Finding the Right Mix Between Private, Public Business

There is often a debate in this nation as to when government intervention is necessary in the marketplace, lately centered around the issue of healthcare. However, answers to such a complicated question are equally complicated, and always differ depending on the nature of the business and the country being discussed. Those who argue for state run enterprise argue, for example, that government is the only entity capable of providing investment in industry in developing nations, that only government can prevent exorbitant prices for necessary goods, and that government ownership can help avoid mass unemployment. Those who argue against this argue that private business makes things run more efficiently, often lowering prices and raising quality. So in the face of such a dilemma, what is right?

Clearly, an equal balance needs to be found. In developing nations, such as some of those in Africa and Asia, there isn't a sufficient private sector to allow for the establishment of a market based system for many goods. Thus, having a nation subsidize initial investment may not be a bad idea in order to provide for necessities such as water, food, sanitation and more. This could also be useful in developing other goods that create an industrial nation, such as energy sources and transportation. However, after significant development, many nations hit a peak and choose to privatize many of their "businesses" in order to continue national growth. Such was the case of many Eastern European post-Soviet countries.

The general rules, according to the Development Education Program and the World Bank Institute, for reasons for the state to intervene involve market failures. These may include the underproduction of public goods such as defense and environmental protection, underproduction of positive externalities such as education, overproduction of negative externalities such as cigarettes, overpricing and underproduction by monopolies, insufficient supplies of social services such as pensions and insurance, and insufficient information.

Of course, these are necessary in developing nations, but what about our own nation. Many of the above points are open to debate. Most would certainly agree that defense is indeed a government's duty. However, what about education? Some believe that private education institutions may actually run more efficiently than public education. (Education is positively correlated with a nation's growth, so the state has a serious interest in it. However, even private education proponents are calling for a voucher system, which also involves government, though in a much more limited sense.) What about cigarettes? Is it the government's job to regulate personal pleasures? What about when deaths resulting from such externalities negatively affect the nation's growth? As for health insurance, this is certainly not the place to settle this debate, for there is no set answer. Once again, it depends on the nation, and the people. But when discussing the issue, it's always good to consider the above points, and think about the dual roles of necessity and growth.