Wednesday, 28 October 2009

Nobody Rides for Free? Think again, Jackson Browne

Lately I've been thinking about the "free rider" problem in economics, partly because free riders are so easy to find once you start looking for them. It's an unbelievably easy Easter egg hunt.

The free rider of course is someone who partakes of a benefit but doesn't help pay the associated cost. If you live in a village of 1,000 people, and there's one dirt road in, absent a local government structure someone might try to collect funds to have the road paved. If 999 people contribute $1,000, but you don't deem the project worthy and decline to pay anything, then you "free ride" on that nice smooth road when it's finally covered with a shiny black layer of pavement.

This winter, I may be a swine flu free rider. How? I'm leaning against getting a protective shot. Part of my reasoning is: Because of the general feeling of panic, and the constant media drumbeat about the dangers of swine flu, millions will get vaccinated. They will help form a protective buffer around me, damping the spread of the flu. Thus, I benefit from the precautions they take.

You can also appreciate this on a mathematical level. Possible infection rates for swine flu have been predicted to be around 30 percent (which strikes me as very high -- but as a free rider, that's okay, because it just means that this figure will scare more people into getting vaccinations, and so give me an even better free ride). But the more people who get the vaccine, the lower that infection rate will be. Now, if 299,999,999 people out of a population of 300 million get a swine flu shot (or nasal injection), and I'm the only one who doesn't, then my chances of getting the virus are practically zero. Because, obviously, where am I going to get it from? An airborne petri dish?

If you feel annoyed at me for free riding, don't be. Everyone's free riding somewhere. Just look around.

Take Afghanistan. It's a justifiable war, I think, unlike Iraq. Yet it still looks like a hopeless quagmire. The legitimacy of the Afghan government has been hollowed out by incompetence and corruption. I would find a way to get troops out of there, fast. This conflict will only end badly. General McChrystal is right: he does need more troops, but even then he may only be able to fight the enemy to a standstill.

But back to the free rider part: There are apparently plenty of other nations that want the U.S. to stay in Afghanistan, to try to sort out this opium-growing and strife-torn mess of a country that is an all-too-convenient hatching ground for future terrorists. The whole world reaps the benefits of fewer Al Qaeda cells operating within Afghanistan's mountainous borders. But other countries are reluctant to commit their troops or their funds to support our combat operation. They would rather sit back and free ride. And so the U.S., still thinking it's the superpower with the mostest, takes this burden on its shoulders.

One more free rider example to complete the set of three today:

I'm about to move to New York City. I was doing comparisons to see how a given salary stacks up in different metro areas. Zounds! New York is frightfully expensive (as if I really needed to be told that, but once you see the numbers in black and white, it is pretty sobering).

I'll be forking over a big chunk of my paycheck to the federal government for taxes. In fact, New Yorkers most certainly contribute a big slice of the federal taxes collected in this country. The irony is that the people who complain the most bitterly about taxes and big government live in the conservative red states, in the heart of America, where salaries are lower. So they get to gripe while free-riding, to some degree, off the liberals.

Example (go here for the cost-of-living calculator): $100,000 in Manhattan salary would buy the same as $40,384 in wages in that reddest of red capitals (and believe me, I know, having lived there once), Oklahoma City. So here's the picture: Oklahoma residents are fuming about government being too large, taxes too high, and meanwhile the typical worker in the state capital probably pays a good deal less to support our troops abroad than the liberal president of the Sierra Club in New York City.

(For those who say it all balances out, because New Yorkers get proportionately higher salaries, two things: (1) If you're making $40,384 in Oklahoma City, good luck transplanting to Manhattan and getting $100,000 just because, you know, you deserve more because of the cost-of-living differential. (2) Our income tax scale is progressive, so $100,000 puts you in a much steeper tax bracket than $40,384.)

Nobody rides for free, Jackson? Au contraire ...