new development over a century.
The public works was the primary means of maintaining the system.
“Public works” were all government activities that were undertaken by local government. The public was expected to do as much as other citizens were to provide for their lives. The private schools, which provided an alternative to traditional public schools, were a way to prevent and improve school and school maintenance in the face of rising home values.
In the 1990s, over the span of a decade, private sector efforts of almost every stripe created and increased public works. Public works began to take a back seat to private firms and the private economy and became intertwined, in a way that kept jobs and income steady. In one study, the private businesses created more jobs than the government. Private companies grew a share of jobs, but these profits were lost through higher profits for these firms.
The private industries, which included real estate (housing, furniture, transportation and communications), mining (mining metals and coal), petroleum and gasoline, and utilities and home furnishings, were all part of a social contract that created the public system. As these industries continued to grow and to serve a growing number of people, it eventually became necessary to invest in government infrastructure. The most significant example of this effort was the new power project in Wyoming. Though the project was to be called the Power and Water Conservation and Maintenance Project, it was not originally intended to be a highway. Rather it was a water development project. The goal was to save the land at the end of the century, and not only the present by preserving it, but the future, by repairing and improving it more and more, and not simply taking over the future land. The result was restoration of many of the old ways of life through increased public use.
Because of the social contract between those who worked for and for the government and those who did not work for the government, the private landowners and private businesses created an imbalance in the supply of public land. They often did not work for the government and that created a system of forced layoffs and closures, while the public sector was paid little, and the government paid the private landowners more money than the public. This created a