Free riding is rubbish

 Last year I lived on Rugby Road and would walk down Chancellor Street to get to the corner. I remember at the beginning of last year that my journey became more and more unpleasant due to an ever accumulating pile of trash and boxes on the sidewalk of Chancellor Street. After a couple weeks it got so bad that the boxes blocked the entire sidewalk and I was forced to increase the riskiness of my trek by venturing into the street just to get around this mess. As a third party who did not live on Chancellor Street, a negative externality was being imposed on me. How rude, I thought to myself–the residents leaving their boxes on the sidewalk are only considering their marginal private cost (and MPB), not the higher marginal social cost of them producing this trash. I suppose I could’ve offered them a Coasian solution such as paying them to remove their boxes, but magically one day they disappeared and I never thought about it again…

…until now. The tables have turned and I am now a resident of Chancellor Street. I now see that trash is a fee based service. Even though we pay, for some reason Charlottesville doesn’t collect our large boxes and they have now accumulated to a sidewalk-blocking level. Now that I am no longer a third party, I have a bit more insight into why this problem persists. The trash bins are shared between six different units. Hence, we have a free rider problem. There are many of us who could remove this trash ourselves or call the trash service and get it sorted out, but we all hope someone else will take this cost on. All residents of the six units will get the benefit of a cleaner sidewalk regardless of who bites the bullet and cleans it up, so alas we are in a stalemate of wills.

Free Markets and Small Government: The Cure to the Healthcare Crisis

Though government schemes such as Medicare exist, the healthcare system in the U.S. is mostly privatized, using markets to distribute healthcare resources according to individual demand. However, many problems persist, including an effective monopoly in the pharmaceutical industry, primarily due to poor execution of patent laws and firms lobbying a government which holds far too much power to interfere in markets, which, much of the time, fare better if left to their own devices. 

Conversely, suggesting in an assembly of a European government that markets should be utilized to distribute healthcare would be political suicide. Policy in these settings is dictated by the belief that healthcare is a human right, making any proposal for market-based solutions appear morally suspect. Even American proponents of a single-payer system seldom focus on efficiency, instead opting to frame any opponents to their ideals as driven solely by “profit” - a buzzword often used to discredit market systems. I propose that a market solution could distribute healthcare more efficiently than a government service such as the NHS. If predatory monopolies can be addressed, markets could reach an efficient allocation of healthcare resources, which is unlikely under government control, as that would necessarily lead to a public monopoly, or a monopoly propped up by government regulation and assistance, which, according to Milton Friedman, is far from desirable. Thus, the most moral and efficient way to distribute healthcare is through a market system and the notion that economists are committing a moral evil by opposing government monopolies of healthcare is unfounded.

The Genomic Gold Rush

My biology class on DNA was just visited by Eric Green, the director of the National Human Genome Research Institute and a significant participant in the Human Genome Project (HGP).

Originally a $2.7 billion dollar project approved by Congress and funded by the NIH, the HGP focused on sequencing the human genome in its entirety. Unlike USPS’s monopoly on US letter delivery, this government-funded endeavor was not legally protected as a monopoly. A race to be the first to completely sequence the human genome ensued between the HGP and the private company Celera.

The HGP presents an interesting overlay of several concepts discussed in class; the extraordinary start-up costs required for early sequencing efforts (namely the equipment and specialized labor) means it exhibited some characteristics of an economy of scale, but not so much as to wholly prevent competition. The HGP involved government action opposed by some congressmen, introducing Friedman's "strain" to society. The HGP is now widely regarded as a positive externality, benefiting humanity by aiding in the development of medical advancements such as gene therapies, custom medications, and earlier disease diagnoses. Although the "race" ended in a tie, by competing with Celera and providing publicly accessible data, the HGP prevented monetization of the human genome through Celera’s planned subscription service.