Friday, January 20, 2012

On public goods and services.

Apologies for the disjointedness of this one. This is more back of the envelope than even usual.

Who should pay for public goods? Who should provide them?

By "public goods" I mean products or services created in order to benefit the general public. The contrast would thus be to "private goods" which are created expressly to benefit a limited/specified group of people, or even a single person.

Public goods, by definition, should be within public control. This means at least that some level of our government is managing these resources in our name; and that ultimate ownership rests with the general public. Hence, for example, no public good should be sold by a government without consulting the public first. An election that results in a clear majority of support for an explicit platform of sales would count as adequate consultation.

But does it mean more than this? Does the public have to pay for the good, whether through taxes or user fees? Does provision of the service have to rest in the public sector, with direct government or public employees?

Take the first first: who pays? It seems odd to me that many public goods are paid for out of general tax revenue, plus some top-up from targeted taxes (such as Ontario's OHIP premium for healthcare) and/or user fees (transit fares are an obvious example, or tuition fees). I'm not saying these are bad as funding sources. I'm saying they aren't the only option.

Consider transit, for one. Why not let developers build, say, subway lines that attach to the currently existing system? I can see worriers regarding "premium" fares for using these lines, or cut-rate construction/safety standards, or undercutting the rights and contracts of public workers - but all these seem solvable, by devoting resources to careful inspection of the development during all stages, and regulation thereafter. All of which would cost substantially less than what it would to build the line completely. The private builder would then be responsible for the continued operation of the line, and the government would have the option to purchase it, assuming full responsibility. This isn't just a "P3", then, for in a P3 public money is at stake; in what I'm suggesting, public money is only spent to regulate and inspect.

It's also not entirely pie in the sky. Toronto-area condo developers are at least talking about building new subway out to their condo developments, in order to make them more attractive to buyers, and folding the cost into the price of the units and/or the monthly fees. Maybe the numbers wouldn't actually work, but it seems a possibility. After all, we already let developers build their own roads.

This is extendable to other public goods -- schools or hospitals, for example -- by essentially the same logic. If proximity to schools is a benefit that condo purchasers will pay for, why wouldn't the developer build a school?

Much as we need to stop looking to one level of government to solve our lacking public services -- usually the province -- and tax, then spend, to build them, I think it's time to try to tap into the amount of wealth that exists in the private sector, and use that to develop our infrastructure. Yes, w could just raise their taxes; but isn't it funnier to let them, effectively, tax themselves?

When it comes to the provision of public services, many insist that they be provided by public workers, while many others insist they be provided by contractors. Of course, neither is right -- it really depends on the benefit vs. the cost, within reasonable limits, counting all benefits and costs, not just dollar amounts. Government isn't everything, but it's also not nothing, and it is reasonable to look for alternative methods of service delivery before concluding that current methods are acceptable.

However, an idea that occurred to me -- while I was thinking through the legal fatuousness of claims that public unions could "bid" on contracted services -- was the possibility of cooperative corporations. Right now, the two options on the table are public workers, with big unions and legacy contracts, or contracted-out workers, who are generally squeezed pretty hard by their employers, who themselves rake in the dough.

But why not spin the service off? Keep the union, but reconstitute it as a cooperative corporate entity, and let them be the contractor for the service. This would transfer the risk out of government hands, and thus away from the tax rolls, but also the reward. Workers would also be free to set their own terms of employments in consultation with each other, rather than antagonistic negotiations (or "negotiations") with a government.

I'm not sure if either idea would actually work. But it's clear that governments are having difficulty maintaining, never mind improving, our public goods and services, and are unwilling to simply take private wealth through taxation or fees. So, why not at least think about getting government out of the public service game -- leaving the paying to the private sector, and the providing to former unions -- and into the public service management game?

No comments: