Privately provided public goods?

The Economics Series~

 Living in Adam Smith’s commercialist society, where firms are obsessed with profit maximization and households with the power of sovereignty, the world has been expeditiously changing and growing not only in terms of profits but also in terms of international trade. Progressively moving to a much more skilled population, incomes of the households have also increased leading to a substantial increase in the living standards of the society and of the country at a bigger picture. However, these radical changes are making the rich richer and the poor poorer which is conclusively forming a need for public goods. Well, Government authorities do fulfill these needs impeccably, but, what if these goods were taken into account by the private sector? Would it be more efficient or amateurish? Would it become reasonable for consumers or exorbitant? Would it solve the free rider problem or lead to a gratis economy? A few bazillion questions need to be answered decisively which would lead to the satisfaction of the purpose of economics: reallocation of resources. 

The private sector’s main objective is to proliferate their profits and lucrativeness so, to invoice the households that much, expertise quality will have to be pledged. Therefore, if healthcare, a public good, is provided by the private sector, undoubtedly, a drastic amelioration in the healthcare sector would be seen as the capitalists focus on providing their consumers with the best they can. In addition to that, in India, almost 70% of the hospitals are regulated by the private sector which has immensely impressed the economy by expeditiously responding to public needs and rapid technological advancement and improvement. It not only provided the population with precise medical treatments and stupendous efficiencies, but also it has set an example for youth to take the Indian economy to the next level. However, as we know that nothing interesting is ever one-sided, likewise, a free market territory does not always provide the citizens with absolute good. As hefty costs are involved in providing the finest quality, the prices would consequently be higher. This might cause extensive difficulty for the lower-income group to take advantage of. To be honest, healthcare could be called one of the most expensive sectors which could even finish off a layman’s savings (due to considerable demand for it) and could even impact macroeconomically by raising poverty levels. The same instance has happened in India, capaciously increasing the poverty levels in the country… 

Defense, a prominent public good, is provided by the federal government, but what if capitalists provide them? As per the US war department, the private sector is eminently skilled at providing it. This is because the defense is conspicuously technologically powered and the private sector is highly efficient at producing that which would not only make the nation safer but also would make the country economically secure. Moreover, operating in a free market, the competition successively increases and elevates as the rivals decry that it is a profit-making province and so would instantly change their resources to provide them. Well, as now there would be a myriad number of competitors in the market, they would want to produce their best and leading quality products so that they could be the market leader. Admittedly, a strong will to produce pre-eminent quality goods would conclusively provide the nation with almost the finest technology not only in terms of defense but also healthcare, transportation, and education, making the nation economically and technologically advanced. Nevertheless, the private sector provides their consumers with excludable and rival goods which signifies that free-rider consumers4 would less likely be able to consume this particular service. The private individuals would produce it for their own gradational benefits and not for the community as a whole. This could have outrageous effects on the safety of a nation and would be potentially dangerous if any war takes place… 

To conclude this invigorating piece of argument, I would like to take a stand that public goods should undoubtedly be provided by the private sector since its efficiency, quality, technology, and response time would unquestionably yield the nation favorable economic growth, a better balance of payments position, higher living standards with the quality of life, a finer Human development index (HDI) value, lower poverty levels, and a superior gross national income (GNI) value. However, stricter government regulations should be imposed which would provide the country with the utmost equality in terms of income and wealth and a lower Gini coefficient value. Over and above that, a stricter government pronouncement would avoid the capitalists to form any monopolies which would exploit their consumers by charging higher prices with inferior quality. In the end, it is all just to say that an efficient price mechanism would always and forever make society grow and lead, making this world a better place to live. “When public and private sectors combine their intellectual and other resources, more can be achieved” once said Gro Harlem Brundtland, Norway’s first female prime minister.