No Substitute for Socialization

William Lloyd Garrison, the great abolitionist, was an impatient spirit. When told that slavery would end only through baby steps in the right direction, he responded, “Gradualism in theory is perpetuity in practice.”

One need not equate chattel slavery to government services (though the income taxation that pays for those services has been likened to slavery) to see the applicability of Garrison’s maxim. To be sure, the political world moves slowly most of the time, but if those who want government shrunk radically call for gradualism, that is surely what they will get—at an even more glacial pace than if they had espoused abolition.

“Steps in the right direction” are all well and good. But the advocates of any presumed steps are obliged to demonstrate that the direction is indeed right. They usually just assert it without argument. That’s not good enough.

To my claim that “privatization” that falls short of true socialization “merely blur[s] the line between ‘private’ and ‘public’ sector … and undermine[s] the case for the genuine divestiture of state-held assets,” Leonard Gilroy responds that “the opposite is true.” But he makes no argument for this. His example of the “contract city” Sandy Springs, Georgia, does precisely what I claim: blur the line between “private” and “public.” Its residents may get services at a lower cost than they would have otherwise, but that’s not really the point of what I call socialization. As Randal O’Toole notes, it may not even save money, since politicians will always be tempted to spend any savings.

The reason I would not call contract cities a “step in the right direction” is that the lesson likely learned from them is not that government shouldn’t coercively provide services, but rather that government has a wider array of options for coercively providing services than we thought. I submit that is the wrong direction. And what lesson would we expect to learn from contracting out land-use restrictions? We really must keep our eye on the ball!

This discussion reminds me of two other hot topics in public policy. The first is medical marijuana, which some advocates of drug decriminalization believe is a “step in the right direction.” I don’t see it. I think the late Thomas Szasz was right when he said that medical marijuana, far from striking a blow for individual autonomy, merely bolsters “the therapeutic state” by conceding its power to make, in its wisdom, an exception for people it deems sick enough.

Likewise, those who say immigration restrictions should not be abolished until the welfare state is eliminated unwittingly become preservers of the welfare state by saving it from the strains that open borders might produce.

How do we end government services if politicians are able to make them appear more efficient by contracting out? And what happens to the cause when “privatization” is perceived to fail, as it did with the Baltimore schools and elsewhere?

I don’t see how we will make progress in shrinking the state if we back “reforms [that] allow the public sector to steer while the private sector rows.” At best we’ll teach the public that the market is simply an efficient means to the ends chosen by politicians. Though surely unintended, Gilroy’s strategy seems more suited to sowing confusion about what the market process really is.

I completely agree with Dru Stevenson that “believing in free markets does not necessarily mean believing that all goods and services are best provided by for-profit entities.” After all, when I wrote about socializing the schools I said, “Some schools might … become consumer or producer cooperatives.” But I don’t agree that we need to worry that real privatization might “easily result in an anticompetitive government-created monopoly”—not if government genuinely gets out of the way. There’s an easy way to overcome “the cultural tradition by which consumers expect a sole provider and feel uneasy about competitors”: Let competition freely blossom.

I also wouldn’t worry that ending government support for education will give an advantage to religious schools over secular ones. First, that should be no concern of the government, and second, it’s amazing what people can do when left to their own resources. As long as the government money keeps rolling in, the necessity to find alternative financing never arises.

Stevenson seems to think that government has come to dominate certain services like transportation because of market failure. Inspired by Public Choice, I’m more of a skeptic. Government tends to expand because rulers and their “private-sector” cronies benefit. The market-failure excuse is an ex post rationalization. At any rate, those who believe in market failure seem oblivious to the more serious and less remediable problem: government failure.

Also from this issue

Lead Essay

  • In a sweeping essay, Sheldon Richman explains why private property and free competition are superior to state-provided goods and services. He warns against granting “private” corporate monopolies, which are not true privatizations, but act as arms of the state. He adds that for many state activities, the best way to privatize is not to provide the service at all — as in the case of punishing victimless crimes, which no one should do. For legitimate services, he recommends a “homesteading” approach, in which stakeholders in a public service, such as a school, would receive shares in a new, independent corporation.

Response Essays

  • Leonard Gilroy argues for the benefits of incremental privatization. The general public, he writes, must still be convinced that private entities can perform many of the services that have for a long time been provided by monopoly government entities. To win them over, demonstrations will be necessary, and these should be incremental in nature. Gilroy cites several such attempts and argues that they have successfully built support for the idea of privatization.

  • Professor Stevenson agrees that much so-called privatization does not deserve the name. It both fails to shrink the government and also creates new constituencies for government spending–the private firms who win lucrative contracts. That said, we must think very carefully about what a more privatized world would look like, and whether we would really prefer it in all cases. Are we comfortable, for example, with the largely religious education system that would likely replace state-run schools?

  • Randal O’Toole argues that the difference between success and failure in privatization is primarily a matter of incentives. He cites examples of failed incentive structures, like British Rail and New Zealand’s fishing quota system, as well as some successes: Denver’s Regional Transit District has contracted bus service that runs for half the cost of its government-operated lines, and Atlantic City has an entirely private bus fleet.