The value of public goods

The amount of resources on the planet has not changed over the past fifty, a hundred or even ten thousand years (perhaps with the minor exception of accumulated asteroid dust over time). And yet, with the same material resources as were at the disposal of cavemen, we are fantastically more prosperous and have exponentially more goods and services available to us.

The amount of resources didn’t change, but what changed was our understanding of science, improved engineering knowledge, extraction and refining techniques, logistics, infrastructure, organizational paradigms, financial models, labor practices, sociological and psychological methods, and so on and so on. All these innovations produced the economic growth and material wealth we have today.

What all these innovations have in common is that they are all resources that can be made accessible to everyone as public goods! Allowing access to such knowledge without restrictions would also be the maximally economically efficient condition (given that the people are properly compensated for producing these public goods), since the maximal number of people would be able to apply the knowledge to produce goods and services more efficiently.

If public goods produce real economic growth, and people need to be compensated for creating public goods, what should be the proper compensation level? We argue that the proper (and optimal) compensation level should be equivalent to the monetary value associated with the resulting economic growth. We further argue that, given the inability of markets to price public goods, and the inefficacy of centralized authority to fund such goods, what is needed to solve the problem of public goods is a decentralized economic model that can credibly estimate the economic value of public goods and compensate individuals through a value-preserving coin inflation mechanism.