Public Sector, Private Sector, Public Money, Private Money

I spoke yesterday at the Irish Proshares Association ( a branch of IBEC), along with Jim Power and Constantin Gurdgiev. A gloom of economists indeed.Part of the discussion after our presentation got me thinking of the nature of the “debate” in ireland, where much focuses on public sector versus private sector. The debate is posited in these manichean, zero sum, hobbesian (both Eddie and Thomas….) terms. Sometimes it is overlain with the language of productive versus unproductive.  There is an unspoken assumption that all private sector activity is productive and all public sector unproductive. Speaking as we were in the spanking new PWC building, with a magnificent view of the skeleton of Anglo’s headquarters, I suggested that we reconsider our language.

Anglo was of course a private organization, and one would be hard pushed to find anyone that would concur with the statement “this was a productive use of money” to describe its last decade or so of existence. Similarly  one might well conclude that (steady now…) the HSE is a productive body – one can and must argue about HOW productive but the nature of public health provision is to increase overall economic productivity. Less contentiously, we can look at multinational tax arbitrage (private, but productive?) and the provision of second level education (public, inarguably productive). Much of the problem seems to stem from confusion about being productive (a net addition to economic wellbeing) and productivity (how many “units” of economic output are produced per unit of “input”).

A more useful approach might be to look at public money versus private money. Like all universities TCD is part public part private funded. We get a bloc grant from the state (because there is a public good in having a well educated population); we get a sum of money which the state provides us as opposed to charging fees to undergraduates; we obtain competitive scientific research grants from both public and private bodies; we charge fees for courses to private individuals; we have some campus companies and other activities which give a yield.  We might want to think of all the private sector bodies and how they obtain monies – there is a vast flow of money from the public purse to the private sector directly each year, not to count the indirect multiplier effects. Lets concern ourselves with how effective, how productive is the use of public money regardless in the first instance of whether the body is called public or private sector, itself a rather flexible legal distinction when the 100% public owned state bodies such as NAMA, IBRC and so on are not classed as public sector.  The contractual nuances of the individual disposing of the money might well be important but of prime importance is how the money is deployed. And in that context, the debate needs to mature (but it wont of course)….

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3 thoughts on “Public Sector, Private Sector, Public Money, Private Money

  1. anthonybehan

    I think you have to distinguish between the productivity of finance (or indeed money) and labour. Anglo may well have had a highly effective and productive labour force, but its culture and leadership were poor. Similarly the IFSC and “tax structure” companies are about finance rather than labour. Your argument isn’t wrong, but we often forget about labour and employment theory in favour of economic theory, or macroeconomics more generally. What we need is an optimised workforce; I think that’s a separable comment to saying we need a productive economy.

    Reply
  2. Pingback: Ninth Level Ireland » Blog Archive » Public Sector, Private Sector, Public Money, Private Money

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