Reflecting on the current health care legislation debate, I was thinking about the public option. Are there any historical parallels? Has the government ever entered into an existing market as a competitor? What happened?
I am not interested in:
the government providing services for something available someplaces, but not in the location the government is entering the market. (i.e. Tennessee Valley, REA)
where the government established the market first or very early. (i.e. the Postal service vs. UPS and Fedex; private vs. public schools.)
Regulation. Regulating an industry is not the same as competing in it
Another Great Debate or BBQ thread on the desirability of the program - there are enough of those.
Would you consider Medicare or SCHIP (State Children’s Health Insurance Program) to be examples?
While this is not a federal program affecting something everyone needs, what about those areas that created public municipal WiFi? What about public swimming pools? Local governments offer a whole host of recreational activities that compete with some private offerings.
What about public universities? You might say this is the government establishing the market first, but I quibble a bit about your excluding that. The examples you give (mail/courier, education) are services that were available to the wealthy before the government made them available to the masses. The first universities in the US were definitely private: Oldest U.S. Universities and Colleges
I’m not sure that Medicare works. Like flood insurance, it’s the government offering a service that if offered on the open market, would be priced out of the reach of most people. Grandmothers and beachfront property are very popular and sufficiently connected that the government and cover their upkeep.
I’m not sure this makes it different from health insurance. Flood insurance could be offered affordably to the vast majority of Americans who live in low risk areas for floods. The problem is that the insurance companies know who needs flood insurance, and will only write policies for them at extremely high prices. This is the same situation for older folks and people with preexisting conditions. So perhaps flood insurance is a good example.
Those crazy Canucks (and other Commonwealth countries) have something known as a Crown Corporation (i.e., a company “owned” by the Crown (or Queen)). Example:
There are abundant examples from outside the US, of course. Within the US there are fewer, partly because the US is relatively recently established. Schools, for example, were provided publicly by the states (and, before them, by the colonies) more or less from the beginning, but in many other countries they are a prime example of a service provided by voluntary agencies before the state became involved. Same goes, to some extent, for things like fire services.
Within the US, what about public transport? Public libraries? Or, if we treat universities as something separate from schools, universities?
I’ll throw in fire brigades, which were originally commercial - as far as I know, the government has entirely driven commercial fire brigades out of business, not that I hear too many lamentations.
Public transportation (although normally the government didn’t get into it until after the private transportation companies went bankrupt).
Fire departments. There are still a handful of “subscription” fire departments in some areas, but mainly they’re all tax-supported.
Even granting that there were community schools in Colonial times, public secondary and higher education didn’t come along until later.
Public broadcasting (there were some public stations in the early days of radio, but they were rare until the 1940s, long after commercial broadcasting became established.)
Conrail (1976-1987) and Amtrak (1971-present). Again, private companies had gone bankrupt.
In the 19th century turnpike and canal systems which were mostly built by for-profit enterprises. After the railroads took most of the freight traffic, they ceased to be profitable, but were still essential for local traffic and so they were taken over by local governments. I suppose this would be more like the Amtrak example, where a formerly for-profit enterprise ceased to be profitable, but was deemed important enough that the government felt the need to continue to operate it at a loss. This is obviously not the case with healthcare.
In a more recent example, before the Interstates, most of the limited-access highways were either built by for-profits or were built by governmental bodies that were expected to recoup the construction and operating costs in tolls. The Interstate System might arguably fit into caveat #1, since the for-profit roads obviously first cropped up on routes where the construction costs would be quickly recouped, but it seems likely that given enough time the for-profit model could have eventually constructed most of the major routes. I think this would be an okay parallel for the healthcare issue, since it was an example of something that could be done by the private industry, but the government decided doing at less direct cost to the user would have enough of a benefit to society at large to justify doing it at a loss.
Another situation I might point to is during the 1830’s through 1860’s where private banks issued currency (and essentially set monetary policy) instead of government run ones. It’s sort of an appealing analogy, because it’s an example of private industry running a service that is absolutely essential (like healthcare), not doing it very well, and government eventually taking it over. But I’m not really sure issuing currency would have really been much of a for-profit activity in the first place, and plus the government didn’t really “compete” so much as just snapped its fingers and made it so they couldn’t do it anymore.