Thoughts on the Public Sector and the Public Interest

Recently, the discussions about the existence of the public sector and the purpose of
government behaviors have caused heated debates.

Firstly, most people tend to regard the public sector as the most appropriate vehicle
for the delivery of public services for several necessary factors, regardless of the
possible and potential higher-quality services or products provided by a profitmaximizing private company.

However, this kind of argument has been suspected for several decades. The
necessary factors on which the traditional public sector relies are not as sufficient as
the public previously thought about.

The first tool of redistribution ensures and preserves social justice, but the power will
weaken in terms of seeking for social objectives if the rich find out the main process
of implicit redistribution and their adverse condition in this system, substituting
private services for public ones.

Then there comes the equality of access to services. Evan Davis says, this factor is a
sledgehammer to the problem of ensuring some reasonable access. Reasonable cover
for all can be provided by compulsion, cash handouts, vouches, subsidies to private
operators, or by private companies on contract to the states (Davis 50). The state
provision is not the only source the public require to survive. Besides, Merit goods the
state prefers are steering and refer to altruism. However, government could provide
in-kind benefits in other ways in stead of producing these goods.

For the element of non-profit-maximizing goals, Davis draws a conclusion that the

old public sector model is probably best left to those areas both where competition is
impossible, and where regulation is for some reason impossible as a means of
imposing the consequent necessary restraint (Davis 54). Nevertheless, will the lack
of competition lead to some disadvantages that impair most advantages of this
assumption?

The fourth one is about responsible advice to customers. In the public sector, there
certainly exists a conflict-of-interest problem, challenging the interests of the
customers and the suppliers. The analysis of Davis shows that the traditional public
sector serves the customers interest well in the civil service and protective services in
the UK at least, but it may do government-type things with caution and consideration
in certain services like ticket selling. Even if integrity could be obtained from a ticketseller, it comes with cost and expense. Of course, alternatives exist in this situation,
and private services for education, medicine and finance suffer less from this problem
than their public counterparts. Therefore, it is not always that simple and obvious for
the public sector to be responsible to the customers in a better way.

Moreover, stakeholder-type personnel policies are considered in the public sector.

This kind of management is prone to be appreciated by profit-maximizing,
shareholder-oriented firms. In contrast, the relationship between such progressive
policies and the public organizations may be skeptical and suspicious. On the one
hand, a large organization may not easily cultivate a personal sense of belongings on
the part of employees (Davis 61). On the other hand, the public sector might not be
a leader in enlightened employment (Davis 61).

For the topic of non-profit-making suppliers, Davis reckons that the traditional public
sector eradicates profits, including those good ones, which is unnecessary in most
cases. For intra-industry co-operation, it is now broadly accepted that while there are
some advantages to co-ordination, the best possible strategy is to allow a strong

degree of competition. The traditional public sector was, again, too clumsy a model to
deliver exactly the components of competition and co-ordination in the right
proportions (Davis 67).

Therefore, the ethos above is unable to justify the traditional public sector model. As
Davis puts it, the direct provision of public services by a public sector operating
under a public service ethos can only be justified if in practice its results appear
superior to those of the private, commercial sector (Davis 68).

As far as I am concerned, the criticism towards the public sector is reasonable in some
aspects, but not that convincing. Obviously, public sector provision could be more
efficient than commercial one, given that government has a unique purchasing
muscle, which it can use to limit spending on services, so costs do not escalate
(Davis 68).

What should also be emphasized is that the public sector is different from the private
providers, and cannot be replaced by the latter. There certainly exist several features
and functions the private sectors could not possibly have. For instance, the right thing,
an important principle valued by the public service ethos, could probably be acted by
a non-profit supplier, rather than profit-maximizing one in the market. Meanwhile, if
the market fails to offer services to the poor, the less desirable customers and lower
standard pursuers, government will intervene and the public sector can make a
difference. To be specific, market may not serve the poor to the minimum level we
believe desirable. As a result, the state may choose to give some of its benefits in the
form of directly provided services (Davis 50).

In addition, the public domain has no monopoly on virtue, the private sector no
monopoly on vice (Le Grand 62). Both the former and the latter would fail in some
situations. Different social issues should be solved by different kinds of methods:
some by the public sector, some by the market, and others by the combination of these

two elements.

Secondly, people traditionally view government as the subject that maximizes the
public interest. However, Gordon Tullock says that bureaucrats are much like other
people and, like people in general, are more interested in their own well-being than in
the public interest (Tullock 55). Also, what they do benefits the country or their
bureau. In this case, the methods of achieving government goals do not appeal to
the public interest but to the private interest (Tullock 59). Similarly, as Anthony
Downs has noted, public organizations will develop a culture of their own, a culture
which will differ from organization to organization, which will not be a profitmaximizing culture, but which may be no more related to the general public interest
than a profit-maximizing culture would be (Davis 54). Here, the organization does
not think highly of the profits and ruminate a lot on the public interest, but stresses its
culture and the loyalty to the sector itself.

Actually, there must be ways to make government serves the interests of the rest of
the society when it considers its own interest. However, other problems rise. To begin
with, the instincts of the public do not offer an easy practical guide to public policy,
and in the case of these values, a careless interpretation of the publics well-founded
instincts has been allowed to justify a state apparatus far larger and far less efficient
than is truly necessary to serve the publics taste (Davis 41). Yet, it is quite hard and
difficult for government to find out what the very instincts and actions of the
individuals are. For example, Baroness Onora ONeill says, people still constantly
place trust in many of the institutions and professions they profess not to trust (O
Neill 13). What people say in a poll could not really represent what they may act in
the real world. As a result, the content of the public interest is ambiguous.

Next, the choices and interests of different social groups might have some adverse
influences on the public interest. For example, the middle classes often have louder

voices and stronger muscles than the poor, which is relatively effective to make
themselves heard by the government; when there are controversies between the two
groups interests, the highly capable one may benefit more. Occasionally, only the
special groups such as farmers having specialized information and knowledge could
be affected by the policies. Here, other people do no gain enough information and
only the interests of these groups have been taken into consideration. Whats more,
the special interest lobbies may hold several public interest arguments with every
appearance of believing it. Nevertheless, it is the private interest argument which
leads to the organization of these groups, the transfer of funds, the protection of jobs
and special privileges for special-interest groups. The public-interest arguments
normally require that the project itself be designed in such a way that the direct
transfer is hidden from the public eye (Tullock 43). In these cases, the public interest
as a whole might not be demonstrated properly.

Finally, when everyone in the public sector tries to maximize their personal welfare
through the exercise of individual choice, it may have unpredictable consequences on
institutions like schools and hospitals. The effect may be to give people less of what
they want (Lipsey 27).

I tend to agree that government does not exactly act in the public interest. Sometimes,
charitable contributions are made by the bureaucrats who may help people with some
sacrifice, but the effects are minor compared with those of their interest and own wellbeing and could not be the exact motives of long-continued efficient government
performance. There are a few ways to think more about the public interest, but
government would actually tend to values its own interest in the first place. At the
same time, the public interest cannot be easily found, understood and satisfied by
government.

Words: 1542

References:
Davis, E (1998) Public Spending chapters 2 & 3
Le Grand, J. (2007) The Other Invisible Hand: Delivering public services through
choice and competition chapter 2.
O Neill, O. Without trust we cannot stand (from A Question of Trust (CUP 2002))
Lipsey, D. (2005) Too Much Choice (from Prospect 117)
Tullock, G. The Theory of Public Choice