Why go the public way? (Part one)

If tomorrow the government for some reason disappeared and we were all left without a system of state would it in fact be such a bad thing? There are people across the planet (and especially in the USA) who say that anarchy or virtually no government involvement in our lives is the best situation for the individual. What they don't recognise is that without important services for the public, run by the public sector all that is left is the whims of a small number of the richest to decide what the rest of us get and how much it will cost.

Since the collapse of communism as an economic alternative to capitalism in the 1990's and mainstream acceptance of market forces as the single dominant principle following the Thatcher/Reagan era, it has been fashionable to see the public sector as the biggest problem to deal with. A recent example proves exactly the opposite. The financial disaster that has swept across Europe since 2008 has shown us that terrible errors made in the banking sector demanded huge amounts of taxpayer's money to prop-up and compensate for excessive risk-taking by finance “experts.” The ideologues who argued against government regulation and oversight are the very same people who have put out their hands for government bailouts for their shaky financial institutions.

What this continuing disaster clearly shows is that those making decisions in the private sector are at least as likely to stuff up as those in the public sector. And they are in fact even more likely to make judgements that are in their own self-interest rather than any notion of the common good because that is the nature of business. To survive they must make profits. In smaller operations the overriding concern is to keep the books balanced and not go into the red too often or for too long. In larger companies with shareholders their main job is to make sure that these shareholders get significant dividends - good returns on their investments. All other matters are minor when compared to the financial bottom line. Yes, there are some corporations and some bosses who are ethical and treat their employees well but especially in multinational companies those in ultimate control (ie. owners and shareholders) often do not even live in the same cities or even the same countries as the workers who create the revenue for them. Their greatest priority is to produce more wealth for the already wealthy.

On the other hand, there is the public sector. Governments routinely fail the people they are supposed to be accountable to - not shareholders, but instead citizens, or at least voters. We should not confuse the incompetence or corruption in governments of every kind with incompetence or corruption in the private sector because there are some crucial differences. In theory, every few years electors in democratic countries have the opportunity to remove governments that let them down, and in fact we often do this. When the political system itself fails its citizens, such as in the two-party system that has caused many of us to question democracy itself (including in Spain, the UK and the USA) an alternative should arise before too long, provided that the populace takes a strong enough interest in how well it is governed. In Spain, Podemos is one example of this.

The 20th century had one fundamental battle of ideas that ran through it and that was the battle over how much government we would have in our lives and why. One extreme end of the spectrum held that complete state control of the economy was ideal but across China, Russia and Eastern Europe this has proved to be too much to bear. So-called free-marketeers countered that this proved that government “interference” in the supply and demand of goods and services (including the supply of labour) was mistaken - that it is somehow counter to human nature. In this column next month I will be arguing why it is they who are in fact mistaken.