A trip to the postbox to return the execrable Black Dahlia to LoveFilm reminded me why marketizing public services will always fail. It’s that little slot on there that tells me when the next pickup’s due. Today it read SAT. Those Next Collection signs are very useful. It wasn’t so long ago that they were trustworthy. Not any more: they’re often days out of date at my local box.

The reason’s simple: whoever changes the signs doesn’t have the incentive to bother. Nobody’s checking every little detail of his job – nobody could. And these little extras – what we used to call public service – aren’t Big Picture stuff. (You could have said the same about clean hospital toilets until a couple of years back.) By turning my postman from a public servant into a rational economic actor, we’ve destroyed the small parts of his job that used to connect him with our lives in all their complexity. Marketization can only put incentives (targets, bonuses, competition) in place for a proportion of what he does, or did. The rest is deemed worthless, history. Or it’s left up to his own integrity, which we still expect him to display in his new daily life being pushed around by capitalists.

Now I’m not saying that I oppose the market running public goods; nor do I know whether this ‘public servant’ ever really existed, or even if s/he did, whether we could re-energize the corpse. But deciding where markets can be successful needs to be an empirical judgement: they appear to be better at running airlines than train networks; better at holiday camps than prisons.

And marketization isn’t a process we should be celebrating. When markets need to take over, it’s a sign of human failure, a necessary second-best option, not something anyone should be proud of, Left or Right. Smith, like Worstall on a good day, teaches us that self-interest can be useful, not admirable.

First posted at Liberal Conspiracy.

What’s most fascinating about this lament to socialism perdu is the central thesis:

It is axiomatic, since the death of socialism, that governments must everywhere retreat… Liberalisation, privatisation and global policies of “small government” (except in the areas of defence and law and order) have led to a withdrawal by governments from areas of concern, which, until recently, had been seen as their primary functions.

He’s 180 degrees wrong. In fact, the state is hungrier than it’s ever been. [Read more →]