Public Goods or Not, Lighthouses Saying Auf Wiedersehen

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Looks like the superiority of GPS systems is resulting a bit of creative destruction along the German coast:

The popularity of the satellite-based global positioning system has led to the closure of lighthouses along the German coast. Many more may soon be extinguished. But critics question whether the new system is reliable and safe enough to warrant the closure of these historical beacons of safety.

One of the traditional pedagogical tools for telling econ students about public goods is to use the example of a lighthouse. As a fast example, it seems like a good one: you can't exclude one ship from seeing it while allowing others, and the use by one ship of a lighthouse as guidepost doesn't restrict others ships from using it. Of course, when anything seems too "just-so", there's usually something you're not being told. Read down through this description of public goods for some of the real story behind lighthouses.

The side opposing the shuttering of the lighthouses makes, in my opinion, an bad argument:

Bauermeister fears hobby captains are losing more and more of their skills as a result of modern technologies. If their GPS systems were to malfunction, they could face serious danger. "The sense of orientation is one that must be constantly trained," he cautions. "Those who now only rely on GPS are losing this important ability, which can save lives in dangerous situations."

Even civil engineer Eusterbarkey concedes there will be "disadvantages" for small ship operators if the lighthouses close. Though the 15 lighthouses on the North Sea cost German taxpayers about €400,000 a year to operate, money alone should not be a reason for shutting them down. "The overriding principle has to be safety on the high seas," he says.

Individuals that decide to ply the Germans seas without proper training and without the appropriate tools are choosing to take risks. The public receives no benefit from it, and isn't really in danger of being hurt the way drunk drivers end up hurting others. The larger companies, on the other hand, have invested time and money into preparing for the eventuality of a GPS failure. Seems to me that Germans (and others) are being taxed to protect someone's sense of nostalgia.

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Ian at Truck and Barter observes that along the German coast, lighthouses might be rendered obsolete ... Read More


Oh the irony -- the flawed example of lighthouse-as-market-failure may finally die at the hands of...the market!

Should only be a few hundred more years now until it's purged from the intro texts...


No mention of Nobel Laureate economist Ronald Coase and his work on the private ownership lighthouses?

No mention of the fact that lighthouses in Britain have historically been *PRIVATELY* owned? (Going back 4-5 centuries

Tyler Cowen who you link does mention it in passing but seems o get it wrong. At least if Coase is right.

I think you may be slipping.

But not too much. I still love reading you.

John Henry

Well, thanks, I think. It wasn't really meant to be a survey of lighthouses per se, but you do bring up good cases. I'll try to be a bit more comprehensive in the future!

Most countries provide search and rescue even if people are stupid. A few cases of these might exceed the cost of mantaining lighthouses. Similarly the cost of a few lives lost might cost society significantly in other ways, lost labor, insurance etc.

It should be noted that just as states which vote Republican usually take more dollars than Democrat, societies and individuals who proclaim individual responsibility are far more inclined to enter into lawsuits. Thus in the United States the alleged land of individual responsibility they are far more crippling than in Europe and of course when wants the big money one goes to Republican states such as Mississippi.

Are there any privately owned lighthouses in the USA?

Jay Allen

Yes, there are a few.

Big Bay Point Lighthouse in Michigan, for one.

More details here.


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