Category: Economics, Finance, and Political Economy

When people disparage the private sector and seek services from the government what they really mean is one or more of the following: 1) DISCOUNT ON RESEARCH / RISK REDUCTION: “I am not able to judge the services in the marketplace, and unable to determine which of the inexpensive choices at my disposal in the market is optimum, and therefore I wish to circumvent the market in exchange for having the same services available to all.” – ie: the ‘roads and sidewalks’ analogy wherein, “I have a right to use the same common goods as everyone else.” 2) PROFIT REDISTRIBUTION: “I am not a desirable customer by any company and therefore, I wish to circumvent the market in order to obtain services that are greater in value than what I produce for exchange in the market by servicing others.” – The redistributive strategy. (To some degree this is a legitimate concern, since there will always be some that it is not worth the effort to serve other than by charity.) The basic idea is that if one conforms to social norms, and pays the high cost of respecting property, that one should get some return on one’s investment. 3) STATUS REDISTRIBUTION: “For any company to whom I am a desirable customer, I will be given services in a manner, and of a quality, that is less than I desire, or which is substandard to my self perceived social status.” (This is redistribution of social status is as important to many on the bottom half, as is monetary redistribution – and to some, more important.) It is particularly important for the lower two quintiles. It is this perception of status redistribution that creates ‘enfranchisement’ in the social order. Or rather, it is participation in the middle class, as a consumer, that people desire in order to consider themselves a ‘citizen’ who supports the social order. 4) ENCOURAGE GOVERNMENT COMPETITION WITH PRIVATE SERVICES: “I can more successfully petition the government for redress than I can a company, because I am a more valuable customer to the government than I am to any private company.” (There is increasingly truthful content to this perception – an argument which is beyond addressing here, but which is the increasing performance of public market, and public-credit companies, acting as bureaucracies because they can afford to rely on credit and prices rather than care of customers. Again, this is difficult, but there are in fact, ‘evil corporations’. It’s just that the government cannot change it by regulation of business performance.) Note that in listing these choices, I am relying on an assumption that differences in human ABILITY. I have not included the options that simply result from laziness. Laziness as a reason to circumvent the market is not redistribution. It is a form of fraud. (Although this is a longer argument.) If someone posits an argument that the government would better serve them, you can easily control the conversation by making the discourse about their individual preferences, and keep asking questions until you identify wich of these four positions, strategies or meanings, the person is relying upon in their arguments.