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Public Sector

Also a Crucial Sector

If we are to think clearly about America as a whole, we will want to rethink the overly simplified habit of describing America as a nation with "a private sector" and "a public sector" and letting things go at that.

Why? Because the term "public sector" combines and blurs two very separate functions. One function comprises the provision of services that have economic costs and that generate considerable public benefit. The other function is the provision of governmental capabilities and the fulfillment of governmental duties. These two functions are sufficiently distinct that we would do well to discuss them separately, and that is what I shall do here.

Our "Public Sector Economy" refers both to a distinct group of service providers and to a distinct group of service recipients.

Its mission is to provide universal access to key services without regard for the recipients' ability to pay.

Obviously no society can provide universal access to all services without regard for anyone's ability to pay.

But just as obviously, there are some services that every healthy nation provides to all comers. The Public Sector Economy exists to fulfill a society's universal obligations to those who might otherwise be totally deprived of their absolute necessities.

All children need an education.
Some children need access to Head Start and other types of pre-K programs.
All citizens need access to public libraries and public parks.
(Here in Ames, Iowa, there are more than 30 public parks. Extraordinary!)
All citizens need access to community colleges and state universities.
All citizens need roads and highways and bridges to travel on.
All communities need water and sewer systems.
All citizens need access to affordable housing.
All citizens need access to affordable medical care.
All retirees require some kind of retirement income.

Roughly the same principles apply to all advanced nations. And they are now recognized as nearly universal standards. Some of these obligations are picked up by local or state governments, while some of them are picked up by national governments.

Public Sector Services are supported from public funds. Two key principles underlie the very existence of the Public Sector Economy. In any civilized society, certain necessities need to be universally available. And their availability needs to be assured without regard for the user's ability to pay.

The Private Sector Economy, by contrast, exists to provide goods and services to those customers who have the ability to pay. The Private Sector Economy isn't required to provide anything in particular to the entire population.

The Private Sector Economy is not required to provide anything on a universal basis, and it also isn't required to provide goods and services to customers who don't have the means to pay.

The Private Sector Economy needs to be both enabled by Government, and regulated by Government, but it is not a governmental function. The genius of the Private Sector Economy lies in its appeal to innovators.

Governments write and enforce laws. Governments provide national currencies. Governments defend the nations they serve. Governments protect public order. Governments levy and collect taxes. Governments operate court systems and jails and prisons. (The distinction, in case you've missed it along the way, is that jails hold people who are awaiting trial, while prisons hold people who have been convicted of something.)

The Public Sector Economy is in the service business.

Government is in the lawmaking business, the public order business, the taxing business, the budgeting business, the public spending business.

Government is responsible for making sure that the society it serves has a functioning Public Sector Economy. Charters have to be designed and written. Funding systems have to be designed and approved.

But schools aren't run by "government," they're run by school boards and principals and teachers and other professionals. Schools are in the teaching business, not just for the children of parents who have money, but for the children of all a nation's parents.

Nor are the other parts of the Public Sector Economy meant to be run directly by the Government. Government plays the start-up role. It creates mission-based charters. It launches boards of directors and creates funding formulas. And then it backs away and lets the Public Sector Economy tune itself up as it goes along, always doing its best to mesh its capabilities with public needs.

We're all familiar with the Private Sector's business model. It's the nation's For Profit Sector. Always has been. Always will be.

We're not as familiar with the notion that America also has a Public Sector Economy, an important section of the economy with a different kind of mission and, therefore, different business models.

The Private Sector Economy pays attention to customer satisfaction and business profitability. The Public Sector Economy pays attention to its service missions. Its budgets are often fixed and of necessity it places a premium on stretching its dollars.

Let's think a bit more about all the extraordinary roles the Public Sector Economy takes on.

Think about all the public parks that America maintains. Here in Ames, Iowa, there are more than thirty public parks, inside the city limits. Extraordinary! If we raise our view the Public Sector from the local level to the national level, the same principle repeats itself, in the form of State Parks, National Parks, National Forests, and National Monuments.

Think also about municipal water and sewer services. All homes and places of work need them. And there may be fees associated with them. But as Public Sector agencies, they're more affordable than they might otherwise be, because they're not in the private investor enrichment business.

Think about the nation’s harbors and ports, maintained by various governments. Think about the Disability Insurance programs maintained by Social Security.

All these functions, and more, operate as part of the nation's Public Sector Economy.

Two key features will always distinguish the Public Sector Economy from the Private Sector Economy. The Universality of Need, and the Resposibility to Provide Universal Access, even for those who cannot pay.

Let's think about how these two distinct economies are meant to fit together and to support each other.

A healthy Private Sector Economy helps generate the prosperity from which the Public Sector Economy gets funded.

And a healthy Public Sector Economy helps generate an improved pool of human capital, educationally improved, and with improved health. A healthier and smarter workforce is always in the best interests of the Private Sector Economy.

We stumble, here in the U.S., because we've never quite acknowledged the separateness of these realities. We are not a nation of two main parts - an economy of private sector firms, and a government of public agencies.

We are a nation of three main parts:

- A Private Sector Economy
- A Public Sector Economy
- A Government of Specialized Capabilities

There is one massively important part of the American economy that we have badly mislabeled and mishandled for a good long time - the nation's Medical Sector.

By the two core standards that define the Public Sector Economy - universal accessibility, and universal affordability - America's Medical Sector would be rights by treated as an essential part of the nation's Public Sector Economy.

By putting the Medical Sector in the Private Sector economy, we as a nation flunked two key tests. Medicine ought to be universally accessible; we prevented it from being universally accessible. The Private Sector Economy has never been Medicine's proper home.

When Medicine is universally accessible and universally affordable, it puts our entire nation back in the game. Who really thinks it makes any sense at all to turn America into a country in which millions of its citizens will always find themselves incapacitated by poverty and ill health?

America has been perversely determined for quite a long time to rank the unrestrained enrichment of its medical providers as far more important than the well-being of all its people. And the consequence of this perversity? While other advanced nations deliver medical care to all their citizens, and spend only ten to twelve percent of GDP in the process, the United States consistently spends sixteen or seventeen percent of GDP on medical care and still falls flat on its face, leaving millions out in the old.

We spend more; we get less.

Years ago, we made a terrible decision - we gave our assent to the Private Sectorization of Medicine. Most advanced nations were wise enough not to follow our bad example, wise enough to recognize that their Medical Sectors needed to live by principles of universal access and universal affordability. Some of those nations have stumbled a bit; others have put together medical programs that are remarkably smooth, successful, and affordable. Our task is to study all those examples, learn from them, compare them, evaluate them. Whose approaches have the most merit? And how might their approaches be successfully adapted to the United States?

Long story short. America's Public Sector Economy is as essential to our nation's well-being as our Private Sector Economy. And to the end of creating a nurturing America, an America that rises above its abusive and corrupting dark side, we need to tame the corruptibility of our Private Sector economy.

And as a key part of getting the American game plan working well, we plainly need to end the Private Sectorization of Medical Care. We know how to make kindergarten classes universally available to all five year olds. Access to medical care as accessible as kindergarten now is. Both are more compatible with the mission of our Public Sector Economy; neither is a good fit for our Private Sector Economy.

Aspirational clarity is the key. Does our culture teach us to aspire to a nurturing America? Or does our culture teach us to aspire to an abusive America? Do we aspire to an America of systemic integrity? Or to an America of systemic corruption?

Placing our bets on an abusive America, an America of corruption, will always be our weaker, poorer, and more toxic choice. Aspiring to a nurturing America, an America of integrity, will always be a more warm-hearted choice, a wiser choice.

Steven Howard Johnson

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