Last week, after the University of Virginia Board of Visitors forced out President Teresa Sullivan just two years into her term, U.Va. alumnus and liberal author Jamelle Bouie blogged at the American Prospect that the episode is really a result of “[t]he constant denigration of government and public service, coupled with the often unjustified veneration of business.” He wrote that “[i]n an earlier time, we understood that the values and priorities of the market weren’t universally applicable; of course you wouldn’t run a university like a business. It has different goals, serves different constituencies, and more important, has a broad obligation to serve the public.”
But here’s a question: Are our public universities serving the public well?
Bouie continued:
The same goes for government. The Postal Service has never been a money-making operation, but that’s never been the point; as a country, we agreed that everyone should be connected, even if it doesn’t pay for itself. The value of public-spiritedness trumped the goal of profitability. You could say the same for Social Security, Medicaid, Pell Grants, Amtrak, etc. These programs should be judged by whether they accomplish the goals of our society — a safety net for the poor, help for the young, assistance for the old — and not whether they meet the metrics of a business.
But are these government programs accomplishing “the goals of our society”?
College students have racked up over a trillion dollars in student debt while the unemployment for college grads under 25 has hovered around 10 percent. The Postal Service lost $5.1 billion last year. Social Security ran a deficit of $46 billion. By paying doctors 60 percent less than private-sector rates, Medicaid does not improve enrollees’ health. And Amtrak eats billions in subsidies every year, yet still manages to charge well over $100 to travel between Washington and New York while private-sector buses make the same journey for under $20.
Might the private sector better accomplish “the goals of our society” than the government in each of these cases? Back in 2009, President Obama told Businessweek:
In the 1980s, when everybody was afraid Japan was going to eat our lunch, a lot of companies did a 180 in terms of quality improvement, efficiency, increasing productivity. There was a change in corporate culture that significantly boosted corporate productivity for a long time and helped create the boom of the ’90s. What they pointed out was, there were a couple of sectors that were resistant to that: health care, education, energy and government.
Why did the health care, education and energy sectors fail to evolve along with the rest of the economy? Could it be because those three sectors are also among the most highly regulated and controlled by the government?
Economic growth happens when people find new and more productive ways to organize the production of goods and services (like Walmart’s inventory-tracking system or Apple’s iPod design). But how do we know which new methods will be more productive than the ones we currently have? We don’t.
The only way we can find out which new practices are successful is through trial and error. By testing new solutions, society discovers better ways to organize itself.
The problem with government is that it is not conducive to a trial-and-error process. Government programs create special interest groups and constituencies motivated to keep the status quo from changing. There may be some limited trials, but errors are rarely admitted and almost never shut down.
Markets are a better arena for the trial-and error-process: more trials, more errors — more learning opportunities. Competition may look wasteful, but it actually creates knowledge. Markets are simply better at learning than government is.
Government has a role to play in setting the basic rules of competition and providing a rudimentary safety net for the most unfortunate in society. But there is no reason it needs to be delivering packages, running trains or investing in solar panel companies. Wasting tax dollars is no way to serve the public.
Conn Carroll is a senior editorial writer for The Washington Examiner. He can be reached at [email protected].
