Woes of both the public and the private sectors

Woes of both the public and the private sectors December 9, 2014

Conservatives are skeptical about the government and look to the private sector to solve our problems.  Liberals are skeptical about the private sector and look to the government for solutions.  Former Treasury Secretary Lawrence Summers says that our problem is that BOTH the public sector AND the private sector are dysfunctional.

From Lawrence Summers, People have lost faith with companies and governments – The Washington Post:

Walk from the US Airways shuttle at New York’s LaGuardia Airport to ground transportation. For months, there has been a sign saying “New escalator coming in Spring 2015.” The Charles River at a key point separating Boston and Cambridge is little more than 100 yards wide. Yet traffic has been diverted for over two years because of the repair of a major bridge and work is expected to continue into 2016.

The world is said to progress, but things that would once have seemed easy now seem hard. The Rhine is much wider than the Charles, yet Gen. George S. Patton needed just a day to create bridges that permitted squadrons of tanks to get across it. It will take almost half as long to fix that escalator in LaGuardia as it took to build the Empire State Building 85 years ago.

Is it any wonder that the American people have lost faith in the future and in institutions of all kinds? If rudimentary tasks like keeping escalators going and bridges repaired are too much for us to handle, it is little wonder that disillusionment and cynicism flourish.

Political debates are often framed in terms of the respective roles of the public and private sectors, with progressives stressing private market failure and conservatives stressing the dysfunctionality of the public sector. The sad truth is that there is merit in both perspectives.

The escalator that will take five months to repair is privately owned. Although it is in an airport, failure cannot be blamed on public authorities. Necessary maintenance had been delayed for years — with the escalator in question even being stripped for spare parts to support other escalators. Now, the new owner has many priorities; the replacement of the escalator system is only one.

On the other hand, repair of the bridge across the Charles is the responsibility of local governments. A combination of budgetary short-sightedness, excessively rigid labor practices and a failure to take account of the costs of traffic delays appears to account for the project’s remarkably long gestation.

While much political debate takes place on a macro level, focusing on large-scale changes in spending, tax or regulatory policies, I suspect that much of what frustrates the public happens on a more micro scale. A government that has to install nets under bridges to catch falling debris will not inspire confidence when it aspires to rebuild other nations. When major companies cannibalize their machinery for spare parts, it is hardly surprising that they are not trusted to embark on voluntary long-run programs to control greenhouse gases, promote diversity or develop technologies.

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