Mankiw's Principles of Microeconomics Chapter 11

1. Think of an example of a Public Good.  What are the costs of providing the good?  What are the benefits? Is there another way to have the good provided? Did this chapter cause you to think of Public Goods differently?  In what way?

My mama always told me “there’s no such thing as a free lunch”, but apparently that’s changed these days. A welfare program such as the USDA’s Food Stamp Program (FSP) holds the prestigious record of being the second largest government welfare program. To give you an idea of how much that is, only Medicaid exceed this benefits program. While it’s certainly understandable why this benefit exists, it’s a prime example of a public good that retains the economic complexity of the Higgs Boson particle collider. In 2008 the cost of this program was $26 billion; in 2011 the costs have ballooned to $78 billion. Previous laws that tested the assets of applicants as well as requirements wrapped around their current work status were eliminated in 2000 by the Clinton administration. New eligibility requirements were drafted that enabled anyone receiving any type of government benefit to participate in FSP. These changes, along with aggressive marketing programs aimed at raising awareness to the availability of “government cheese” hand out programs increased the costs of the program substantially.

Don’t get me wrong, the FSP is an absolutely necessary benefit in order to maintain a civil society, especially when we consider the real unemployment rate in today’s economy. However, I think we need to consider the incentives we’re providing people to change their dependencies. While the National Parks Service is putting up signs asking us humans to not feed the animals, because they’ll become dependent on our assistance for survival; here we are feeding ourselves with government assistance by lowering our standards during 2000 when the economy was on a tear. In my book that is the definition of creating a dependency.

Right now we should be developing policies that incentivize behaviors that will encourage people to get off these programs. With all of the negative media surrounding the unemployment situation in our nation, I can understand why we are so resistant to force this change but we’ve got consider it and make the difficult decisions.