本文发表于SSRG International Journal of Economicsand Management Studies (SSRG-IJEMS) – Volume 6 Issue 5–May 2019
Rights-Ethics Public Goods: Based on the Expanded-Definition of Public Goods 1 Jia Kang, the First President and Chief Economist of China Academy of New Supply-side Economics, Research Fellow in Chinese Academy of Fiscal Sciences, Beijing, the People’s Republic of China
2 Feng Qiaobin, Professor in Economics Department of Chinese Academy of Governance, Beijing, the People’s Republic of China 100089
Abstract: Based on related literature, the authors consider that basic education, basic medical services and low-rent house are a special kind of public goods and name them “rights-ethics public goods ”. On this basis, getting some reference from Buchanan and others, the authors revise and expand the classic definition of public goods and develop a new one: the expanded-definition of public goods, and give the related theoretical explanation. Further, the authors discuss the inherent requirements of rights-ethics public goods, namely redefining the democratic and legal mechanisms of the boundary periodically.
Keywords: classic public goods; rights-ethics public goods; expanded-definition of public goods
The theories involving public goods or public product can be dated back to David Hume (1739) and Adam Smith (1776). But in a more complete form, it is generally believed that modern public goods theory dates from Samuelson (1954, 1955, 1958). In the Pure Theory of Public Expenditure, he gave a classic definition of public goods, "each individual’s consumption of such a good leads to no subtraction from any other individual’s consumption of that good", namely the so-called collective consumption goods, which was expressed in formula asThereafter, Musgrave (1959, 1969) introduced the non-applicability of the price exclusion principle into the definition of public goods, and summarized the characteristics of public goods into two essential characteristics of public goods that were accepted widely later, non-competitive and nonexclusive in consumption.
According to the different expression of these two characteristics, all items are generally divided into three categories: pure public goods, quasi-public goods and private goods. Among them, quasi-public goods can be further divided into two categories: exclusive but non-competitive "club goods" and competitive but not exclusive "common supplies" (also known as common pool resources, such as public fisheries, public grassland, etc.). Many scholars further describe the categories in the form of tables, coordinates, etc., and intuitively locate the products that are common in life. In addition to the definition and classification of public goods, the classic theory of public goods has also made a series of progress in the financing and cost sharing of public goods, the effective supply of public goods, etc., and has integrated with the previous exploration of many economists on taxation and public expenditure into a well-defined an informative theoretical system. Among them, Lindahl Equilibrium, Pigouvian Tax, Public Choice Theory, and multi-subject provision of public goods (government, private, collective, voluntary, etc.), etc. has had a tremendous impact on subsequent academic research and practical policies.With the deepening of research and the application of the theory of public goods into practice, a widely accepted view has emerged. Due to the non-competitive and non-exclusive nature of consumption of public goods, the market mechanism has failed in their provision. Thus, the government logically replaces the market to be the main responsible body for the provision of public goods. This is both the reason for the emergence of the government and a basis for defining the scope of government functions. That is to say, the theory of public goods provides a theoretical basis for the division of labor between the government and the market — the government provides public goods and the market provides private products, and has become the theoretical basis for government intervention and the public finance function positioning for a long time. In the process of China’s reform and opening up, the theory of public goods was introduced into the country and was quickly accepted by the academic community to be the standard textbook theory. In recent years, the theory of public goods has received more and more attention in the whole society. "Government should provide public goods and public services" has become a broad consensus. The cornerstone of this understanding is generally considered to be "two basic characteristics". III. THE EXPANDED-DEFINITION OF PUBLIC GOODAlthough the achievements of theory of public goods are enough to make it popular all over the world, when we use the classic theory of public goods to compare the vivid and rich policy practices of various countries in the contemporary, if we do a little bit of research, we still encounter some impediment that are difficult to explain and illogical.A. The identification of "public goods" such as education, medical care, housing, etc.In the contemporary, basic education, medical services and low-rent housing, etc. are public goods that are generally provided by the government. Almost no one disagrees with this. However, any of them, if judged strictly by the criteria of non-exclusive and non-competitive in consumption, are not public goods in the sense of classic definition. Taking basic education as an example, it is easy to achieve technically "exclusive". It only requires a school gate and the cost can be extremely low. In addition, for any school or class, the number of students that can accommodate is limited. In the marginal sense, if you accept Zhang San, you can no longer accept Li Si, and the competition is also obvious. The literature explains these in the following three ways.1. They are not public goods, but quasi-public goods. 2. They have a strong positive externality.In this regard, you can reverse the following as follows.1. The so-called quasi-public goods refer to the goods that have at least one of the non-competitive and non-exclusive characteristics in consumption, such as the aforementioned club products and common supplies, while education, medical care, housing, etc. do not intuitively have any of the characteristics.2. Not only public goods have positive externalities, but quite a few private products also have positive externalities. Education, medical care, housing, etc. certainly have positive externalities. If a person has enough food, eats well and is healthy, generally he has positive externalities to others and the society. However, it seems that there has never been anyone, who considers it necessary to define food as public goods in general.3. The connotation and extension of merit goods are not clear yet. Although Musgrave defines "merit goods" in "A Multiple Theory of Budget Determination" as "increasing the production of goods by formulating policies that intervene with personal preferences". In 1959, he once again pointed out in the "Theory of Public Finance" that merit goods refer to the items that are good for consumers but are inadequate in consumption due to the ignorance of consumers. But the theoretical community hold different opinions on this. It can be seen that the above efforts are to try to legalize the identification of public goods such as education, medical services and housing from different perspectives. However, they have not yet given the key arguments that education, medical services and housing are public goods rather than private products. B. Education, medical services and housing can be determined as private products according to the classic definition of public goods.In fact, Harvey S. Rosen has long confessed that"...in some cases, health services and housing are private products provided by the public sector". When Inge Kaul categorizes global public goods, he also attributes "basic education, health care and food safety" to "critical private products." Professor Howard Glennerste in the Department of Social Policy in the London School of Economics and Political Science also said: "Although the human services we care about also carry the nature of public goods, they are basically private products".Therefore, we can see that many influential scholars tend to "tighten" the boundaries of public goods and strictly adhere to the definition of "two characteristics". But in real life, the essence of this question is whether these products should or should not be provided by the government. Because in the logic of classic theory of public goods, public goods are provided by the government, and private products are provided by the market. It is an established and widely accepted mindset. Once it is clear and acknowledged that education, medical services and housing are private products, they immediately lose the theoretical cornerstone of provision by the government. This is inconsistent with the policy practice of various countries and the values of the civil rights in contemporary. It is not feasible. This paradox is still a blind spot in the existing research literature that has not been positively explained. C. Expanded-definition of public goods: improvement and supplement to the classic definition of public goodsWhen we reorganized the literature, we found that there was another definition of public goods that existed long ago, but it was far less widespread than Samuelson’s classic definition of public goods. James McGill Buchanan argues in Public Finance In Democracy Process (1976) that "any item or service provided by a collective organization for any reason, as determined by a group or a social group, is defined as public". Malkin and Wildavsky (1999) argue that public goods are a social construct (which is translated as "social concept") and is a purely culturally conceptual identity. They say that a product cannot be defined as a public product based on objective criteria; or, it should not be defined by its own inherent properties. A product becomes public because it is decided by the society to deal with it in this way. Hugh Stretton and Lionel Orchard (2000) said: "We will consider the supply that is not determined by individual market demand but by collective political choices, that is, any goods and services that are determined by the government to be provided to their users for free or at a low cost, as public goods". Compared with classic definition of public goods, the difference of the above definition is obvious. The classic definition is defined by the "consumption attribute" of a product - whether it is non-competitive and non-exclusive in consumption, while Buchanan and others define according to "supply body" (the government or the market) and the decision-making mechanism ("determined by the collective political choice").However, we believe that the definition of Buchanan and others does not negate, but include the basic framework that is formed by the classic theory of public goods. This is because, according to the definition of public goods put forward by Buchanan and others, whether a product is a public product is fundamentally marked by whether the determined political decision is provided by the government, and when deciding whether to provide it or not by the government, the relevant subject will naturally consider two situations. One is that there are products that are both non-competitive and non-exclusive in consumption - from defense to environmental protection, streetlights, road signs, etc. - which can "only" be provided by the government for technical and cost reasons. This is the case under the classic there are no technical or cost barriers provided by the market, but for some common values or political ethics about civil rights, there are products that "should" be provided by the government through collective decision-making procedures. It is in this sense that we accept the key points of Buchanan and others for the definition of public goods, which can be regarded as the key contents of the "extended-definition of public goods".The Chinese scholar Qin Hui’s cognitive framework of "On Liberty" can also provide us with important enlightenment. In addition to the recognized rules of "the group domain must be democratic and the private domain must be free", there are many fuzzy areas, which are difficult to be absolutely decided as group or domain. For this part of fuzzy fields, the public should be given the opportunity to re-select at intervals (such as several years). In light of the above understanding, we can consider a framework in which one end (group domain) is pure public goods, the other end (private domain) is purely private products, and there are a large number of "quasi-public goods" in the middle. It can be argued that the classic definition of Samuelson solves the problem of "both ends" (namely pure public goods and private products), but in the vague fields of quasi-public goods, it needs to add the elements of Buchanan-style "public choice" (that is, the institutional elements that Qin Hui said to provide the public with the opportunity to re-select at intervals). Thus, it can be extended to the definition that is both logical and practical in reality to solve the problem of blind zone, which is brought by the definition that most public goods are "quasi-public goods". Therefore, in the theoretical interpretation of public goods, it is necessary to expand and supplement the classic definition based on reality, and form an expanded definition and understanding. IV. RIGHTS-ETHICS PUBLIC GOODS AND EXPANDED PUBLIC GOODS: A THEORETICAL FRAMEWORUnder the expanded definition of public goods, the government can provide both public goods and private products in an intuitive form, provided that the public selection process decides to do so.12 Education, medical care, and housing can be exclusive and competitive. They are private products that can be provided by the market. However, when the society develops to a certain extent, every citizen can enjoy basic education, medical care when sick, basic housing security, a job, basic living goods when old, etc., which are regarded as the "fundamental rights" of human beings and also regarded as a kindness and humane care that a civilized society should have. This kind of value will be transformed into real social policies through publicly chosen procedures after gaining broad consensus. As a result, these former private products will logically enter the list of public goods provided by the government. It is undeniable that the provision of basic education, medical services and housing by the government meets the demands of contemporary society for civil rights. While implementing the basic values of "fairness" and "equality", it does bring tangible benefits to the whole society, that is, the "positive externality" or public welfare that is inseparable from the utility claimed in most of the literature. Therefore, it is suitable for us to call this kind of new public goods as "rights-ethics public goods". Based on the expanded definition of public goods, the scope of the public goods is shown in the figure (refer to Figure 1).
A. The basic characteristics of rights-ethics public goods is "public goods with characteristics of private products".
Compared with classic public goods, rights-ethics public goods have a dual nature, that is, "public goods with the characteristics of private products".That is to say, based on political ethics, it should be equally consumed by all members of society, so it can only be distributed according to political principles. However, based on product attributes, it is both exclusive and competitive, and the total consumption X of a certain type of this product within a certain period is equal to the sum of i consumer consumption (i = 1, 2, 3 ... n). It isexpressed as a formula,
.
So the utility of consuming them can be divided, the beneficiary subject can be identified and the degree of benefit can be measured, and all the conditions for charging are available. As a result, economic principles can be introduced in its production and the door to the Public-Private Partnership (PPP) is open (refer to Figure 2).
a). Distribute according to political principles, but pay special attention to those who lack rights Most public goods should be enjoyed equally by all citizens. The concept of rights-ethics public goods is generated based on the value that "everyone should enjoy certain rights equally", so in theory the government should provide it to all citizens equally. However, it must be noted that whenever people complain about "unfairness", "inequality", and call for government policy adjustments, there is a selfevident fact that there are already some people and some groups in society, who first enjoy the rights that more people and everyone should enjoy. Therefore, the popularization of rights should be those that have no rights. In other words, only the lack of rights requires the fight for rights and the granting of rights, and only when the rights are not equal, there is need for the popularization of the rights. Noting this fact helps to accurately target the supply objects of rights-ethics public goods in a certain period of time, that is, low-income people who are unable to pay tuition, medical expenses, living expenses, etc. due to reasons beyond their control. As Michael Hill (2003), a British public policy expert, points out: in today’s developed countries, the supply of public goods and services in history is basically the first to be biased towards the poorest people who need help most, and then on this basis, the equalization of public goods and services is realized gradually.b). With the conditions of production by the private sector, the “economy” and “efficiency” principles and the “user-paid” and “public-private partnership” modes can be fully introduced into
production.The classic theory of public goods provides three modes of production of public goods: direct government production, private production, and third-party production. From the later developments, the myth of the government’s direct production of public goods has long been broken. Samuelson himself has repeatedly pointed out that "I have repeatedly told that a public product does not have to be provided by the public sector, it can also be provided by the private sector." Further, Elinor Ostrom (2000) has shown that under a series of preconditions, collective organizations that are spontaneously formed by the public can also provide some kind of public goods, and the effect is not inferior to the government. In contemporary, the concept of private production of public goods has been widely accepted. Under what conditions can public goods be provided by private individuals in sufficient quantities? Harold Demsetz (1970) argues that private companies can effectively provide public goods in cases where non-payers can be excluded; and through discriminatory price strategies – setting different prices for different consumers, maximize the returns to ensure that private individuals can provide enough public goods. Goldin Kenneth (1979) also believes that a certain public goods cannot be fully provided to consumers through market means because the technology that excludes non-payers has not yet been produced or is not economically viable. Once exclusive is achieved, consumers are subject to "optional access" constraints, such as fees, while those who do not pay are excluded. In short, in the view of classic theory of public goods, whether a product can be provided by private individuals depends on whether it is exclusive.
Accordingly, the answer to the best way of producing rights-ethics public goods is already coming. Previously, we have fully stated that products such as education, housing and medical services are private products that are competitive, technical, and easily exclusive before they become public goods without public decision-making procedures. Who is consuming? How much has it been consumed? ... This kind of problem that plagues the pricing and charging of ordinary public goods is very clear here. Both the "exclusion of non-payers" required by Demsetz and the "optional entry" of Goldin can be met here. Further, according to the theory that has been repeatedly proved, when the public goods are provided by private individuals (with necessary government regulation), the market will gradually approach the equilibrium between production and consumption through the power of the "user payment" system and realize the optimal allocation of the resources.
There is another unexpected by-product of private production of public goods: the core problem in the classic theory of "the pricing of public goods" is automatically addressed. Of course, the premise is producers. In most cases, the reason for the difficulty of pricing is mainly due to monopoly. In the field of public goods, the pricing difficulties caused by natural monopoly have always been a difficulty bothering the government in many countries. It can be said that as long as there is a monopoly - for whatever reason - the price discovery mechanism will be problematic, and product pricing will become a problem. So the fundamental way to solve the pricing problem is to eliminate the monopoly. In the case of rights-ethics public goods, they were originally producers. In most cases, the reason for the difficulty of pricing is mainly due to monopoly. In the field of public goods, the pricing difficulties caused by natural monopoly have always been a difficulty bothering the government in many countries. It can be said that as long as there is a monopoly - for whatever reason - the price discovery mechanism will be problematic, and product pricing will become a problem. So the fundamental way to solve the pricing problem is to eliminate the monopoly. In the case of rights-ethics public goods, they were originally "competitive products" that could be competitively consumed without the difficulty of exclusion, so technically they can not only be produced by the private sector, but also be competitively produced.In fact, it does not matter whether certain public goods are produced by the government or by private individuals. What is important is to clarify the misunderstanding that only government production can maintain the public welfare of public goods and provide it to the public at a cheap price or for free, that is, government production = low price or free, while private production often leads to high prices, thus losing the "public welfare" and "publicity" of public goods. Simply list the logical points here, and it is enough for us to distinguish the confusion. On one hand, low-cost or free-to-use public goods does not mean that it can be produced at low costs, and it does not mean that the costs of government production is lower than that of the private sector. On the other hand, private production of public goods does not mean that the private sector can directly sell public goods (services) to the individuals in any case. In the case of private production of any public goods, there is inevitably an intermediary- the government between the production and consumption (refer to Figure 3). The government can adjust and regulate the production and consumption according to the needs and circumstances, for example, developing the entry conditions of the producers, providing product standards and quality, specifying the qualification, cost burden and time limit for the consumers, etc., which is the main aspect of the government’s role under the expanded definition of public goods. Therefore, the government can apply different principles: in the "consumption" side, when deciding who should consume or enjoy, the answer is "should or should not", for which the basis for decision is the political ethics and value held by the majority of people or the policy makers; in the "production" side, the question is "can or cannot", that is, who can organize the production of public goods at higher efficiency, for which the basis for decision is pure economic problems like "efficiency". Given that the economists have long been conclusive about this – in general, the productivity of the public sector is always lower than that of the private sector, thus public goods are handed over to private production, which is necessary and justified in terms of efficiency. As Zhou Qiren (2008) said, a product that is non-competitive in consumption does not mean that it is also non-competitive in production. It can be consumed at low prices or for free does not mean that the production of these products is at low price or for free.The enduring discussion of private production of public goods proves from another perspective that the efficiency of public goods produced by the government in person are often less than that of private production, leading to waste of resources, poor quality of public goods, the expansion of the public sector and the increase in the actual burden on the people. Therefore, the discussion on the private provision of public goods actually reflects the unremitting efforts to try to bring efficiency principles back into the production of public goods. That is, under certain constraints, the private sector’s participation in the production of public goods is not only not detrimental, on the contrary, it is beneficial to the latter's "public welfare" because it helps to mobilize all possible social resources to participate in the production of public goods, which in turn will expand supply, improve quality and lower prices, thereby enhancing social welfare in general.
In the classical theoretical context, certain public goods may not be involved in production by the private sector because of their non-exclusive and non-competitive nature. The "private characteristics" of rights-ethics public goods are basically not obstructive. This is one of the most important distinctions between rights-ethics public goods and public goods under the classic definition.
Therefore, in theory, the best way to realize rights-ethics public goods is to organize production mainly by the private sector according to economic principles, and then provide to the public for consumption in accordance with political principles and policy guiding mechanisms mainly by the public sector. In this way, it is possible to implement the political ethics of "Everyone should enjoy the same rights.", meanwhile making full use of market mechanisms to maximize the efficiency of public goods production. It is in this research direction that the frontier concept of public-private partnership (PPP) has rapidly become a cutting-edge innovation method that leads the trend in the practice of new public management in recent years.
B. The provision of rights-ethics public goods mainly reflects the government function of income redistribution.
Emphasizing the advantages of private production of rights-ethics public goods does not mean denying and reducing the government’s important role in its provision. As mentioned previously, there is an intermediary - the government between the production and consumption of public goods,. In addition to the fact that the distribution of public goods must be carried out and guaranteed by the government according to political principles, the government must play an irreplaceable role in "intermediate links" such as how to raise funds, how to pay, and how to manage, and so on.
Under the classic theory of public goods, the government collects taxes to finance public goods. Although Lindahl equilibrium has long proved that the price of certain public goods is equal to the sum of the tax amounts that are willing to pay by the individuals who enjoy this public goods, the most ideal situation is those who have the highest rating of this public goods (often the most in need) bear the largest share of the tax, and so on, until the full cost is shared. However, for various reasons, the "peer-to-peer benefit principle" in the above logic is rarely reflected in the tax practice. In most cases, there is no relationship or no direct correspondence between the tax category and tax rate and the type and quantity of personal consumption public goods. This is of course due to the difficulty of the public’s preference for public goods, the impossibility of charging for individuals due to non-competitive and non-exclusive consumption of classic public goods, and the limitations of the "capability principle" from another perspective.
Rights-ethics public goods have relatively strong attributes of "private products" that make it possible to charge individual fees and, if needed, to manifest and strengthen the link between individual pay levels and consumption levels. In addition to the "user pays" system, the typical case refers to the improvements in the social insurance system that is widely implemented in various countries. On one hand, as long as the conditions are met, every member in society must join the social insurance system and pay social insurance premiums (taxes) according to the standards set by the government. On the other hand, as long as the conditions are met, each member in society can enjoy the public services in the system that are linked (not necessarily equal) to their own contribution levels. The role of the government in this is mainly to organize and maintain such a system. Specifically, first, develop relevant laws and urge each member in society to join the system with national power. Second, specify relevant rates and require the employers and employees to pay in mandatory. Third, when the system is insufficient in fund, inject the capital, use available budgetary resources and redistribute. Fourth, the social insurance funds are entrusted or managed directly through the formulation of relevant systems. Fifth, the relevant products are purchased and paid by the government as public representative.
As for the products and the extent to which the government chooses to highlight the link between the level of personal payment and the level of consumption, it depends on the specific situation of different countries at specific stages.
As for the payment, the common feature of rights-ethics public goods is that the government as a representative of the public can advance and pay a considerable part of the costs. In the case of private production, the government usually bids the producers from the market by formulating the quality standards and types of the required public goods (services), performing performance appraisal, etc., and pays the fees after the consumption of the members in society. Even for those public goods directly produced by the government, although there is no clear payment line as above, they are paid through financial budget and government grants.
It can be seen that for the rights-ethics public goods, which is originally private products in an intuitive form, once they are politically selected as public goods, the government plays an important role in income redistribution and social management, and maintains "user pays" system and other policy adjustment tools such as subsidies and differential pricing. It fills a huge gap between producers’ "must pay before production" and some consumers’ "can’t pay but must consume", making rights-ethics products consumed by the social members in a wide scope as much as possible and increasing the total social welfare.
C. The Boundary Determination of Rights-Ethics Public Goods and Related Decision-Making System
In contemporary, the main contents of rights-ethics public goods are education, medical care, housing, employment, personal services, and relief for low-income people.
In classic theories, the boundary drift and dynamic adjustment of public goods are already observable universal facts. The most general explanation for this is that the advancement of exclusive technology and the decline in cost have led to certain products drifting from "public domain" to "private domain". In addition, factors such as the development of the market economic system and the different stages of economic and social development have also caused the drift of its boundaries. In the case of rights-ethics public goods, the criteria for determining boundaries are not only purely technical conditions and cold economic factors, but also social policies with complex political interactions, the decisive influences of which are some kind of "political ethics" or "value" held by most people.
Furthermore, the most important thing for the government is not to provide what kind of rights-ethics public goods, but to establish a public choice mechanism for dynamic adjustment and regular redrawing at the institutional level.Histo rically, "civil rights" are both caused by the constant struggle of those who lack rights, and by the compromises and concessions of the people with vested interests based on actual needs. So the fundamental question is that what kind of mechanism is used to realize the interaction of the two sides. From the perspective of the long history of human history, there are only two ways to classify the thickest lines. One is the adaptive adjustment of the vested interest groups when those without rights are unable to tolerate and rise in revolt, the form of which is often large external conflicts with huge social costs (uprising, riot, dynasty replacement, etc.), which is called a "standard public choice" mechanism. The history has answered which is better or worse and will continue to make an answer.
贾 康 介 绍
第十一届、十二届全国政协委员和政协经济委员会委员，华夏新供给经济学研究院首席经济学家，中国财政科学研究院研究员、博导，中国财政学会顾问，国家发改委PPP专家库专家委员会成员，中国一带一路PPP项目开发委员会委员，中关村公共资源竞争性配置促进中心首席经济学家，北京市、上海市等多地人民政府咨询委员，北京大学、中国人民大学等多家高校特聘教授。1995年享受政府特殊津贴。1997年被评为国家百千万人才工程高层次学术带头人。多次受朱镕基、温家宝、胡锦涛和李克强等中央领导同志之邀座谈经济工作（被媒体称之为“中南海问策”）。担任2010年1月8日中央政治局第十八次集体学习“财税体制改革”专题讲解人之一。孙冶方经济学奖、黄达—蒙代尔经济学奖和中国软科学大奖获得者。国家“十一五”、“十二五”和“十三五”规划专家委员会委员。曾长期担任财政部财政科学研究所所长。1988年曾入选亨氏基金项目，到美国匹兹堡大学做访问学者一年。2013年，主编《新供给：经济学理论的中国创新》，发起成立“华夏新供给经济学研究院”和“新供给经济学50人论坛”（任首任院长、首任秘书长），2015年-2016年与苏京春合著出版《新供给经济学》专著、《供给侧改革：新供给简明读本》、以及《中国的坎：如何跨越“中等收入陷阱”（获评中国图书评论学会和央视的“2016年度中国好书”）》，2016年出版的《供给侧改革十讲》被中组部、新闻出版广电总局和国家图书馆评为全国精品教材。根据《中国社会科学评估》公布的2006～2015年我国哲学社会科学6268种学术期刊700余万篇文献的大数据统计分析，贾康先生的发文量（398篇），总被引频次（4231次）和总下载频次（204115次）均列第一位，综合指数3429，遥居第一，是经济学核心作者中的代表性学者。
