IBJOpinion

MARCUS: What is it worth? TV has the answer

Morton Marcus
April 16, 2011
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Morton Marcus

“The Price is Right” is far different from “Deal or No Deal.” The latter is a game of chance—find the beauty holding the briefcase with $1 million. “Price” requires you to know the “usual and customary” charge for an item—a variant on the song “How Much is That Doggie in the Window?”

Discovering value emerged as a TV staple long before the recent economic tsunami. Could public television exist without “Antiques Roadshow”? Can you imagine HGTV without a program delving into home prices? Before long, maybe a Blue Cross channel will initiate a program during which patients on a gurney, doped up with a sedative, get a chance to win a free procedure if they can “Price the Operation!”

Let’s think about this for a moment. We appear obsessed with value. We are outraged by prices at the gas pump and jump at the chance to buy anything advertised as 50-percent off. We purchase Christmas wrapping to hold in waiting for 48 weeks in anticipation of higher prices closer to the time of need. We delay buying the 52-inch TV because we know the price will fall. We know a good price when we see it, and we know when the price is too good to be true.

Price information fills our heads and occupies our conversations. But all these are private-sector prices. We don’t have any idea of prices in the public sector.

What does it cost to fill that pothole? What would it cost to keep that pothole from recurring soon? How much does it cost to provide instruction for a learning-disabled child? What does it cost to try a person for possession of marijuana?

With government, we assume the sum we pay is a close approximation of the cost. Government isn’t supposed to make a profit. But what should be the price to park on a downtown street? The cost to government is trivial. Here we are thinking more broadly of the costs to others, the costs of not finding convenient parking or the costs of traffic congestion.

Some government services are given away. No price (fee) is charged to park on most streets, to borrow books at the library, or for immunizing a child. The benefits of these services dominate our thoughts.

Today, many challenge the idea of “free” parking or a “free” library, believing that those who use government resources ought to pay for them. Similarly, there are those who, aside from questioning the value of vaccinations, would have the families of the inoculated pay for that protection.

These are neither silly nor sinister thoughts. But they frequently discount the reasons for many essential government functions. First, it is often wise to separate services from the ability to pay for those functions. Second, many government activities have positive external effects.

A public with good access to knowledge and art is of value to all. Similarly, a public immune to infectious diseases is a benefit to all. A fee standing between a citizen and a public service discourages use and reduces those universal benefits.

We could have a better understanding of public-sector services by taking a clue from the private sector. Let’s have our mayors, governors and legislators host public access TV programs called “What Does It Cost?” We and they might learn something of value.•

__________

Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.

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  1. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

  3. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

  4. The facts contained in your post make your position so much more credible than those based on sheer emotion. Thanks for enlightening us.

  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

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