Beyond Corporate Capitalism: Not So Wild a Dream
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Obviously, some forms of public or publicly related enterprise are not models of efficiency. The failures of Freddie Mac and Fannie Mae have suggested to many critics that these quasi-public businesses need a major overhaul. On the other hand, the highly unusual structure of Freddie and Fannie (which gave implicit government backing to privately owned risk-taking businesses) was a major source of their recent problems. (Indeed, they were not, in fact, public enterprises in any true sense of the term.) So, too, Amtrak has had a variety of problems, some of which derive from inadequate investment. But, again, it is important to remember that private corporations are hardly paragons of efficiency. American steel companies were riddled with inefficiencies until they were compelled to change. American auto companies were forced, kicking and screaming, to catch up with global practices and modern technologies.
Furthermore, new ways to curb efficiency problems in government enterprises have emerged. In Europe, where public telecommunications corporations often compete with private companies, a “public option” can help keep everybody on their toes. Independent public oversight of public enterprise is another strategy. Since 1970 the independent Postal Regulatory Commission has overseen the USPS to keep tabs on efficiency and transparency and to maintain its historical role of providing affordable service to all Americans. Yet another answer to the ownership “design” question can be found in those mixed private-public structures of many leading international airlines.
And, again, even when private corporations are managed more efficiently than public ones, the massive economic costs they can impose on society make internal efficiency look trivial compared with the waste caused by economic recession, healthcare irrationalities, and the truly extraordinary costs associated with unrestricted growth that damages the environment and causes climate change.
As the late liberal economist John Kenneth Galbraith once observed, “The issue is purely a pragmatic one: Is it working now, or would it work better under public ownership?” Further perspective was offered by the late E.F. Schumacher, author of Small Is Beautiful, still one of the most influential books for environmental activists and others. Radical decentralization, human scale, participatory control, and a mix of cooperative and private firms are essential wherever feasible, Schumacher held (as do we)—but “when we come to large-scale enterprises, the idea of private ownership becomes an absurdity.”
Publicly owned enterprises also don’t have to be national. One important strategy involves focusing on public enterprise at the regional level. Under the New Deal, the TVA gave rise to a proposal for seven major regional public enterprises, and in the 1960s a number of regional commissions were established. A revival of regional approaches to public enterprise might build on modern Chinese experience, where regional competition has helped maintain discipline for publicly owned firms (as well as economic management in general).
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Contrary to the conventional wisdom, there are many paths to expanding public enterprise in America. Take banking, where coming crises will once again almost certainly force us to ask basic questions about the industry and remind us that had the government demanded voting stock in exchange for the taxpayer bailout of Citigroup, Bank of America, AIG and other institutions, these firms would have become de facto publicly controlled. Moreover, there is an effort under way to create state-owned banks like the one in North Dakota. Since 2010, legislation exploring or creating such banks has been introduced in seventeen states: Arizona, California, Connecticut, Hawaii, Idaho, Illinois, Louisiana, Maine, Maryland, Massachusetts, Montana, New Hampshire, New Mexico, New York, Oregon, Virginia and Washington.
Relentless conservative attacks on the Affordable Care Act in Congress and in the Supreme Court have also stimulated interest in publicly provided healthcare at the state level. More than fifteen states are considering legislation pointing to some form of single-payer “public enterprise” system. In May 2011 Vermont approved legislation that will allow its residents to move into a publicly funded insurance pool. Universal coverage would begin in 2017 (possibly as early as 2014) if a federal waiver is granted. This past February in California, a universal “Medicare for All” bill failed in the Senate by just two votes. (Similar legislation approved by both houses of the state legislature was vetoed by then-Governor Schwarzenegger in 2006 and 2008.) Since 2009, Connecticut has been striving toward a system of affordable healthcare for virtually all of its residents—which will likely one day include a nonprofit public health insurance program.