Private Sector Idolatry

This comment came from a reader in response to our post “The Private Sector Isn’t Always Cheaper/Better (Student Loan Edition)” which discussed the fact that the student loan program administered through banks costs $7 more per $100 loan than loans provided directly, and what an incredibly rich fee/expense level that was for a debt product.
I thought it merited a post of its own:

Thank you for your post about unneeded expenses that trace to our cultural orthodoxy making a graven image of the private sector. Whether we name it ‘shareholder value fundamentalism’, ‘market extremism’, or ‘economic royalism’, we now routinely experience the excesses of a culture gone mad for private sector extremism. Decades of Republican right wing and corporate propaganda have planted a poisonous, destructive shared idea in American culture: namely, the private sector is perfection itself and government is a morally bad actor.

This, of course, is just part of the overall project of the right wing to ‘shrink government so small that we can drown it in a bathtub’. And, it has led to widespread shared beliefs and behaviors that believe the private sector can — indeed, must — do anything and everything. Scratch an American and he or she will tell you with great conviction, “The private sector is THE answer to every important question” and “Government is inefficient and ineffective and never the first choice.”

It is all part and parcel of our strong cultural bias toward either/or-ism. My way or the highway. Red or Blue. With us or against us.

Now we are experiencing the comeuppance shared by all human beings who drift into either/or extremism. The inefficiencies and expense of outsourcing student loans to the private sector are of a piece with other inconvenient truths. There is, for example, the uncomfortable reality of just how much the war in Iraq, the war in Afghanistan and the war on terrorism has been outsourced to a private sector that, true to it’s total commitment to shareholder value, has paid more attention to profits than to service. We’ve also come to read about the inefficiency and ineffectiveness of our private sector, market based approach to health care. See this post and note the added costs when free market competition leads companies to spend lots of money trying to keep people from being insured and then even more denying claims.

In addition, we know our perfect private sector has a wee problem with externalities that are, no longer external to our daily experience. Shareholder value extremists want the market to solve global warming — or, as in the post you sent me regarding the seven deadly sins, actually don’t want the market or anyone else to solve it. One wonders how much ‘administrative overhead’ is spent on fighting any government regulation regarding fuel efficiency? We do know, though, that our worship of the private sector has produced decades of fuel inefficiency through, among other things, having trucks excluded and then watching as the market produced SUVs. Of course, for the true goose-stepping private sector idolators, this is yet one more example of a government that doesn’t work.

Beginning with Reagan (and Thatcher), we’ve put the private sector on a pedestal and demanded that government stop screwing up the market. Culturally, that is. We all know that the private sector royalists and extremists have actually purchased the government and, thereby ensured that markets are not free but rather subsidized by government — as in student loans, health care, energy, mortgages/finance, and so on.

But, the meme is still, “the private sector is perfect and government is perfectly bad’.

In the late 1970s and early 80s when all this began in earnest, we were still experiencing the downside of political elites who feathered their own nests by preferring government to the private sector. It was the opposite form of extremism — and it, too, had bad effects.

A quarter century later, though, the pendulum has swung dramatically and we now reap what we’ve sowed. We have lived through an “era of the private sector” when the private sector has ruled this nation and government has taken a back seat. And, what do we see if we have the courage to evaluate, “how did this all-private-sector-all-the-time strategy actually work?”

Well, let’s start with this: it wasn’t a complete disaster. We can point to examples where good things happened by betting exclusively on the private sector. We surely don’t want now to go to the other extreme of ‘the private sector is wholly inefficient and bad’.

And, we also know that folks at the top have done pretty well with this orthodoxy. And, based on some of your recent posts, these folks keep on doing better.

On the other hand, whether it is student loans, health care, energy, financial services, housing, manufacturing, transportation, military readiness, health itself (e.g. obesity, etc), job security, skills, etc, the carnage wrought by our graven image, either/or idolatry of the private sector is all around us every day.

Among the very sad aspects of this extremism is the difficulty we will experience in seeking any return to reason itself. We cannot succeed with reason in the absence of recognizing the depredations of the all-or-nothing assault on government and worship of the private sector. Yet, the regard for the private sector is now Pavlovian and there are far too many entrenched elites who will find it impossible to acknowledge error.

Because those elites are in the private sector. And, as we know, the private sector, like the Bush Administration, is never wrong.