Private vs. Public

(Another post motivated by good discussions in my “Consumerism, Politics and Values” course readings today from both Benjamin Barber’s Consumed: How Markets Corrupt Children, Infantilize Adults and Swallow Citizens Whole,  and Don Slater’s Consumerism and Modernity).

In past posts about the economy I noted that the unsustainable trends that have brought about this crisis really took root in the early 80s.  Until then we had a current account surplus, a strong industrial base, and had been paying off government debt as a percentage of GDP, even though 1968 had been our last balanced budget (we also had ones for 1999 and 2000, but those were enabled by the bubble economy).   As we delve into consumerism and in particular consumer culture, this also seems to be the point in which our culture took a wayward turn.

The problems and dangers of consumerism are immense for individuals.  It de-humanizes us in a way, limiting our freedom and our scope of action even as we believe we have complete free choice.   One poignant way it does this (noted by both Barber and Slater) is to privilege individual freedom and the “private” over societal good and the “public.”

To free market true believers the private is, if not the only relevant thing (Thatcher infamously claimed that there is no society, only individuals and families), at least the most important.   The public sector, or government, is bureaucratic, dangerous (it starts most wars and has a legal monopoly on violence) and as Hayek notes, unable to process the vast amount of diffuse information that a market can.    Therefore, the public sector is to be as limited as possible, and most decisions that are socially relevant should be made by free autonomous actors in a voluntary manner mediated by markets.

As an abstract argument, the appeal of such an approach is obvious.    State power is more obviously and blatantly violent and oppressive, bureaucracies are notorious for not only not effectively processing diffuse information, but actively preventing clear and known information from being acted upon.   Markets have proven their worth by creating an unprecedented amount of wealth  and prosperity, and where they govern, states are generally at peace.   So why would a privileging of the private over the public be an error?

First, there is the obvious problem of dualistic thinking.   A dualistic thinker sees two opposite options and believes one must be chosen.   It’s either a free market or a planned economy.   To be sure, the dualistic thinker recognizes that there is a middle ground, but by definition that middle ground is suspect.  If one aspect of the dualities is superior to the other, then one should get as close to that aspect as possible.    However, this dualism is impossible to maintain.  The difference between private and public varies in function and impact depending on context.   It’s logically wrong to say either a free market or a planned economy is globally superior; rather, depending on the case, it might be better to plan (e.g., the military, the police, or the legal system) or to let the market operate (setting prices for most goods and services, etc.)

Given that the arguments against state power and bureaucracies are valid arguments, the issue really becomes when is the need for public action important enough to risk the dangers and disadvantages of governmental activity.   This also means to compare those risks and dangers — in some cases they may be immense, in others the risk may be tiny.   This complicates the question, of course, but shows a failure in logic of those who argue pure ideology.   This is also true for those who posit markets as morally superior choices because they allegedly allow for the most liberty.   That claim again varies by context; a market in sex trade of abducted women is quite different than a market for peanut butter.

Often free market ideologues try to claim that governments or sex trade folk use physical force and thus that is immoral, but it is not logical to simply declare physical force as bad when non-physical forms of coercion — economic, psychological, manipulation by powerful elites, etc. — are more profound and damaging to freedom than mere physical force.   And once that obvious line is muddied, it really becomes a complicated effort to make moral judgments balancing different factors.

So there is no logical reason to assume that the success of market economics means the private is always better than the public, only that in many cases government power can be abusive and counter-productive — communism certainly proved that!

The problem with simply letting private choices determine public outcomes has been noted by Mancur Olson (the free rider problem) and what Kenneth Waltz called “the tyranny of small decisions.”   Our short term direct wants lead us to rationally choose something that actually goes against our longer term, broader interests.   We want downtown to survive, but choose to buy a TV at Walmart.   We want a clean environment, but choose to drive a large SUV because we want to pull our boat to the lake for recreation.

In the recent economic housing collapse, short term interests made it rational to make loans that people couldn’t afford: it generated assets on the balance sheet, earned fees, and given rising home values, default was unlikely.  Many people noted the long term negative consequences of these acts, especially as mortgages were being bundled into financial products sold as “very safe” investments, but the power of the short term direct interest to trump the longer term “true” interest was immense.

Moreover, private choice will always privilege those with the money.   Their choices matter more.  Hence capitalism does little to meet real needs in much of the world — it may be in our long term interests to have a broader base of prosperity and avoid situations where large majorities would have a rational interest in destroying the system, but it serves no short term interest.   The public good — civil society and social stability — gets destroyed by an emphasis wholly on the private.    That leads to less charity, less solidarity with the community, and a ‘something for nothing’ mentality that somehow if we selfishly do what we want, the longer term broader interests will take care of themselves.  The magical market will somehow make it all come out right.

The answer, however, is not to veer strongly towards government control.  Rather to recognize that the prosperity we have came from a kind of balance between markets and government action to try to provide equal opportunity, address free rider issues, and look at the broader public interest over crude short term individual interests.   That’s why we have regulations on pollution, credit practices, and the like — powerful actors can exploit and manipulate less powerful ones, and that is not good for the public over all.

The current crisis is time to finally put aside that cult of the private.   Yet, in so doing, we need to seek balance, and not deride or denigrate markets or private interests.   We need to ask serious questions about where and to what extent public interests are being corrupted by privatization, and to what extent government action unduly limits effective market solution to problems the market is best in a condition to solve.

President Obama has taken steps towards recapturing space for the public sphere, and limiting the ‘cult of the private sector.’   His rhetoric suggests he does not want to shift to a ‘cult of government’ as an alternative.  Yet for this to work there needs to be open and honest dialogue over the role of government, the importance of broad public goals, and how we make the calls on how much and what to do.   Most people believe such calls now depend on who contributes to campaigns — other people’s private interests, not true public interests.  To overcome this crisis and develop a sustainable future economy we must move away from a culture dominated by consumerism.  Finding the proper space and role for the “public” is a good first step.

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  1. #1 by notesalongthepath on July 13, 2009 - 20:39

    Scott,
    You should have a column at an online news company. You have a broad understanding of cause and effect and how society/business/government are related, with an overriding sense of values, and of what is truly important in a life well-lived. I wish more people could read what you write/say.
    Thank you!
    Pam B

  2. #2 by henitsirk on July 15, 2009 - 18:46

    Dualism might just be the root of all evil! Maybe we need to seek the middle path in all things — hard to do in this country of individualism and “freedom”. (How unfree are we when we reduce complex reality to dualism?)

  3. #3 by henitsirk on July 15, 2009 - 18:47

    Forgot to follow the comments!

  4. #4 by Scott Erb on July 16, 2009 - 01:54

    Thanks for the kind words, Pam. I’m enjoying your blog too — excellent writing. I agree completely with Henitsirk on dualisms. We set our selves up for mistakes and errors by simplifying reality in that way.

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