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Neoclassical economists insist that government outlays for administration, defense, & internal security generate pure public goods that benefit all members of the community since they are completely nonrival in consumption; eg, the benefits to one citizen from a battleship in no way prevent others from having similar benefits. Hence, in studies of fiscal incidence, economists allocate all such presumed benefits at their total costs to households by some a priori formula. It is argued that the benefits from so-called pure public goods -- insofar as they exist -- are civilization itself. They are the overhead costs of the modern state, whose benefits are community life, incomes, etc. They do not enter into individual preference functions in the usual manner; allocating them as if they did involves double counting. A better procedure is to ask who pays for these public overhead expenditures, or who pays more in taxes than received in benefits such as transfer payments, food subsidies, schooling, etc. The evidence from studies of fiscal incidence in several countries indicates that the rich -- who also most enjoy the "blessings of civilization" -- generally pay for them. 4 Tables. AA.

Controversy continues as to the effectiveness of foreign aid and hence whether it is a suitable activity for public financing. Frequently the discussion is in general terms, and country studies are uncommon. Thus, Dr Ozay Mehmet's appraisal of the 'Effectiveness of Foreign Aid- the case of Somalia', in this Journal, IX, I, May 1975, pp. 35–47, is Very welcome, particularly since lessons from Somalia's experience are probably applicable elsewhere in Africa. Nevertheless, some of his conclusions mislead on important and au courant issues. Hopefully this commentary will help set the record straight.