The Turkey Theory of Government and Lemon Socialism

Years ago, like most city officials, I was confronted with the ugly reality that, by definition, governments were in the unenviable position of running money-losing services. After all police, fire, street and public health services do not make money.

To describe the situation, I used two terms. The first is what I called the "turkey theory of government."  If a proposition or a service was a loser, government was expected to deliver the service.  If money was to be made, conservatives in the private sector would rally together and try and force government out.

In the first half of the twentieth century, public transit was often delivered by private companies such as the Madison Bus Company. When the numbers no longer added up to profitability after the 1950's, government was expected to take over the service. 

Over the centuries everything from garbage collection to fire fighting moved back and forth between the public and private sectors.

A current example of what was traditionally a public function that the private sector now wishes to operate is water systems.

As long as the service is a turkey, the public sector can have it. If there is a profit to be made, enter the private sector.

That gets us to lemon socialism. While welfare systems, public subsidies for transit and the like are decried by the right wing as socialistic, there is no such cry when it comes to socialism for corporate America.

The best example was the public tab to bail out the savings and loans in the 1990's to the tune of $700 billion. Airlines and automobile manufacturers all were the beneficiaries of public money to save businesses that were poorly run, usually through a combination of greed and incompetence.

Of course lemon socialism can be a little more complicated than the simple public bail out of a privately held company.  It can include no-bid contracts to companies like Blackwater, where the public funds are nothing more than a gift to a presidential friend, or it can be the use of public money to subsidize a private operation of a public service such as an airport or a convention center or a highway.

In any case, lemon socialism flourishes in this country, usually advanced by the most conservative critics of government services and high taxes.

Unlike a public operator, the private owner focuses on short term profits and often neglects the long term conditions necessary to sustain the operation. Again, convention centers come to mind.

Comments

[jon]

I'm gonna be picky, you did have a good post, however...

"Airlines and automobile manufacturers all were the beneficiaries of public money to save businesses that were poorly run, usually through a combination of greed and incompetence."

Ever heard of someone named Lee Iaccoca? I think he ran things well after the government loan (and he paid that off too)

Although he is an exception...

[Steve Vokers]

Yeah, but a more recent example would be the $10 million the state gave GM for their Janesville plant, only to have them squander it by continuing to build gas-sucking SUVs as the price of gas rose.

[dp]

I believe that Lee Iaccoca was brought in shortly before they asked for the money. If only the banks would make substaitive changes as they were going under I would mind bailing them out as much. GM actually got closer to 43 million of our money over the last 18 years.

[John]

Just had to say that this piece opened up a whole new thought process for me. Loved it.