There is a perennial discussion about whether the government should intervene, and at which rate, in the market. The discussion has become more adversarial than dialectic. It is often argued on terms for or against an intrusion of government actions (Zerbe, 1999). My problem with this perspective is the assumption that government functions outside and with equal power of that granted to the market. Since the market is a social construct, an arena of trading if you will, that ceases to function without the legitimizing actions of its consumers, how can government regulation be seen as an intervention in this marketplace and not creating simply the creator of the rules of which services and goods can be traded?
Howlett, et al. (2009), in Studying Public Policy, discuss this issue at length and point out the different ideological underpinnings of policy makers and academics that study political economy. They argue that there are several different perspectives about the role of government and their regulatory powers over markets from positivism to statism, and that they depend on the ideological position of the policy maker. This causes obvious tensions and transaction costs that create destructive competition and coalition forming which are detrimental to policy making (Munger, Stiglitz).
Joseph Stiglitz, in his article “Private Uses of Public Interests”, shows how government inefficiencies are caused by inappropriate expert advice, lack of transparency, and an inability to foretell the future. That policymaking is more than the efficiency of the market, but has to consider many more stakeholders, and if it would work more collaboratively, through discourse rather than debate, he argues it is possible that government could accomplish more.
For public school education, The framers of the US Constitution argued that public education is necessary for a democracy to have informed citizens who are actively engaged, which would protect the landowners from an uneducated mob. Educated economic actors are necessary to market capitalism as people need to understand price signals in order to behave “rationally”, or be productive citizens, and in the best-case scenario entrepreneurial to develop the market. Yet, education has been diminished in almost every state constitution to “adequate” levels, determined by each state, and an area where costs are cut when budget issues arise. Decentralization and a privatization of the education sector in the US is a perfect example of this ideological debate about whether government is intervening in the market, or whether government uses the market to provide services.
In this case, the government heavily determines and regulates the education standards and through judicial mandate has had to provide education to all citizens. However, if the government did not have the authority to mandate such education, and we left the market up to provide education in the most cost-effective manner, then what would become of the public education sector. With information trickling in about charter schools failures, are we learning that now?
It seems more logical that citizens, consumers, and governments should be able to set standards and regulate the according to their social preferences, and health and wellness of society (its education, health, environment, rights and equality of its citizenry) should be held in higher accord than efficiency of the tool utilized to provide services for society.
Howlett, M., & Ramesh, M. (2009). Studying Public Policy: Policy Cycles and Policy Subsystems (3rd ed.). Oxford: Oxford University Press.
Munger, M. C. (2000). Analyzing Policy: Choices, Conflicts and Practices. New York, NY: W.W. Norton & Company, Inc.
Stiglitz, Joseph. 1998, Spring. “Private Uses of Public Interests: Incentives and Institutions.” Journal of Economic Perspectives. Vol. 12. No. 2. Pages 3-22.
Zerbe, R. O. J., & McCurdy, H. E. (1999). The Failure of Market Failure. Journal of Policy Analysis and Management, 18(4), 558–578.
Kelsey H
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