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Celtic Warrior
In the United States of America, public goods are dying. The infrastructure is fraying, the educational system produces third-rate graduates, and medical services aren’t a public good at all. There is, however, a public good that resists decay, and that is national defense or the ability to wage war. Republicans continually urge a strengthening of the armed forces, and so do Democrats, if less enthusiastically. Defense spending is absurdly high; according to armscontrolcenter.org, the U.S. spends as much on def(of)ense as the the rest of the world combined.
There are myriad reasons for this imbalance, having to do with history, ideology, vested economic interests, and the like. Here, I question the idea that national defense/war is a public good from which all citizens (or rather: tax payers) benefit equally. A public good, as defined by economists, is a service or resource that is available to all who wish to use it (Dawes, 1980). You can drive to Los Angeles on the Interstate 5 without paying toll. But you may also sit at home or take the train. I5 is a public good.
National defense in the traditional sense is the ability to fight off foreign attack. If the Mongols rode again, we would repel them, and you would benefit from this repelling without lifting a finger. This public good would be forced upon you. There is no opting out.
But neither can you opt out from co-bearing the costs. In a true public-good game, players may cooperate by chipping in, but they can also defect. The good is provided to all if the sum of chips meets some threshold. Therefore, says game theory, it is rational to defect, because no matter what others do, you will have more cash in your pocket.
Fearing rationality, nations do not allow citizens to play the public good game when it comes to defense. They extract tax payments and visit penalties on those who seek to opt out on their own. Still, they use the rhetoric of public goods, trumpeting that national defense is in the best interest of all, no matter how humble their circumstances. Forcing people to pay taxes is to force them to cooperate in a public goods game.
An alternative is to collect payments from those who benefit the most from the good. Some highways are maintained with funds collected from drivers. The more you use the road, the more you pay, and the more you contribute to the good. Libertarians should like this scheme, as should less thoughtful Republicans. Paying for use is the flipside of privatization, and privatization is good, they say.
When it comes to attacks by (or of) foreign nations, those who have the most, have the most to lose (or win). It is in their interest to share the costs (but not the gains) with everyone. Government, and the system of taxation, ensures that they get their way.
What if national defense (offense) were a public good game, in which the choice between cooperation (chipping in) and defection (literally!) were a libertarian thing, and in which the payoffs reflected the wealth and the interest of the players? Let us consider two fictionalized cases. In each, we segment society into the “Rich” and the “Rest.” For rhetorical effect, we refer to Rich and Rest as individuals. Suppose Rich has 1M in the bank, Rest as 100k and the tax rate is 30%. For simplicity, assume that taxes are not used for anything else.
Case 1
The bill of war is 300k. Rest can defect, knowing that Rich must flip the bill or lose everything.
Case 2
The bill of war is 330k. If Rich and Rest cooperate, they win the conflict. However, Rest can threaten defection, knowing that Rich can cover the difference, or lose all. The reverse is not possible. Rich cannot threaten to defect, gambling that Rest will cover the expense. Rest does not have the money.
In both scenarios, the poorer strata of society can leverage their poverty to exert political power (and thereby become less poor). The rich are shackled by their wealth. Because they have more to lose, they have to pay more to keep it.
Society does not, alas, work this way. Most modern nations do not allow their capability to wage war to become a public good from the provision of which the non-rich, if they are rational, will defect. Instead, they force everyone to contribute. The rich benefit from this arrangement, and they will use their influence to keep it that way. When the representatives of their caste talk the libertarian talk, they bracket out war, and they sing the songs of national solidarity, civic duty, and freedom; whatever it takes to get those who have little to gain to contribute.
Dawes, R. M. (1980). Social dilemmas. Annual Review of Psychology, 31, 169-193. DOI: 10.1146/annurev.ps.31.020180.001125
http://armscontrolcenter.org/issues/securityspending/articles/fy09_dod_…
