In the United States, we have a myth about the power of private industry. We believe that the private sector is robust, efficient, and always provides the correct and stable equilibrium needed to solve problems and provide us with innovation. We see free-market competition as the only legitimate way to advance and grow, with popular TV characters expressing ideas such as, “Capitalism: God’s way of determining who is smart, and who is poor.“
Public action, on the other hand, is downplayed and typecast as an incompetent, greedy villain. Accepting aid from a public agency is seen in some ways as a cop out, or only as something that is acceptable for a short period of time as long as you are deserving of assistance by working hard, trying to be smart, and following all the rules that others lay out.
For those who have achieved success, this model fits nicely with the worldview that they would like to see and believe. It elevates them while framing poverty or economic distress as a moral failure.
As we move forward as a globalized society that is able to adapt to technological changes and new institutions, we will have to realize that this myth does not reflect the reality of public programs or the private sector. In The New Localism Bruce Katz and Jeremy Nowak write the following about their idea of dynamic new approaches to policy and governance,
“Successful network governance models show the complex and varied interplay of the public, private, and civic. The models eviscerate the cartoon version of an efficient private sector taking the place of an inept and incompetent public sector. Rather, network governance combines the entrepreneurial capacity and capital of business and philanthropy with the legitimacy and broader concerns of local government.”
Government and public institutions have an authority and responsibility that is hard for the private sector to replicate. Because government agencies don’t have a profit motive, they are able to focus on public priorities and concerns in ways that businesses cannot. However, because businesses have private capital available for investment, they can take risky bets and make investments that public sectors could not. Finding ways to merge the strengths and weaknesses of public and private sectors is crucial to develop networks that have the appropriate capacities to invest in the future and implement changes to help regions grow and advance.
Simply claiming that the private sector always provides the best outcomes or that the public sector is slow and bloated does not help us think about what is really needed for economic growth and development in the 21st century. Both sides need to be understood clearly and appreciated for their strengths and unique features. Future governance models will combine aspects of both the public and private sectors to get stuff done.