Some services must be public
In this episode, we explore why some types of service can only work well when they’re not in private hands
If you look at old buildings in cities in Britain and a few other countries, you’ll occasionally see up there on the wall some kind of strange metal plate with an oddly random-seeming number. Most of these are somewhat plain and dull…
…though sometimes they can be colourful and decorative.
In Britain, it’s called a ‘fire-insurance plaque’ or ‘fire insurance mark’. In the later half of the 17th century, particularly in the aftermath of the Great Fire of London in 1666, private fire insurance companies started to come into being: these plates provided proof that your house was insured by one of them, and that random-seeming number is the account-identifier, just like today.
But where it differs from the present-day is that the insurance-companies each ran their own fire-brigade. At first, these would only respond to a fire if it was at a house that they insured. Later, some bright spark realised that if they let other houses burn, the blaze would probably spread to their insured house anyway, so they’d best put out fires elsewhere - but they would charge for doing that, of course. Which meant that each fire-brigade wanted to be the first one out there, so that they could get the fire-fighting fees assigned to them before anyone else turned up. And in a few cities - and as I remember, my former home city was one of them - they only got paid if there was a fire, which lead to a few firefighters indulging in a bit of arson to get things going just so that they could get some pay. Perverse incentives again: Not A Good Idea…
Yeah, it was a mess, right from the start - and a costly one, too, often in many different forms of cost. Yet it still took nigh on a couple of hundred years before people got sufficiently fed up with that kind of mess to come to the obvious conclusion: some services must be public, in the sense that they must serve everyone, and hence can’t be split up into random privatised chunks. What happened in London, for example, was that in 1833 all these disparate fragmented fire-brigades were merged into one unified city-wide brigade, paid for by the city-council, distributed locally, but able to work together in larger teams as required. At last, the fire-services actually worked, the insurance-companies went back to just doing insurance, and everyone was happy. Sort-of, anyway. But it worked so well that every other city soon did the same kind of thing, and private fire-brigades became a rarity used only for specialised needs within some types of organisation, such as at an airport or a chemical-works.
And that’s been a general principle for a lot of other services: some services must be public. Sometimes they need to be public-only in their entirety, which certainly applies to police (not least because private police-forces have themselves too often acted way outside of the actual law…). Sometimes service-delivery itself can be sort-of privatised but with public supervision or scheduling, such as with tow-trucks and taxis. True, there’s a trend in the US towards re-privatising prison-services, but in practice has proven to be a really bad idea (because perverse-incentives again, and huge costs too); it basically provides no real benefit to anyone other than the shareholders, and really does need to be brought to an end, for exactly the same reasons as in the fire-services example.
The other service-domain where this principle of ‘some services must be public’ particularly applies is healthcare. There’s now no doubt whatsoever that, in practice, publicly-funded universal-healthcare is the only way that works: the hard-data are adamant upon this point, showing that the cost of a nation’s healthcare-system is directly proportional to the extent that it’s privatised, with fully-privatised systems costing up to six times more than fully-public healthcare-systems. Fully-privatised healthcare also leads to poorer overall healthcare-outcomes: the US, for example, currently has around an eight-year shorter average-lifespan than countries with full universal healthcare such as the UK or Japan.
I’ve seen this first-hand over the past few years, with an in-person comparison of universal-healthcare in the UK versus the partly-privatised healthcare-system in Australia. Okay, the UK’s NHS is in trouble right now, but that’s mainly because it’s reeling from decade after decade of systematic sabotage by conservative governments, who’ve hated the notion of universal-healthcare right from the very start. But Australia’s healthcare is fully viable, and fully-available, only in the limited parts that still publicly-funded; everything else is dominated by a chaotic mess of barely-organised and sometimes barely-functioning privatised ‘healthcare-providers and ‘healthcare-insurers’ - the ‘insurance’ part constantly failing because of the absurdity of trying to build an insurance-plan for a context is not about a single concern such as fire, but about something that is, by definition, inherently-unknown in almost every possible way. It’s still not yet as bad as in the US - fortunately for us here in Australia - but in all too many ways it’s a similar type of nightmare tangle of options and claims and paperwork and ‘co-pay’ add-on costs and sudden discoveries that no, despite what we told you, your insurance doesn’t actually cover this one issue that you’re currently facing right now…
So yeah, we really do need to stop pretending about this one. The bald hard fact is that the only way that works is universal-healthcare; the only reasons for still trying to prop up the disastrous dysfunctions of a privatised healthcare-’system’ are either ideology, stupidity or greed. Some services must be public - and healthcare is definitely one of those services.
So what can we learn from this, in terms of building towards for a more viable future? One point is a simple test: if a service needs to serve everyone, then it must be public, otherwise we’ll get landed with all manner of fragmentation, misalignment, lost economies of scale, broken interoperability and other system-wide dysfunctions. And the other key point, perhaps, is that any form of privatisation or the like within those types of services will immediately introduce perverse-incentives such as those that lead to the deaths of hundreds of patients in the Stafford hospital scandal in the UK. Again, some services must be public - and we need to be clear which ones those are, and make sure that in those cases any attempts at privatisation are kept firmly at bay. Okay, yes, privatisation can sometimes still be sort-of-feasible, if often inadvisable, for any service that is elective, an option, a ‘lifestyle' choice’ or the like; but for anything that affects everyone, it is most definitely Not A Good Idea…