How do we pay for government and what services should it provide?

Government does not operate as the private sector does.

For the most part, governmental entities do not care about market forces or what services to provide based on a profit motive. In the private sector, a business decides that a niche exists in the market and then will produce a service or product in order to fill that niche.

For example, if you want to buy an auto, there are many different brands of cars that can appeal to different segments of the market. Royal Royce sells to a very small super-rich segment. Toyota and Ford make cars that appeal to many more economically diverse groups of people. Even the way they go about marketing to customers is different. One advertises extensively using many different methods while the other manufacturer hardly markets its cars at all.

In the private market, the business sets the price based on what it costs to produce the product or service and, most importantly, the profit it wishes to achieve. Their profit margin can be anything that the market will bear. Business even sometimes sells at a loss to build their brand or encourage consumers to try other products that they provide. If the business is wrong about the price or the desire for the product they sell, they will fail and close their doors.

In the public sector, that is just not true. The public sector or government should provide services that the private sector is incapable of providing. The private sector may be incapable because the service is not economically viable but is still very necessary to society.

An example would be policing. The private sector is completely capable of providing security to a gated community. The security companies have guards to man the gatehouse, patrol within the walled compound, and call law enforcement to make the arrest when necessary.

Private security could not provide general law enforcement to our neighborhoods on terms that society would expect or accept. Could the private sector do so cheaper than a public law enforcement agency? Perhaps they could, but those type of services should not only be a matter of cost.

We expect our police to have high standards of professionalism and training. Each day an officer or deputy decides on whether to make an arrest, give a ticket or how to defuse a domestic situation, acting in the public’s name. They go through hours of continuous training. That cop you see on the street today is not a security guard. She may have a college degree in law enforcement. If a deputy wants to progress in his career, he will need to have one or more master’s degrees and, in some cases, a doctorate or even a law degree.

Economically, the private sector would not be able to place the same caliber individual onto the street, make a profit and charge less. And, a private sector employee should not be able to deprive an individual of his freedom, rights, or life.

But, while the private sector cannot effectively provide police services, it does a great job at running amusement parks. In fact, is there anyone that does that better than Disney? We can then agree that roller coasters should be left to the private sector.

Then what about Martin County’s Sailfish Water Park? Why is the public asked to subsidize this supposed public necessity? If there is enough of a desire by the public to have this amusement park, wouldn’t the private sector have built it? More importantly, a private operator would need to make a profit and not have recurring losses while still being told by the board of directors (in our case the Board of County Commissioners) what a good job he or she is doing.

Then, should government be providing ball fields, hiking trails and playgrounds? I would say the answer is yes. Our parks are considered public areas that are open to all regardless of economic status. Martin County has public beaches so that our citizens can enjoy the ocean. Even a community pool open to all residents has a public policy purpose that can be publicly supported. The problem becomes when government insists that the public pool morph into an amusement park under the pretense of paying for the pool.

Should there be a public golf course? I believe the answer is yes. It should not, however, try to be a country club. Just as public ball fields should not mirror major league stadiums, neither should a publicly owned golf course need to feature the same level of play as those in the private sector. It should offer the basics with perhaps ancillary features such as a snack bar and golf lessons. These incidental amenities should be operated by businesses paying rent or fees to help maintain the facility. The same would apply at all recreational public facilities from beaches to other parks. The public sector has proven time and time again that restaurants or umbrella rentals operate much better in the private domain.

The public sector is not a private entity. While it can learn from the private sector, it can’t operate like it. There is no profit motive. Government services should be open to all sectors of the community regardless of ability to pay.

In forming a government, the people has done so to protect the common good. Government is an altruistic endeavor. We give it extraordinary power over our individual rights. Therefore, it is incumbent on citizens to make sure the organization that we have created does not go off in unintended and unnecessary directions. Nor should government infringe on the private sector unless the private sector is unable to provide products and services deemed necessary in a cost-efficient manner to all citizens.

In the next blog post on this subject, I will examine how society pays for the cost of government services.