Johan Norberg of the libertarian US think tank the Cato Institute has an op-ed in the Australian about the population debate. He sets up the usual dichotomy between endemic Government failure and the apparent perfection of markets.

The politicians who blame a crumbling infrastructure on the surprisingly large inflow of people must be surprised to find out that Woolworths is perfectly able to service a growing population, and that there is no lack of gas at the service station for a growing number of cars. The difference is that businesses react to price signals and adapt, because that is how they profit. And they never blame their consumers for too strong demand.

What could explain the ability for private companies like Woolworths to expand their operations to keep up with an expanding population at a better rate than Government? Simple: Woolworths is not afraid of debt. If a new outer-suburban subdivision opened up, Woolworths wouldn’t hesitate to borrow capital to build a new shop.

What would happen if an Australian state government (who, after all, are mostly responsible for service delivery and infrastructure) tried to borrow some money to build a new hospital, or a train station? The op-ed pages of the Australian would fill up with anti-Government screeds, accusing those governments of fiscal irresponsibility, of crowding out, of economic ignorance.

It’s the aversion to public debt that is at the core of the infrastructure and services crisis (to the extent there is one).

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