FROM ISSUE NUMBER 23 - SPRING 1971 GO TO TABLE OF CONTENTS

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Public goods and private status

R. JOSEPH MONSEN and ANTHONY DOWNS

IN the past few years, many Americans have come to believe that our society allocates a disproportionate amount of its resources to private goods. John Kenneth Galbraith and others (preceded by Matthew Arnold in Culture and Anarchy a century ago) have repeatedly argued that our society is “privately rich but publicly poor.” The chief villain behind this “misallocation” of resources, according to most versions of this argument, is the large business corporation. Business is portrayed as using clever and nefarious advertising techniques to manipulate the desires of consumers so that they buy private goods and services they do not really need or want. We believe this argument is misleading, for it obscures a more fundamental factor underlying the present allocation of goods between the public and private sectors.

 

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