The Common Interest
American Society: Public and Private Responsibilities.
by Winthrop Knowlton and Richard Zeckhauser.
Ballinger. 360 pp. $24.95.
Not least among the supposedly novel beliefs attributed to the Reagan administration is that many activities undertaken by government should rather be done in the private sector. In fact, this is not entirely a new idea; since the early days of the nation, public officials have looked to the private sector to perform tasks they could not, or would not, do by themselves. During the 1960’s the practice became quite common, as the Kennedy and Johnson administrations enlisted a variety of non-governmental organizations in the “war on poverty” and other efforts.
Yet the Reagan administration has made much more of this idea, while also strongly suggesting that Washington would in the future be doing much less on its own. Early in his first term, President Reagan created a Task Force on Private Sector Initiatives and charged it with promoting “private-sector leadership and responsibility for solving public needs, and [recommending] ways of fostering greater public-private partnerships.” At the same time, he told his cabinet to examine existing programs “to determine which could be more productively carried out by the private sector.” Largely as a result of this and many subsequent studies and directives, “privatization” is now one of Washington’s buzzwords for a broad spectrum of issues—economic as well as social and even, some would argue, in foreign policy. Not a few leading Democrats have hopped on board as well.
How much actual difference this philosophy has made is a matter of some dispute. Critics of the administration have claimed that as a result of it essential government services have been impaired, needs unmet, rampant scandals created, and public leadership and authority eroded. Judging from polls showing renewed support for federal social programs, many Americans now may also believe that too much has been entrusted to the private sector.
On the other hand, many who generally support the Reagan administration feel that it has been too timid in reducing the size of the federal government. Public spending, they say, remains too high, regulatory policies continue to be overly restrictive, and the much-ballyhooed Private Sector Initiatives program has turned out mostly to be a new way of soliciting private contributions for government purposes. Far from carrying out an agenda for privatization, these critics argue, the Reagan administration has allowed innovative ideas like educational vouchers and enterprise zones to languish.
The distinguished group of contributors that Winthrop Knowlton and Richard Zeckhauser have assembled in American Society: Public and Private Responsibilities do not try to resolve this dispute. As befits a book commissioned for both the 350th anniversary of Harvard University and the 50th of what is now the John F. Kennedy School of Government, its concerns are far loftier than the mundane question of whether the Reagan administration has rolled back the public sector. However, the essays contained in this volume are essential reading for anyone who wishes to answer that question intelligently.
One reason is that they show how difficult it is to think about separating public and private responsibilities. History and politics have conspired to ensure that few—if any—activities fit neatly into one sector or the other. As Diane Ravitch recounts in her essay on the development of American education, at various times the methods and values associated with private schools have been influential, at other times those of the public schools. As perceptions have changed, today’s system has evolved into a complex blend of the strengths (and weaknesses) of each. In this as in other areas of policy, untangling public and private responsibilities seems an insurmountable task.
Even if it could be done, it is hard to say how. The efforts of political economists to specify a proper division of roles, Zeckhauser notes in his own contribution, “are not widely understood, carry little political weight, and except in the defense area explain little about the nature of government activities.” Although the private sector might generally be more efficient at producing things, the public sector sometimes has an advantage, especially where fair treatment is involved, or the inculcation of certain values, or limiting profits.
By the same token, although government is normally thought to be better at redistribution, the truth is that much redistribution occurs in the private sector, often as the result of regulatory policies that could as easily (and perhaps more efficiently) be carried out through fees, prices, or other market mechanisms. As for assisting the poor and the needy, Zeckhauser writes that government programs have by no means been an unequivocal success and in some cases private philanthropy might be more helpful.
Yet if neither history nor economic theory offers sure guidance, greater clarity on the relative capabilities of each sector might permit desirable improvements. For example, Nobel Prize-winning biologist Gerald M. Edelman argues here that the displacement of private support for basic scientific research by public sources has led to an emphasis on short-term, mission-oriented work at the expense of the long-range, open-ended exploration that is more likely to produce conceptual breakthroughs. He recommends reestablishing a system of funding of distinguished institutions by “private sources and foundations without concern for some of the notions of democracy that must be heeded in disbursing government funds.”
Much the same point is made by Knowlton in his essay on the arts. Truly creative work, he observes, is most likely to be underwritten by a relatively small number of private sources, attracted for one or another reason to the artist’s idiosyncratic vision. Rather than endlessly seeking to stimulate new discoveries, as they now do, government endowments (and their bureaucratic counterparts among the giant foundations) might more usefully provide sustaining support for artists and institutions with already established reputations.
“Social assignments should play to social strengths,” generalizes Michael Walzer. Government should be responsible for those tasks that require coercion; the private sector for those where a wide range of individual choices is desirable; the “social sector”—voluntary associations, religious groups, and so on—for those where significant minority interests are found. A reasonable prescription, but one which overlooks the main point. Often, what a task seems to require is as much a creature of the customary arrangements for doing things as it is a means for determining them. A nation with a strong commitment to the public sector may imagine that “creativity” in the arts and sciences is less important than other goals (or may emerge along with them). Conversely, a nation without such a commitment may think that civic virtue is no more than the totality of individual choices.
In other words, clear thinking about what the public and private sectors can best do is still no substitute for a sense of what the common interest really demands. This is most evident when public and private responsibilities clash. As Thomas C. Schelling and Glenn C. Loury show in their respective essays on cigarette smoking and poverty, much of what we regard as problematic is the result of behavior over which individuals have considerable control. Expanding the public role might help somewhat (and it may also hurt, if the wrong idea of the public interest prevails), but the surest route to improvement lies through changes in private perceptions of desirable behavior. What matters in these (and other) cases is not just the locus of responsibility, but also how it is exercised.
Shifting duties between the public and private sectors is thus not merely a matter of achieving greater efficiency, or fitting tasks to capabilities. It is about the character of these tasks and duties as well. Whatever virtues the Reagan administration may see in privatization as a general strategy, by insisting that those who receive welfare benefits should be obliged to take steps to become less dependent, it has sought to use the power of government to change the choices recipients make privately (though to what effect remains to be seen). Turning other government activities over to private hands might fundamentally alter their nature, too.
That is why there is so much fuss about the Reagan administration’s ideas. The interest groups, the clients, the employees, and others who have grown accustomed to and benefited from the current array of public services are alarmed that the new arrangements might be less advantageous, or at any rate considerably more uncertain. With careful planning these worries can be partially assuaged, but nothing much can be done to gloss over the fact that privatization may also change what these groups and people have been doing. For better or worse, a deregulated airline, or an arts community more reliant on private benefactors, or a school system where vouchers play a prominent role is different, just as is a welfare system that makes demands upon recipients.
For its part, the Reagan administration has been less than forthright in presenting its case for such changes. Most often it has used arguments based on relative efficiencies, or conceptions of a theoretically proper division of government services. At times, it has even gone out of its way to suggest that the purposes served by public programs will not be affected at all by transferring them to private control. But the language of economics and public administration, even if convincing, is ill-suited to resolving questions that are really political. What the Reagan administration needs to do instead is to explain (if it can) why giving more responsibility to the private sector will help realize the public interest. Otherwise, its progress in this area will remain confusing and disappointing, even to its own followers.
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