Public Goods Are Bad – Tragedy of the Trojes
By: John Russell
By spending over $900 of government money to provide “free” food to students, we showed why markets are the only way in which goods can be fairly and efficiently allocated to those who want it the most, while also showing (and getting them to unknowingly participate in) why any goods provided through taxation are inferior.  Below is a list of observations and why they necessarily apply to broader economic policy:
Public Goods Inevitably Replace the Price Mechanism with a Time Mechanism
After getting out of class early to prepare the event, the first thing that was obvious was the line of people waiting to get some ‘free’ food.  As reported on the front page of the Sagebrush, the line stretched unusually long from the store all the way to the back of the business building.  But why was the line so long?  The Tragedy of the Trojes revealed that in a priceless system, where the price of goods are unable to perform the necessary function of rationing, something else will.  Notoriously known for their long lines, Canada’s health care is a system where the cost of goods and services are hidden from the consumer.  Instead of the money price managing the wants of consumers, such a system relies upon waiting times and long lines to manage it instead.  In the below video segment, you will see both the long lines of the Trojes event as well as something incredible – a person completely skipping the line, paying for their food, and leaving the other suckers waiting:

But why did this person pay for the food instead of waiting in line to get it for free?  Well, that person’s time was more valuable spent doing something else than standing in line like the other people.  Luckily, in this situation, he had the option of representing his desire for Las Trojes Mexican using money instead of human time. The price mechanism is far more efficient in allocating resources fairly as evidently seen by the hours people spent waiting to get food that day.  Where normally it may take up to five minutes to get food on a busy day, that day it took much, much longer.  Paying for a service with money, such as a burrito, represents an exchange of claims over resource ownership.  Paying for the same services with human time is outright resource destruction.  Think about all the productive things those people could have been doing that day if they weren’t waiting in that line…

Public Goods Inevitably Lead to Over Consumption
The second most blatant observation about the event was the rampant over consumption of goods and services.  When prices are absent, the natural rationing that occur through the price mechanism are removed and there are no signals preventing people from over consuming.  During the Katrina hurricane disaster, people criticized the price of water being “exploitative” and “evil” because a gallon of water was extremely expensive.  However, without such a mechanism in place, the people at the front of the line would have taken as much as they could and left the rest to go without water.  This is exactly what happened with the Tragedy of the Trojes, where the people at the front of the lined consumed as much as possible and left the people waiting in line to starve:

Public Goods Inevitably Lead to Lower Quality
What incentive did the workers in the kitchen have to keep the quality of the food high?  Operating outside a market economy where price and competition were no longer an issue allowed them to throw together food which was noticeably worse than what they usually provide.  Perhaps if we, the government, mandated that they provide higher quality food they would have.  But that is simply untenable, and the natural propensity for the quality of subsidized goods to deteriorate over time can clearly be seen throughout history.

Public Goods Inevitably Lead to Shortages or Rationing
We live in a world where there are unlimited wants but limited resources.  Just as there are limited resources on earth, there is also a limited time in which we are alive.   In order for society to deal with this predicament, either rationing or shortages must occur.  However, the difference between a market system and a priceless system is that those who really want a service are easily able to communicate that want with money. If people were forced to wait in the line in our example, the wants and desires of the varying people would be different. What if one of the people were really hungry and were willing to pay a premium while another in the line was just stopping by to grab some for his dog? Without prices, there would be no way for them to communicate this desire:

Public Goods Inevitably Lead to Higher Prices
If our event were to last for a year, what rational business owner would try and slash inefficiency to keep prices low?  Any types of services which are funded through tax dollars have no incentive to slash costs since, again, they operate outside of the market.  What incentive does public education have in keeping prices low?  One only has to see the ever increasing costs of government bureaucracy to recognize the rampant waste and bloated budgets of their departments and salaries.  Las Trojes, I predict, would be no exception.

Public Goods Inevitable Disrupt the Capital Structure
For all intents and purposes, the reason why Las Trojes was chosen above any other food venue on campus was that it’s a low quality Mexican food joint (go ahead and disagree with me Barry).  If one were to poll the student body population and ask them to compare and rank the tastiness of the various food venues on campus, Las Trojes would probably be at the bottom of the list.  In a market economy, a company which does not satisfy the wants and needs of consumers become poorer and can eventually go out of business.  However, government subsidization allows goods to operate outside the marketplace which skews demand, disrupt savings, and confuses investors.  If people valued Port of Subs over Las Trojes, they would be unable to communicate this fact in such a system and it would be Port of Subs that would begin to get poorer and may eventually go out of business. Governments could try resolving this by giving everybody a single vote, but those who are not interested in fast food, for example, may ignorantly cast their vote towards Las Trojes and hurt those that do participate in fast food.  Prices, not voting, are the only way to efficiently maximize the wants of consumers and keep the capital structure of the economy (or UNR campus) in a position to satisfy wants.

Public Goods Inevitably are Unfair
People waiting in line were super pissed off – and for good reason.  They noticed that people ahead of them were consuming so much more than what they would have normally used.  They called them “greedy” and “selfish”, and though that is true, it is because of the policy in place which made them so.  We have the tendency to view the world in a way where we only look at the actions of individuals, without really stepping back and recognizing why they are acting that way.  The individuals were merely acting rational in an irrational and immoral system.  Only through the elimination of such a system could we ever begin to recognize and produce the good that arises in a truly free market.

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View Comments Posted in Abolish ASUN, Economics, Money
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  • libertyq

    that is a very good, what Austrians would probably call, realistic demonstration of the results following from implementing a bad theory in practice. thank you for sharing this.

  • Keeban3

    I really enjoyed all the links hidden in there as well. Nice job.

  • YoursinLiberty

    My friend a student at UNR told me about this “event” that you orchestrated. I think this is brilliant. I wish the camera work was a little more polished and narrated a little better. We did not hear that the first person spent $50 until 5 minutes in to the filming. Interview with the beneficiaries and losers would have driven the point home. Great work though. This is a perfect thing for John Stossel’s show.

  • http://unrforliberty.com/2011/01/friendly-competition.html Friendly Competition | UNR Students for Liberty

    [...] and so frequently we rarely stop to consider or give it much thought. As we illustrated in the Tragedy of the Trojes event, in a priceless system, where the costs of goods and services are hidden from the consumer, another [...]

  • http://unrforliberty.com/2011/03/abolish-asun-the-uncut-interviews-2.html Abolish ASUN: The Uncut Interviews 2 | UNR Students for Liberty

    [...] of the Trojes: http://unrforliberty.com/2010/10/public-goods-are-bad-tragedy-of-the-trojes.html Putting America Back to Work: http://unrforliberty.com/2011/02/2451.html $3,400 Worth of Catered [...]

  • Inquisitor

    What I found interesting is that this “even” was on the way to disproving the public goods point they wanted to make. That is until people had to be encouraged to take more than their fair share at the very end in order to make the budget run out.
    In other words everyone was taking a normal sized lunch and everyone in line would have been served until suddenly in the last 30 minutes a select few people started grabbing $50 worth of food and the budget ran out. I wonder where they come from and what would have happened if the budget did not run out because of them? hmmmmm

  • Inquisitor

    Oh one more interesting moment “missed” by the cameras. Some of the people who grabbed bags full of food handed them out to the “losers” outside after the “event” was over. Another hmmm moment.

  • Huh?

    What are you trying to claim? That people are charitable?

  • Huh?

    Everyone was taking more than what they would have typically have taken if they were purchasing it with their own money, hence: ‘Public Goods Inevitably Lead to Over Consumption’

  • Quisitor

    I was there and there wasnt no one that needed prompting. Everyone was taking way more than they needed. I even heard that the first couple of people were the ones who got like 100 dollars worth of food and everyone else was just limited by how fast they could turn out food. And another thing “the last 30 minutes”? This thing only lasted like 15 minutes at most. Its sad to know that there are people out there who know absolutely nothing about something and yet feel compelled to talk about it.

  • http://unrforliberty.com/2011/03/what-a-concept.html What a Concept… | UNR Students for Liberty

    [...] seem to glean over the point entirely, managing to not only not take away the key economic lesson (that public funds will always be at the mercy of the Tragedy of the Commons) but exasperating it more so (by seeking to impose penalties on those clubs that don’t spend [...]

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