Public Goods, commodities and social contract

Are education or healthcare public goods or commodities? Should the State control education or healthcare, or should it allow market forces to set prices and utilize resources?  Questions such as these seem to beg answers depending on the respondent’s political ideology.

Socialists, or statists in general, would argue that they are “public goods”; that the state must be their arbitrator. Liberals and libertarians would argue for the opposite; they are “commodities” which ought to be exchanged in free markets. Who is right? Can there be a common basis upon which one may judge the two opposing views?

Before I suggest such a basis let me reveal to the reader that, as a principle, I do not believe in public goods. The reason for that is that I consider absurd the notion that some third party (the State) could, or should, think of what is good for me better than I do. So my opposition to the idea of public goods is a fundamental one. It stems  not only from my instinctive mistrust of the State but from a host of rational arguments, like the one I mentioned above. Furthermore, experience has shown that socialized education and healthcare systems have failed in almost every country that has been tried. “Almost”.

The other day, as I was having a conversation about the (failed) education system in Greece with a number of friends, one of them pointed out that there exist in the world states which have socialized their education with excellent results. He mentioned Finland.

It is true that Finland reformed its public education system in the early 90s and today has what is considered by most the best educational system in the world. Doesn’t this “prove” that education can be – or is – a public good, and achieving high quality for best price is only a matter of “better” management from a State?

Firstly, I am not knowledgeable of the cost per capita for public education in Finland in order to provide a full economic analysis. Perhaps it is too costly, perhaps not. I would like to respond to the point raised by my friend (and by many other I am sure) by focusing on something beyond economics. Besides Finland there are a few other countries too, Scandinavian mostly, which seem to have achieved high standards in socializing education and health. How do they do it?

I would like to suggest that what makes the difference between success and failure in the socializing of education or healthcare is the trustworthiness of the social contract in a given State.

Counties that benefit from strong social contracts have a good chance of managing education and healthcare centrally. Countries where social contracts are not that strong, or failing, ought to take the view that education and healthcare are better served if considered commodities. Greece is an example of a country with a very brittle social contract. Mistrust for the State is fully justifiable: the Greek State does not serve citizens or society, it is an apparatus used by political parties to buy votes in exchange of life-long guaranteed positions in the public sector. Considering education and healthcare in Greece as public goods serves only to make the system cronies richer and more powerful, at the expense of tax payers and mostly the poor, the main beneficiaries of public services.

So it is not ideology that ought to determine one’s views. A more insightful analysis on the relation between citizens and the State, as well as the quality of democratic institutions, is also relevant.