Out of Control Policy Blog

New at Reason: Public Options Are Ill-Conceived

Colleague John Palatiello and I had an article in Bacon's Rebellion today responding to a recent editorial in a weekly Northern Virginia newspaper (Cascades Connection) that attempted to justify governments being in the business of business and competing against private sector companies to provide golf courses, pools, water parks and other utterly non-essential government functions. As Connection editor Mary Kimm wrote:

Do these public options hold down the prices at private camps, private colleges, private country clubs? That’s unknown, but what we do know is that the public options make many things affordable and accessible to people who would not be able to afford them otherwise.

Meanwhile people continue to pay a premium for the amenities, services and added value and availability of the private options, keeping those businesses in business.

Why not just get governments into the grocery store business too? They could even start their own telecom enterprises to sell cell phones or set up clothing stores too, right? Applying Kimm's thinking, government's presence in any given marketplace would pass muster if it gives people (subsidized) amenities they'd otherwise pay a little bit more for in the private market.

Presumably, that could also include producing newspapers as well. In our article, John and I suggest that Kimm might not look so favorably upon the "public option" if her company was suddenly placed in the position of having to compete with a low-cost, high-subsidy government-run newspaper.

We then go on to discuss the absurdity of government-run golf courses—what Governing magazine once called "perhaps the most non-essential of the non-essential public services":

[W]hat's even more disturbing than the notion that there's an inherent public interest in low green fees is the fact that governments aren't very good at running golf courses. Many municipal golf courses are running huge deficits, are in poor condition, and face competition from better-maintained privately owned public courses. For example, the Freedom Foundation of Minnesota published a report earlier this year estimating that municipal golf enterprise funds throughout Minnesota combined for approximately $2 million in operating losses in 2007, and earlier this year South Carolina state legislature rejected a budget proposal to privatize two state-run golf courses currently operating at an estimated $500,000 annual deficit.

In fact, government-run courses rarely turn a profit, thus requiring a subsidy from taxpayers at large. In other words, non-golfers subsidize those who play the public links. Advocates like Kim see no problem with such inequity, arguing that government golf will "hold down prices" and offer links "at a cost well below private options."

But this is a false illusion and ignores the myriad of hidden costs. When a fully allocated cost is applied to public golf courses—including land acquisition, interest on bonds, operation and maintenance, labor costs, liability, retiree benefits and tax revenue foregone—it becomes clear that the "public option" is a bad deal for taxpayers.

Luckily some policymakers are paying attention, and over 25 percent of all municipal golf courses have been privatized over the last several decades. Governments from New York City to El Paso to Los Angeles County have either sold or contracted out the management of their golf courses to private operators, who have a natural incentive to focus on reinvesting in the quality of the golf course to attract more players, host more tournaments, sell more merchandise, and generally increase golf revenues. By getting out of the way, these governments turned these liabilities into revenue generating assets.

I have yet to hear a compelling rationale for a government role in providing golf. And I'd really be curious to hear someone attempt to explain away the obvious immorality of forcing non-golfers to subsidize those who play the public links.

Let's focus on priorities, folks. The "public option" is the fastest track to get a lower-quality service for more taxpayer money. Aren't policymakers supposed to be trying to do more with less, rather than the other way around?

» Reason Foundation's Annual Privatization Report 2009
» Reason Foundation's Privatization Research and Commentary

Leonard Gilroy is Director of Government Reform

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Comments to "New at Reason: Public Options Are Ill-Conceived":

Branden M. | August 27, 2009, 3:52am | #

There is a recession on, and since millions are out of work, it's hard to summon a lot of sympathy for John McAfee. John McAfee, whose software company produces McAfee Antivirus, has lost 96% of his fortune, going from a net worth of $100 million to $4 million. He still won't ever need cash advance loans. He had built up the company, and sold it for stock in the late 80s, heavily investing in real estate through Lehman Brothers, who aggressively dropped the ball, costing him the bulk of his fortune, and forced the sale of a lot of his assets. Hassan Nemazee won't likely need debt settlement relief, but he'll need a good lawyer.

jacksmith | August 27, 2009, 8:46pm | #

NO CO-OP'S! A Little History Lesson

Young People. America needs your help.

More than two thirds of the American people want a single payer health care system. And if they cant have a single payer system 77% of all Americans want a strong government-run public option on day one (86% of democrats, 75% of independents, and 72% of republicans). Basically everyone.

According to a new AARP POLL: 86 percent of seniors want universal healthcare security for All, including 93% of Democrats, 87% of Independents, and 78% of Republicans. And 79% of seniors support creating a new strong Government-run public option plan, available immediately. Including 89% of Democrats, 80% of Independents, and 61% of Republicans, STUNNING!! Senator Max Baucus, You better come out of committee with a strong government-run public option available on day one.

The History:

Our last great economic catastrophe was called the Great Depression. Then as now it was caused by a reckless, and corrupt Republican administration and republican congress. FDR a Democrat, was then elected to save the nation and the American people from the unbridled GREED and profiteering, of the unregulated predatory self-interest of the banking industry and Wallstreet. Just like now.

FDR proposed a Government-run health insurance plan to go with Social Security. To assure all Americans high quality, easily accessible, affordable, National Healthcare security. Regardless of where you lived, worked, or your ability to pay. But the AMA riled against it. Using all manor of scare tactics, like Calling it SOCIALIZED MEDICINE!! :-0

So FDR established thousands of co-op's around the country in rural America. And all of them failed. The biggest of these co-op organizations would become the grandfather of the predatory monster that all of you know today as the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT health insurance industry. And the DISGRACEFUL GREED DRIVEN PRIVATE FOR PROFIT healthcare industry.

This former co-op would grow so powerful that it would corrupt every aspect of healthcare delivery in America. Even corrupting the Government of the United States.

This former co-op's name is BLUE CROSS/BLUE SHIELD.

Do you see now why even the suggestion of co-op's is ridiculous. It makes me so ANGRY! Co-op's are not a substitute for a government-run public option.

They are trying to pull the wool over our eye's again. Senators, if you don't have the votes now, GET THEM! Or turn them over to us. WE WILL! DEAL WITH THEM. Why do you think we gave your party Control of the House, Control of the Senate, Control of the Whitehouse. The only option on the table that has any chance of fixing our healthcare crisis is a STRONG GOVERNMENT-RUN PUBLIC OPTION.

An insurance mandate and subsidies without a strong government-run public option choice available on day one, would be worse than the healthcare catastrophe we have now. The insurance, and healthcare industry have been very successful at exploiting the good hearts of the American people. But Congress and the president must not let that happen this time. House Progressives and members of the Tri-caucus must continue to hold firm on their demand for a strong Government-run public option.

A healthcare reform bill with mandates and subsidies but without a STRONG government-run public option choice on day one, would be much worse than NO healthcare reform at all. So you must be strong and KILL IT! if you have too. And let the chips fall where they may. You can do insurance reform without mandates, subsidies, or taxpayer expense.

Actually, no tax payer funds should be use to subsidize any private for profit insurance plans. So, NO TAX PAYER SUBSIDIES TO PRIVATE FOR PROFIT PLANS. Tax payer funds should only be used to subsidize the public plans. Healthcare reform should be 100% for the American people. Not another taxpayer bailout of the private for profit insurance industry, disguised as healthcare reform for the people.

God Bless You

Jacksmith — Working Class

Twitter search #welovetheNHS #NHS Check it out


Senator Bernie Sanders on healthcare (http://www.youtube.com/watch?v=RSM8t_cLZgk&feature=player_embedded)

American HEROES!! :-) Click replay to play http://bit.ly/j31oU

(http://www.youtube.com/watch?v=IbWw23XwO5o) CYBER WARRIORS!! - TAKE THIS VIRAL

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