At the birth of the American republic, the word “private” had a sinister connotation. Derived from the Latin privare, meaning to reduce or tear apart, it described behavior often contrary to the public interest. In the late 18th century, a pirate was called a privateer.
Today “private” has become a positive, even boosterish word, while “public” carries a shady undertone. “Private sector” has become synonymous with efficiency and innovation, while “public sector” connotes bloat and unresponsiveness, even corruption.
A sentence in Peter Nelson’s recent screed against a public option for health insurance (“Where battle line is drawn on health care,” June 23) sums up the new zeitgeist like this: “Everyone understands that UPS and FedEx exist to keep the U.S. Postal Service honest. It never works the other way.”
Never? How remarkable that the adulation of the private sector continues even as it brings society and the economy to their knees. Wall Street firms pocketed billions in private profits while their actions impoverished tens of millions. Perhaps it’s time to revive the word “privateer.”
Everywhere we look it is the private, not the public, that has proven bloated, inefficient and corrupt.
A recent BBC investigation revealed that private military contractors in Iraq had “lost, stolen, or not properly accounted for” at least $23 billion in taxpayer funds.
A few months ago, Chicago privatized its public parking meters and the cost of an hour of parking promptly rose by 200 percent!
In the 1960s, when Canada shifted to a single public health insurer from a system dominated by private companies, per capita health care costs in Canada were about the same as they were in the United States. Today, Canada’s public health system delivers first-rate health care to all Canadians for far less than our private system costs to provide care for less than 80 percent of Americans.
In 2003, Congress added a “private option” to Medicare. Private insurers promised the efficiency of a private market would lower costs and improve care. In the only empirical case we have in this country of private health insurers competing with a “public option,” the public won hands down. According to the Medicare Payment Advisory Commission, Medicare Advantage plans cost an average of 12 percent more than traditional Medicare to provide the same care, resulting in excess costs of $54 billion over five years and $149 billion over 10 years.
If I had my druthers, I’d opt for private doctors and hospitals paid for by a single public insurance company, as Canada has, because I don’t trust the private insurers to fight fair if a public option is created. But if they did, the competition between private and public might prove useful.
In 1979, Phoenix initiated a competition for residential solid waste collection. Private firms bid against city work crews. Over the next 15 years, the inflation-adjusted cost of service declined by 38 percent for all garbage collected by both private contractors and the city agency.
For more than 30 years, Minneapolis has allowed private haulers to collect solid waste from about half the city while city crews collect from the other half. In this case, the public and the private don’t directly compete, but contrary to Nelson’s assertion, they do hold each other honest, spurring higher efficiencies and productivity.
The residents and businesses of Lubbock, Texas, have for more than 90 years been able to buy electricity from either a city-owned or an investor-owned utility. Two sets of wires run down their streets. In this case, the public and the private don’t compete on price. They compete on service and quality, and from all accounts their customers enthusiastically support the ability to choose.
One of the reasons it’s so easy to condemn the public sector is that it is so, well, public. Government makes decisions in front of everyone. Even a cub reporter can easily uncover problems. The private sector, on the other hand, acts in secret.
In part, we beat up on the public sector because we can. We can throw da bums out. We can even, if we choose — and we seem to be so choosing — shutter the public sector. The debate about the relative merits of the public and private sector is a healthy one. But a viable debate needs two sides. Where are the political leaders who will stand up and speak forcefully about the need for an expanded “public” and the dangers of an expanded “private”?
This article originally appeared in the Star Tribune.