An objection I’ve seen to privatization of public services is that they exclude people on the basis of lack of payment. Economic power becomes a means of assuring access to “public” goods, and so the goods are not really public anymore, particularly for the poor or the unlucky (those who chose to pay for a public good but to the wrong provider, who happens to provide poor service).
The concept of legal rights tends to vanish in such a system as well, since the administration of the goods is no longer regulated but instead decided by the marketplace, which will disproportionately favor the needs of the wealthy over the needs of the majority.
Finally, such a system works against progressive taxation, since provision of public goods is no longer paid for with a pool of funds taken from the wealthy and redistributed to those who can afford less through public access to public goods. Instead, provision of the goods is one-to-one, you pay and you receive access.
Such public goods might be:
military defense
legal representation
water access
firefighting protection
electricity access
law enforcement protection
I believe that without guaranteed access to regulated public goods, an economic system with wealth inequality tends to break down.
Firstly, fully agree that wealth equality is a prerequisite to achieving efficiency. So much indeed that economists often optimize for both.
Some of the mechanisms from the article are actually not “budget-balanced”, for example the much-hyped quadratic funding requires a matching fund—which can be raised through progressive taxation. Note that at this point the terms “private” and “public” break down a bit, in theory the taxes could be collected entirely through private coordination, without requiring a public government body, but that doesn’t look like a realistic outcome anytime soon.
In practice, any system can be gamed, which is why tax professionals advocate for “lowering the rate—broadening the base”. Translating this to public goods funding schemes, it might be worth replacing the 1:1 matching schemes of various governments by quadratic funding, but replacing the entire economic system would surely be naive indeed!
Thank you for the reply, Victor. I’m learning quite a bit here.
In general a belief in efficiency through competition is not one that I agree with, and neither is belief in provision of public goods through private unregulated entities. However, having ideas and models of creative alternatives to existing systems is important, to create contrast and encourage deeper analysis of the existing system. Also, in case the existing system fails for any reason, understanding what else is possible, and what the limitations are, seems desirable.
I consider the design of the US political system as a mechanism to reflect and serve public preferences, but also temper those preferences over time and across common groupings of interests. Unfortunately, participation in the system is low, and its results would be different if political participation in the country were higher. A high level of participation would change how spending and taxation happen. That would, in theory, improve the overall satisfaction with government spending on public goods. If you disagree with any of that, let me know, so I can gather information.
Anyway, I appreciate your post, and want to take a few notes about the ideas you proposed here (something I think to do frequently for others’ posts to the forum, actually).
An objection I’ve seen to privatization of public services is that they exclude people on the basis of lack of payment. Economic power becomes a means of assuring access to “public” goods, and so the goods are not really public anymore, particularly for the poor or the unlucky (those who chose to pay for a public good but to the wrong provider, who happens to provide poor service).
The concept of legal rights tends to vanish in such a system as well, since the administration of the goods is no longer regulated but instead decided by the marketplace, which will disproportionately favor the needs of the wealthy over the needs of the majority.
Finally, such a system works against progressive taxation, since provision of public goods is no longer paid for with a pool of funds taken from the wealthy and redistributed to those who can afford less through public access to public goods. Instead, provision of the goods is one-to-one, you pay and you receive access.
Such public goods might be:
military defense
legal representation
water access
firefighting protection
electricity access
law enforcement protection
I believe that without guaranteed access to regulated public goods, an economic system with wealth inequality tends to break down.
Thanks for your comment Noah!
Firstly, fully agree that wealth equality is a prerequisite to achieving efficiency. So much indeed that economists often optimize for both.
Some of the mechanisms from the article are actually not “budget-balanced”, for example the much-hyped quadratic funding requires a matching fund—which can be raised through progressive taxation. Note that at this point the terms “private” and “public” break down a bit, in theory the taxes could be collected entirely through private coordination, without requiring a public government body, but that doesn’t look like a realistic outcome anytime soon.
In practice, any system can be gamed, which is why tax professionals advocate for “lowering the rate—broadening the base”. Translating this to public goods funding schemes, it might be worth replacing the 1:1 matching schemes of various governments by quadratic funding, but replacing the entire economic system would surely be naive indeed!
Thank you for the reply, Victor. I’m learning quite a bit here.
In general a belief in efficiency through competition is not one that I agree with, and neither is belief in provision of public goods through private unregulated entities. However, having ideas and models of creative alternatives to existing systems is important, to create contrast and encourage deeper analysis of the existing system. Also, in case the existing system fails for any reason, understanding what else is possible, and what the limitations are, seems desirable.
I consider the design of the US political system as a mechanism to reflect and serve public preferences, but also temper those preferences over time and across common groupings of interests. Unfortunately, participation in the system is low, and its results would be different if political participation in the country were higher. A high level of participation would change how spending and taxation happen. That would, in theory, improve the overall satisfaction with government spending on public goods. If you disagree with any of that, let me know, so I can gather information.
Anyway, I appreciate your post, and want to take a few notes about the ideas you proposed here (something I think to do frequently for others’ posts to the forum, actually).
Thanks, I appreciate the discussion. :)
> A high level of participation would change how spending and taxation happen.
Absolutely. Unfortunately many people don’t see it’s worth the effort, arguably very rationally so (https://en.wikipedia.org/wiki/Rational_ignorance) and high participation often only comes from elites (https://stukroodvlees.nl/de-participatie-elite-en-de-participatieparadox/).
From the mechanism design corner, sortition (for voting, referenda, any political discussion) might help: https://en.wikipedia.org/wiki/Sortition
Or we can all just decide to actively discuss and deliberate more: https://www.goodreads.com/book/show/7159287-when-the-people-speak