The struggle between capitalism and socialism is back. “America will never be a socialist country,” President Donald Trump tells us, even as Senator Bernie Sanders and Representative Alexandria Ocasio-Cortez champion democratic socialism. At the same time, a consensus is growing — from Ray Dalio, the billionaire hedge fund manager, to Joseph Stiglitz, the economist and Nobel winner — that capitalism needs major reforms if it is going to survive. Perhaps surprisingly, given the trend towards the privatisation of public services over the last generation, American history offers a way forward: the public option.
Most people probably associate the idea of a public option with health care. When the US Affordable Care Act was debated in 2010, proponents of a public option wanted anyone to be able to buy into a government health insurance option like Medicare that would compete with private health insurance plans. But the public option isn’t a recent policy innovation, it isn’t limited to health care and, historically speaking, it hasn’t even been particularly controversial as an approach to public policy.
Americans love public options and have relied on them for hundreds of years. A public swimming pool is a public option; many people have private swimming pools. A public library is a public option; many universities have private libraries. Public parks, public schools, public defenders in courtrooms — the list goes on. They are all public options, government provisions of goods and services that coexist with the private marketplace.
Throughout its history, Americans have turned to public options as a way to promote equal opportunity and reconcile markets with democracy. For example, public libraries allow anyone to read, check out books or surf the internet. This expands educational opportunities and guarantees access to information to everyone, but it doesn’t prevent people from buying books at the bookstore if they choose.
Political leaders and policymakers are noticing that public options can help reform capitalism without abandoning markets.
Public options also benefit competitive markets and make capitalism work better. Public options in the form of public schools guarantee that we have an educated workforce, and services such as public transit and the post office support economic activity. The public option also competes in the marketplace with private options, expanding choices for consumers and acting as a check on monopoly power in concentrated sectors.
It also helps make democracy more vibrant by giving us a shared set of experiences and goals to talk over in the public sphere.
Without question, the history of the public option, like the history of America, includes shameful episodes of exclusion. To take just one example, in the Jim Crow era, public pools in many places were off limits to black Americans. But as the civil rights movement made strides in opening public accommodations to all, public options, including public pools, became more inclusive as well.
The public option can provide a way forward for an America that is torn between our urgent need for greater equality and the benefits of markets. A public option can go a long way in expanding access while introducing healthy competition.
A public option could significantly expand access and help working families and their children. It has the potential to transform life and commerce. A public option like this would help businesses, whose workers have persistent childcare problems, as well as families that are financially squeezed.
Political leaders and policymakers are noticing that public options can help reform capitalism without abandoning markets. The 2020 Democratic presidential primary features a robust debate about moving towards a true public option in higher education so that post-high school training or college would be free for everyone. Proposals vary in the details, but they typically would increase funding and ensure that tuition is free at public institutions — instead of leaving students with an increasing debt burden.
Of course, public options can be designed poorly and can fail for lack of resources, just like any other public or private service. Public defenders in the judicial system are routinely underfunded. And not all public schools provide the kind of high-quality education we want for all our children. Policymakers promoting public options also need to be particularly attentive to structural racism and regional disparities.
Americans don’t need to resign themselves to vicious capitalism, just as generations before us didn’t. And the idea that public action and markets are incompatible is simply false. We don’t have to choose between competitive markets and equal opportunity. Public options are a way to mitigate the damage that comes with the worst aspects of capitalism while creating a common fabric that ties us together.
— New York Times News Service
Ganesh Sitaraman is a law professor at Vanderbilt Law School. Anne Alstott teaches law at the Yale Law School.