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It’s the government sector, not the public sector

One of my undergrad textbooks was Economics of the Public Sector by Joseph Stiglitz. But what it really is is the Economics of the Government Sector. That is what the book deals with; things like welfare, defense, and education, which, for whatever reason, are generally provided by the government.

Why are the words ‘government’ and ‘public’ so often used interchangeably? Is it because government acts in ‘the public interest’? This is hardly a convincing argument. For one thing, there is much that the government does that isn’t in the interest of anyone except for certain voter groups. For another, the private sector acts in ‘the public interest’ just as surely as the government sector. After all, it is in the interest of each member of the public – and what else is ‘the public interest’ but the aggregate of all the interests of all these many individuals? – to be fed and clothed and the private sector does such a good job that we worry about obesity.

But this conflation of government and public or, worse, government and society, is a common one. The notion is that there is government, on the one hand, which is cooperative, and the private sector, on the other, which is individualistic. Congressman Barney Frank is supposed to have said “Government is simply the name we give to the things we choose to do together.”

This is complete rubbish. Think of all the things you do in your life with other people, willingly, voluntarily, like going to church, running a marathon for charity, volunteering at a food bank, joining the Rotary. All of these “things we choose to do together” are social, public, serving some ‘public interest’, and they do not involve the government.

Indeed, there is very little ‘choice’ in government. As the economist Milton Friedman once wrote, “you may get to vote once a year-on what? On a long, long list of propositions, with very little relationship between your vote and what ultimately happens.” As he noted in his 1962 masterpiece Capitalism and Freedom, government gives conformity without unanimity – if 51% of the electorate vote for something, 100% of them get it. The private sector, by contrast, gives unanimity without conformity, each person can attempt to get what they want.

This confusion between ‘government’ and ‘public’ or ‘society’ was best critiqued by the Frenchman Frédéric Bastiat in the 19th century

“Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.

We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.”

Free marketeers shouldn’t let themselves make this mistake. Schools run by the government are just that, government schools. They are not ‘public’ schools. Government is, at best, a necessary evil. It is certainly not, as the political left would claim, a engine for the perfection of mankind.

John Phelan is an economist at the Center of the American Experiment. 




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