We’re in this together: Private sector suffers, too, from public sector decay

Last month I gave a presentation to a meeting of the State Chamber of Commerce along with a representative from another state policy organization.  I was struck, and frankly dismayed, by the extent to which my co-presenter  spoke as if government and the private sector were opposing forces pitted against one another in a  zero-sum competition. In this view, taxes assessed on businesses and households extract dollars away from productive consumption and investment in the private sector in order to “grow government”.

It is certainly true that a vibrant private sector will always be the main engine of economic growth in a capitalist economy. Public spending can at times crowd out private investment, although, as economists like Brad DeLong argue, during times of sluggish economic growth like the present,  government spending can be vital for keeping the economy from grinding to a halt and for incentivizing private investment. But more fundamentally, this polarizing conception of “government versus the private sector” misses the important ways in which businesses, as well as families and communities, cannot thrive without a strong and effective public sector. You cannot have a vibrant, productive private sector without state and local government helping to:

  • Educate our children and train our workforce;
  • Police our neighborhoods, investigate crimes, and detain lawbreakers;
  • Enforce patents, copyrights, torts and other foundations of the legal system;
  • Coordinate the response to natural disasters and outbreaks of disease that threaten public health and safety;
  • Maintain and upgrade our roads and bridges;
  • Assist those unable to support themselves due to age, disability, disease, or poverty;
  • Protect the quality of our air and water supplies;
  • Allow consumers to know that the products they buy and the food they eat are safe;
  • Support research and development.

In addition to all these functions that the public sector assumes directly, government is also a primary payer of services to private for-profit businesses and not-for-profit agencies providing a vast array of health care, social service, correctional and educational services – from nursing homes, private hospitals, and home health agencies to private prisons and educational testing companies.

The deep and prolonged state fiscal crisis is leading to a decay of public services that affects the private sector both directly and indirectly. The Oklahoman recently reported that budget cuts to the State Fire Marshall, for example, are leading to delays of up to two to five months in issuing the fire safety plans required by every new business. The reimbursement rates paid to medical service providers have been cut by the Oklahoma Health Care Authority,  the Department of Mental Health and Substance Abuse Services, and other agencies. As school districts, state agencies, counties and cities struggle to operate on reduced funding, they cut back on their purchasing and contracting with thousands of private vendors. Layoffs and furloughs of public employees, no less than private sector job losses, leads to less economic activity and slower economic growth.

The broader point is that we are all in this together. Oklahoma’s success depends on the public sector as well as the private sector, along with non-profit organizations, the faith community, local communities, and families all playing a role.  If we “shrink government” to where public school children are taught in larger classes and offered fewer programs, crimes are not investigated and prosecuted in timely fashion, infrastructure is allowed to deteriorate, and vulnerable individuals and families are not protected, the quality of life that we all count on and that is required for our security, health and economic prosperity suffers. That isn’t good for business and it isn’t good for Oklahoma.

ABOUT THE AUTHOR

David Blatt helped found OK Policy in 2008 and became the organization's Executive Director in 2010. David previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers. He lives in Tulsa with his wife, Patty Hipsher, a special education teacher in Broken Arrow, and their son, Noah.

3 thoughts on “We’re in this together: Private sector suffers, too, from public sector decay

  1. Thanks, David, for a valuable contribution to this emerging debate. The starting point for such discussions needs to be this: “What kind of community/state/nation do we want (and how are we going to pay for it?)” Pitting the private and public sectors against each other is a red herring that distracts us from the questions that need to be pursued TOGETHER (as you clearly state).

  2. One of the challenges government services face is public perception. Decline in public services is subtle, a bit like th analogy of the frog in the pan of water. He never notices to rise in temperature until it’s too late. Cuts in public services are not immediately noticable. A few more potholes this year, a few more next year, chunks of cement falling from overpasses, and eventually a bridge collapses with loss of life. The public screams, “Why didn’t government maintain the highways?” Well, because you can only stretch available resources so far. Director Hendrick made the point repeatedly to legislators the last two years that OKDHS staff is operating with ever increasing efficiency, but there is a limit. We reach a point where we have to reduce services. There is an accumulation of deferred maintenance, training, deferred investment in new equipment and systems that reaches a tipping point towards collapse. The recovery is long and difficult, and everyone suffers.

  3. This happens to be my biggest frustration. We teach financial literacy using a national award wining delivery. It is completely free to them for the next two years many still choose not to even look at it and pay for other lesser programs. Then I see them whining and crying we don’t have the money ITS know wonder maybe they should try the course

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