we'll examine that question with the help of economic analyst richard gill on this edition of economics. i'm david schoumacher. we can all enjoy the benefits of public services such as museums, schools, and highways, but they have to be paid for. they are, usually in the form of taxes. why must the government provide these services? why can't we rely instead on the free market? it's a controversial question, as we see in the case of private utilities versus the tva. the great mississippi flood of 1927 left 800,000 homeless. swelling waters overran levees throughout the tennessee river and into the mississippi, turning northern louisiana into an inland sea. secretary of commerce herbert hoover called the flood the greatest peacetime calamity in the history of the country. the disaster was predictable. the mississippi had flooded before. local authorities attempted to provide flood control, but with uneven efforts. the levee system is only as strong as its weakest link. the building of dams could have prevented the flood. some legislators wanted to use federal funds. but they faced tough

wesked economic analyst richard gill to explain the economic thinking behind social security. social security program is a bit like god, country, and yale. you have to be for all of them -- well, perhaps not yale -- but you have the feeling that they all work in rather mysterious ways. the reason we're for social security is that it has, in fact, achieved its central purpose -- providing for the needs of the elderly. poverty among our senior citizens, a deep concern in the 1930s, has been substantially reduced in the present day. the reason social security seems mysterious is really twofold. first, the system doesn't work at all in the way we were taught to believe it would. the idea seemed to be that an average citizen -- let's call him peter -- would deposit his and his employer's payroll taxes in a fund which would keep growing over the years. at retirement, this same peter would use theseaccumulated funds to live on. in fact, the way it works is that young peter pays into a fund which is immediately used to pay already elderly paul. the notion of a huge accumulating trust

we asked analyst richard gill what our economic past may imply about the future. during her industrial revolution, great britain was running out of forests. she responded by shifting to a coal technology. production increased many times over. that has been the story of modern economic growth. we see it today in metals like copper and energy sources like oil. this scenario isn't accidental. it is built into the way the market mechanism works. we have first a growing shortage of some resource. its price goes up, setting in motion a series of responses. first, it becomes profitable to try to find more-- we getdded supply. it becomes advisable to use as little of this resource as possible-- we get conservation. thirdly, it becomes desirable to focus our scientific and technological attention on developing new products and means of production that use other resources-- alternative technologies. historically, there is little doubt about the matter. responses have not only met the resource shortage problem, but have overshot the mark by a great margin, leading to increas