Charles O’Donnell argues why our public services must stay public in the present economic climate.
With the recession taking its toll and the need to reduce the State deficit, there have been many voices calling for drastic cutbacks in public spending. Before such measures should be taken, it is worth questioning what cut backs ultimately mean.
Many people in the private sector have scapegoated the public sector for Ireland’s existing economic problems, but it was not the public sector which saw an end to the construction boom. It was not the public sector that mismanaged banking finances and it was not the public sector which shut up shop and moved to countries where labour is cheaper.
It is, however, the public sector that has to pick up the pieces. The hypocrisy of banking institutions that advocated deregulation, now coming to the state for help is a classic sign that the Government does have a vital role in how the economies of the world are run. The notion that ‘less government is better’ is struggling to rationalise itself in the present crisis.
Of course, taxation is something nobody likes. However, is it not better if one does not have to worry about childcare, health insurance, education for your kids, retirement and being able to afford a house? What good are low taxes if the cost of living skyrockets, if housing is unaffordable, if the quality of life is reduced?
An area that has been up for a lot of debate in Ireland over the past decade is the health system. Groups from all sides of the ideological spectrum hold adamant views of what is the best way to provide this service.
Minister for Health, Mary Harney has rationalised a two-tier health system as the best solution to Ireland’s problems. With this system however, there are potential implications from both an ethics and an economic point of view.
Some will argue Ireland’s position is different in that we have a universal model and by adding a private sector, it is simply offering choice. When it comes to health however – when it comes to someone’s life – there can be no choice, only the most solution will suffice.
The notion that we privilege somebody’s well being on their wealth is something that the majority of the nation would not agree with. However, to think that the problems are merely in allowing people with insurance a privilege in terms of waiting lists and services is not the major concern here.
It is the effect that a private sector will have on the industry as a whole. Even economists in the US are coming around to the notion that privatisation within the health system does not inherit the efficiency that free markets are meant to instill. If privatisation is so efficient, why is it that the US, the largest spender on health care per GDP, has such negative ratings on criteria such as quality of care, efficiency of care, access to care, equity and waiting times?
One could easily be forgiven for thinking the problem with the US model is a lack of public spending, but this is not true. Administration costs are higher in the private sector than in the public sector and higher indeed than they are in most Western European countries.
Private healthcare creates a further burden to the economy in terms of the cost on private companies. In the US, General Motors has been crippled by having to pay insurance premiums for their employees, thus adding to the costs of production. This just creates a drag in the economy.
Competition from the private sector would also almost certainly drive up the wages of doctors and other medical professionals in the entire system. It is this principle that a private sector in Ireland would surely push up costs in the same way they have done in the US.
There are potential implications from both an ethics and an economic point of view
Education reform has been a big issue of late. The re-introduction of third-level fees debate and cutbacks in primary and secondary level has caused much controversy. Students protested to stop an introduction of fees, but if we are to protest on this matter we must not be hypocritical when it comes to other issues.
Again education is essentially two-tiered and students who come through a private education are more likely to get the top places in university than students who come through the public model.
This two-tier system fundamentally excludes those who can’t afford to pay and takes the best teachers from the public sector and places them in the private sector. This highlights what could happen to the health system if we expand down the road of a two-tier system.
Another key area which is coming up for review in Ireland is our policy towards transport. Some would argue that the problems of transport are duly because they are not let into the hands of the private sector. When the UK privatised the railway, a worrying feature was the decrease in safety measures. It showed very little signs of success and is considered by most analysts a failure.
The reality is that Irish transport is grossly underfunded, and it is not a waste issue. We have the lowest levels of funding in Western Europe. Instead of the Government washing their hands of the transport sector, why not show some leadership and give it the funding it needs.
There are no definite laws when it comes to this debate. All one can go on is examining other cases. But to engage in third way social experimentation can be dangerous and if not regulated, damaging for the economy and the public.
Yes, the public sector, does have to hold its hands up. Of course itcould be more efficient. We must not cloud our judgement though and buy into the notion that cutbacks in the public sector will solve our problems. Instead we must demand accountability and see that reform is implemented. Just as there are some things best left to the private sector, there are some things best left to the public sector.