It’s an interesting time to teach public policy.
As I tell my students, I am much less concerned about their eventual policy preferences than I am with the analytical processes through which they form those preferences. I figure I’ve done my job if they use two phrases more frequently than they did before taking my class: “It depends” and “It’s more complicated than that.”
Two current policy debates provide great examples of what I mean. The first is the huge mess that is Governor Daniels’ effort to contract out Indiana’s welfare intake system. The second is reform of American health care. The claims and counterclaims about both initiatives mostly involve labels—“privatization” and “socialization” being the most prominent ones. Those labels, in turn, trigger ideological reactions, left and right, that are generally—to be kind—unexamined.
The most basic question to be asked about any proposed public policy is a deceptively simple one: what, if anything, should government do? In other words, is the problem we are addressing one that can or should be left to the private sector? Or should it be “socialized,” i.e., provided communally by government or by for-profit or nonprofit organizations? Despite those on the left who want government to take responsibility for more aspects of our society and those on the right who believe private enterprise is always superior, the answer to that question will usually depend upon the nature of the task at hand.
Most Americans agree that police and fire protection, for example, should be socialized through the government. Ditto national defense, for obvious reasons. Most Americans also agree that income shouldn’t be socialized; we want to provide a safety net to those who cannot care for themselves, but we have ample evidence that socialized income systems—whether through idealistic communes or socialist governments—stifle important freedoms and don’t provide sufficient incentives for productivity and innovation.
When government is given responsibility for providing a service, contracting with profit-driven companies may or may not make sense. It depends. Filling potholes isn’t as complicated as deciding whether a single mom qualifies for welfare. Private contractors’ primary incentives are about cost control, not service to the indigent, and the human consequences of ineptitude and wrongful denials of benefits can be tragic.
It would also be nice if our policy debates centered upon the actual role that government is proposing to fill. I’ve seen several TV ads warning against “government-controlled healthcare.” But no one is proposing a system where our medical providers work for government. The argument is whether government should have a larger role in providing health insurance. Opponents of “socialized” medicine may not have noticed, but we have already socialized medicine, through the insurance companies that currently decide our care. The question before us is whether a new government entity should compete with those insurers. Would a “public option” keep private insurers honest? (Since Medicare’s overhead runs around 3% while private insurers average 24%, it’s worth considering.)
When should we privatize? When socialize? It depends.