The Private Abuse of the Public Interest: Market Myths and Policy Muddles
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- ISBN13: 9780226076430
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Despite George W. Bush’s professed opposition to big government, federal spending has increased under his watch more quickly than it did during the Clinton administration, and demands on government have continued to grow. Why? Lawrence Brown and Lawrence Jacobs show that conservative efforts to expand markets and shrink government often have the ironic effect of expanding government’s reach by creating problems that force legislators to enact new rules and regulations. Dismantling the flawed reasoning behind these attempts to cast markets and public power in opposing roles, The Private Abuse of the Public Interest urges citizens and policy makers to recognize that properly functioning markets presuppose the government’s ability to create, sustain, and repair them over time.
The authors support their pragmatic approach with evidence drawn from in-depth analyses of education, transportation, and health care policies. In each policy area, initiatives such as school choice, deregulation of airlines and other carriers, and the promotion of managed care have introduced or enlarged the role of market forces with the aim of eliminating bureaucratic inefficiency. But in each case, the authors show, reality proved to be much more complex than market models predicted. This complexity has resulted in a political cycle—strikingly consistent across policy spheres—that culminates in public interventions to sustain markets while protecting citizens from their undesirable effects. Situating these case studies in the context of more than two hundred years of debate about the role of markets in society, Brown and Jacobs call for a renewed focus on public-private partnerships that recognize and respect each sector’s vital—and fundamentally complementary—role.
The authors support their pragmatic approach with evidence drawn from in-depth analyses of education, transportation, and health care policies. In each policy area, initiatives such as school choice, deregulation of airlines and other carriers, and the promotion of managed care have introduced or enlarged the role of market forces with the aim of eliminating bureaucratic inefficiency. But in each case, the authors show, reality proved to be much more complex than market models predicted. This complexity has resulted in a political cycle—strikingly consistent across policy spheres—that culminates in public interventions to sustain markets while protecting citizens from their undesirable effects. Situating these case studies in the context of more than two hundred years of debate about the role of markets in society, Brown and Jacobs call for a renewed focus on public-private partnerships that recognize and respect each sector’s vital—and fundamentally complementary—role.
The Private Abuse of the Public Interest: Market Myths and Policy Muddles
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Tags: health care policies, policy spheres, public private partnerships
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This is excellent political science and public policy analysis critiquing a philosophy and approach to policymaking that the authors term “market utopianism”. It is grounded in a look at how several market-based public policy approaches in 3 areas–health care (HMOs, for-profit health insurance) example), education (public school choice, charter schools, and private school vouchers), and transportation (airline, railroad, and trucking deregulation in the 1980s)–have actually played out in the real world as opposed to the drawing board.
“Market utopianism” is, roughly speaking, the view that market-based government policies are a) presumptively applicable and usually, if not almost always, preferable as a government policy approach, regardless of the issue; and b) require little or nothing in the way of government regulation or other intervention to work well.
In its more extreme versions, often on display in political campaigns in recent decades, it expresses a “markets good, government bad” view that serves as an instantly available, one-size-fits-all response when a candidate is asked what his or her approach to public policy is.
The authors discern a 5-step cycle common to the introduction of market-based reforms in the three policy areas referred to above. The final stage is pragmatic adjustments to the initial policy to correct for its practical flaws. These adjustments entail expanded and more vigorous governmental intervention, contrary to the rhetoric usually accompanying initial adoption of the policies which implies no, or a minimal, role for government in putting them into effect and ensuring they work properly.
For example, in response to consumer complaints about how HMOs have actually functioned, many states have stepped in to pass “patients’ bill of rights” laws which constrain the ability of HMOs to deny coverage for certain services or adjudicate patient disputes in-house rather than in an independent, impartial forum.
Drawing lessons from practical experience, the authors describe and advocate what they call an institutional pragmatist, or realist approach as more likely to result in sound, sensible and effective policymaking. This, they maintain, is the approach favored by the real Adam Smith, as opposed to the incomplete version of him trotted out by anti-government, free market ideologues.
At 131 pages, this is a succinct, accessible, well-articulated analysis and reminder of what our actual experience shows: markets do not self-regulate in some sort of blissful government and regulation-free state of nature. Rather, they require vigorous, effective government regulation to function properly. Recommended as a non-technical read for thoughtful policy types and other citizens.
Rating: 5 / 5
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