Bad arguments for Public Goods

Jim Hightower, in an excerpt taken from his book, Thieves In High Places, writes about John Rawls's Veil Of Ignorance, and in the process demonstrates that his understanding of public goods is completely backwards:

It's not that I believe in the Fairy Godmother of Saintly Altruism, but that the self-interest of most people generally coincides with the common good. Hence the depth of support for the public schools, public libraries and other things public, even in a time when nearly all the cultural forces are pushing privatization.

If you believe that the self-interest of most people generally coincides with the common good, as Jim Hightower claims to, then there is very little reason to support public provision of schools, libraries and other "market failures." Only in cases of externalities or nonexcludable goods is there even an initial justification for government intervention. Then, after this first requirement is met, one must determine whether or not the government can address this public good problem without causing even worse problems of its own. Most people skip this second step and simply assume that if there is market failure, there is a government solution.

Now that he has discovered Rawls, I would recommend Hightower brush up on his understanding of public goods and self-interest by reading Adam Smith:

Every individual necessarily labours to render the annual revenue of the society as great as he can. He generally neither intends to promote the public interest, nor knows how much he is promoting it...He intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for society that it was no part of his intention. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good.
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Only in cases of

Only in cases of externalities or nonexcludable goods is there even an initial justification for government intervention. Then, after this first requirement is met, one must determine whether or not the government can address this public good problem without causing even worse problems of its own. Most people skip this second step and simply assume that if there is market failure, there is a government solution.

@ a fundamental level, we are confronted w/ yet another manifestation of the seemingly ubiquitous perfectionist/utopian fallacy, the notion that any/all significant public/private good problems can be addressed by relatively short (5-10 year long) term policies. most people skip the second step you outline because of an inveterate, fantastically erroneous assumption that there exists a wonderous policy formula that can function as a panacea.

the obvious painful truth is that there is no such magical formula & macro-level decisions always come down to compromise. this answer, of course, will never satisfy a utopian. such are the consequences of paying attention to the likes of hegel & heidegger, two savant idiots that have damaged the civic philosophy of the last 200-odd years in innumerable & inestimable ways.