The Private Abuse of the Public Interest: Market Myths and Policy Muddles

The Private Abuse of the Public Interest: Market Myths and Policy Muddles

The Private Abuse of the Public Interest: Market Myths and Policy Muddles

The Private Abuse of the Public Interest: Market Myths and Policy Muddles

Synopsis

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.

Excerpt

According to Richard K. Armey, a former Republican leader in the U.S. House of Representatives, “markets are smart, government is dumb.” Though many conservatives would presumably decline to buy this proposition wholesale, the cultural penetration of words to that effect has transformed both intellectual debate and policy practice in the American public sector over the last three decades. That private interests harnessed to market strategies should and can be deployed in the service of public ends has become an article of faith among many of the conservative and moderate political leaders who have largely dominated Washington, D.C., and many state capitals since 1968. Even members of that endangered species formerly known as liberals often refrain from quarrelling with this received wisdom. the hot pursuit of market alternatives to government has powerfully shaped both how policy is conceived and how it is practiced.

This little book is a caveat emptor, an invitation to think twice about the supposedly broad-ranging benefits of the public use of private interests. It is by no means a general critique of the introduction of market mechanisms into public policies, and still less an indictment of markets per se and their role in the “coordination of human activities not by central command [but] by mutual interactions in the form of transactions” (Lindblom 2001, p. 4). Deregulation of airlines, for example, contributed to competition among carriers and a sharp decline in fares, transforming air travel into a common form of transport for millions of middle-class Americans.

Our book's more modest aim is to explore the central institu-

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