Crisis and the Public-Private Sector Debate

society

This is meant as an economic, non-political post reflecting on my thoughts as to the interplay between the public and private sectors.

As early as four decades ago, my father, a political scientist and economist (with a PhD in each discipline), used to describe to me how society would eventually find a healthy balance between allowing the private sector to flourish and provide opportunity (ala American capitalism) and ensuring the public sector provides for the common good and serves as a safety net for all (ala Chinese socialism).

“The question”, he posited decades ago, “is whether, over time, increasing social programs to capitalism or privatizing socialism would reach that optimal balance point most efficiently.” He was absolutely right back then and is still right today.

China, over the past four decades, but especially over the last two, has meaningfully privatized many industries in a country known for its public-sector dominance. The country is now creating more millionaires and billionaires each year than any presumably “capitalist” country. And it doesn’t appear that this trend will slow down anytime soon.

Likewise, over the past 100 years, the United States has continued to create more and more social programs to serve as safety nets for citizens, from Social Security and Medicaid to federal housing assistance, unemployment insurance, and supplemental nutrition assistance programs. These, of course, are above and beyond foundational programs supporting public education, transportation infrastructure, joint defense, and so on.

What I find to be an interesting thought experiment is to ponder the following. Even in the US, known for our “free-market capitalism” and private sector bias, when there is a crisis (e.g., 2008 financial crisis, or today’s COVID health crisis), our immediate inclination is to look, not to the private sector and CEOs to save us, but to the public sector and our federal, state, and local leaders to take responsibility, and help individuals, businesses, and private hospitals. Mind you, it’s hard to imagine making it through these crises without public sector leadership, but my contention here is that it is interesting we may miss the significant irony of expectations implied above.

I’m left appreciating my father’s prescience, some forty years ago as to the degree of “meeting in the middle” that would occur — and the staggering shift that has occurred in China. Additionally, I come away appreciating the complexity of the interplay between the private and public sectors, and the delicate balance we must find between the two in order to retain nearly endless opportunity for growth combined with a safety net for all.

But, admittedly, I’m struck by the contradictory messages we in the private sector send government: in good times, the message is, “leave us alone to thrive;” in bad times, the message is, “why aren’t you doing more to help us survive?”

Most importantly, times of crisis are a time when private-sector leaders, CEOs and executives, must show their true leadership. I encourage all CEOs to step into this crisis and provide support and guidance to those who may not see through the situation quite as clearly. This is a time for all of us, whether we’re part of the public or private sector, to lead our communities, teams, and families through uncertain and trying times.

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