Column by George Sibley
Political Economics – February 2003 – Colorado Central Magazine
A READER FROM Whitefish, Montana, took me to task for an inaccuracy in my enthusiastic bashing of private-sector public transportation (December 2002 issue). Specifically, he took issue with my perception about the poor quality of the rails the trains run on, and it turns out that he is right. Checking some more authoritative sources than my own perceptions and word-of-mouth from fellow rail passengers, I’ve learned that the Class I trunk lines in the United States today are in much better shape than they were in the 1970s and 80s, when my perceptions were formed. That doesn’t mean things are great, but I wasn’t giving credit where it’s due, and I apologize to both readers and railroads.
But that reader seems to have missed my larger point about the private and public sectors, and I suspect that he wasn’t alone. So I want to try again to make the point from another direction. He seemed to think that I was merely asking for more public regulation of the private-sector transportation industries — specifically the airlines. But no. I don’t want more regulation. I want us to rethink whether the private sector should be doing public transportation at all.
Actually, it’s high time for us to question whether private corporations should be providing a lot of the public-oriented services which they now deliver, because there is a serious disconnect between profit and public service — especially in a sparsely populated region like Central Colorado. Consider our roads.
We gave up on private-sector highways hereabouts long ago. We tried private tollroads, and they failed. When the tollroads were actually maintained, they weren’t profitable — which isn’t too surprising, considering the terrain in our region. In the case of highways, profit and public service were clearly at odds.
But perhaps profit and public service are usually at odds. Much of the infrastructure for air transportation is publicly funded — from the locally-funded airports to the federally-funded air controllers, and now small communities in Central Colorado will have to come up with profit guarantees to get the airlines to fly in at all. But when the airlines suffer huge losses, they’re bailed out with federal funds.
And the railroads could never figure out how to offer comprehensive public transportation profitably, either. Gradually, line by line, the railroads convinced their regulators to let them out of it, until now Amtrak survives, but offers very limited service.
Thus, I’m not merely recommending more public regulation of the private sector. On the contrary, I think there’s a disconnect between providing public service and ensuring profitability, because profits can be improved by cutting service, and service can be improved by cutting profits. Thus, where universal service is the democratic objective, the only thing that really makes sense is that form of “public capitalism” called “taxation” — which we undemocratically allow ourselves to be brainwashed into considering some kind of evil.
I would not suggest that “public capital” is always invested well — but who would make that claim about private capital? In an intelligent society, taxpayers should think of themselves as investors in the things they need for a good society.
If, like private investors, we wanted to have a financial return on our investment in public services, we would have to pay higher taxes, but that would be pretty stupid. Private enterprises provide a financial return for a few investors, because there are many, many consumers. When you pay for a public service, however, the service is presumably return enough on your investment. I’m happy with that.
Another obvious area in which there’s a huge disconnect between market capitalism’s need for profit and the public’s need for service is health insurance. How can we possibly believe that the best way to pool our resources to help each other through unpredictable misfortunes is to put those resources in the hands of private-sector entities that have to make a profit?
OREGONIANS LAST FALL put up an initiative for “universal” health insurance; all taxpayers earning more than 150% of the poverty level would invest in insurance for all. They calculated that 25% of the premiums people were paying for private insurance went to advertising, executive pay, and profits (and profits rose 20% to 54% for most major health-care “providers” in the third-quarter of 2002 over 2001, even though health insurance has become more unaffordable in recent years). Plus, that 25% undoubtedly increased considerably in Oregon that quarter to pay for the big advertising campaign the private-sector “providers” mounted to defeat the measure.
But the Oregon proposal represents a kind of good sense that we cannot ignore forever. Someday we have to wake up and see how this blind faith in private-sector market capitalism is undermining our ability to do well those things that can only be done well through some form of “public capitalism.”
The private sector is very good at coming up with new ideas, and financing whole industry “startups” through market capitalism — the electronic evolution of the past quarter-century is evidence of that. But when it comes to putting broad public systems of universal service into effect — including systems to truly deliver the electronic evolution to all the people — what works best is that form of public capitalism that we call taxation.
Everybody pays; everybody gets a reasonable level of service. And that should be return enough on the investment. I hope some Libertarian Republican will try to persuade me how wrong I am in this — but with real examples, not religious ideology.
George Sibley teaches and writes in Gunnison, and will miss the Cattlemen Inn.
