3 Comments

I don't think these cables are a good example of a public good. They are eminently excludable; you can't transmit data on the cable if the owner doesn't let you, and it is easy to tell who is transmitting since they have to ask permission. The fact that most are built and owned by private companies who invest then collect the revenues seem to mark it as a standard high upfront cost industry.

They are also rivalrous, as your example of Google et al. building their own demonstrates, although at this point they are not so much rivalrous to individuals as they are for large data moving companies due to their huge capacity.

Expand full comment
author

Hmmmm, yes perhaps I mis-phrased. Maybe what I'm trying to get at is the externalities enjoyed by those who do not pay for the cables. We still enjoy low prices on goods and services whose trade was at some point enabled or facilitated by these cables, despite not being the cable-company's customers. This is similar in my mind to how even those who do not own a cell phone may benefit from living in a world where others do. There is also the interesting transition from these cables being mainly built and funded by governments to being mainly built and funded by companies.

How would you rephrase this?

Expand full comment

I would probably say that they are private goods, full stop I think.

The cables do lower the prices of goods and services to those who are not direct customers of the cables' owners, but they do so because someone is their direct customer, using the cables to facilitate exchange and getting paid. It is very similar to how I benefit from eg. lower cost products if a board game producer buys a new printing machine. I am not a customer of the printing machine manufacturer, but I still benefit. Me being better off is just part of the virtuous spiral of economics.

Now, the cell phone case is a bit closer, I think. Even though I don't buy any products made cheaper by the cables (somehow) and never make use of goods or services contingent on their existence (possibly?) the world around me might be nicer because other people being richer via all those things. The problem, again, is that the argument then applies to any product or equipment that makes things cheaper. On the one hand, I am tempted to write that off as "Yes, everything ever has externalities attached to it, so what?" On the other, I don't want to down play just how good it is for people to live in a society with more, well, everything people want. It really is pretty amazing to think that if I get tagged by a car tomorrow, someone with a cell phone can immediately call 911 instead of having to track down a phone in someone's house like when I was a kid. "Societal wealth" isn't exactly a public good, being non-rivalrous, but it arguably is a bit closer than many that are claimed to be :D

The transition from government to private is less key to the definition, I think. People generally use "public good" to mean "thing I want the government to do", regardless of whether it makes sense as an actual public good in the technical sense. Sometimes that isn't bad, with governments taking the plunge on a big idea that is too risky for regular people to spend their own money on; mostly it is very bad, with governments wasting a ton of money on bad ideas people stayed away from for good reason, and even when it is a good idea tending to crowd out private businesses. However, I expect that "high up front fixed cost, long return on benefits" describes most all of the government projects that were worth doing, even if also some of those that weren't.

So, to answer your question: In a long winded fashion :D

Seriously, I think really the best way to describe it is as a high upfront or fixed cost capital investment, with a long tail of benefits. Much like printing presses or oil super tankers, there are huge benefits for nearly everyone from their existence because of how enriching they are, even though just about every investment good shares that trait.

Expand full comment