Sunday, July 20, 2008

Thought Experiment

Here's an idea that I think my socialist friends in San Francisco might love.

We'll have the city of San Francisco open up a chain of restaurants. We'll make them completely free and the city will pay for them with taxes. We'll tax wealthy people the most so that the people without much money won't have to pay any taxes for this service. Since it's free, it will have the additional benefit of causing most of the profit-seeking restaurants in the city to close down. Even though they may sell better food, it's hard to compete with something that is free to the customer. But since there's little competition, the food quality in our public restaurants may suffer or vary too much from neighborhood to neighborhood. The people in the wealthier neighborhoods may try to help their restaurants get better ingredients, but that wouldn't be fair to people in lower income neighborhoods. To solve this, we'll create a central bureaucracy that will set food standards across the entire city. Although the overhead of this bureaucracy will cost about 20% of the total cost of the entire operation, it'll be worth it because we'll have uniform standards set by professionals who know what is best for us. And it'll be funded for by taxes from wealthy people who already have too much money.

Some super wealthy people may choose to go to private restaurants, but it will be a tiny minority because few people can afford to pay taxes once for their public restaurants and then pay a second fee to private establishments. Those establishments will be very expensive because they will only cater to the wealthiest and the tiny demand will severely limit competition. Although our leaders will all dine at these elite establishments, they will stand behind the quality and cost of the public restaurants.

Some other people may choose to pay for raw ingredients and eat at home, but we'll demonize those home-cookers as being anti-social and weird. We'll wonder why they don't want to eat with the rest of us? Is our food not good enough for them? It would be too dangerous to let this trend catch on. But it'll be okay -- eventually one of them will screw up and that's when we'll pounce. Perhaps, one of them will get food poisoning and we'll feign outrage. Although the incidence rate of food poisoning is the same at both public and home kitchens, the general population knows that statistics lie. We'll say we must protect these home-cookers from poisoning themselves and we'll demand they change their ways and eat like the rest of us.

Hopefully, this model will become so successful that we'll replicate it to the state level. And then other states will copy it. To ensure that things are fair from state to state, we'll pass "No eater left behind" legislation to ensure consistent standards. We'll have to raise more taxes though to fund the Department of Gastronomy.

Of course, no system is perfect. Problems may arise from time to time. For example, the workers at these state-run monopolies may realize they have a lot more leverage than they would in a free marker. Where would people eat if they went on strike? They will negotiate lucrative contracts that guarantee it's virtually impossible to get fired and everybody will get a fair salary based on seniority instead of based on the quality of their work. After all, how would it be fair to pay Michelle more than David just because Michelle works longer hours.

Some people though may not like the food they are getting. They will demand better from their state government. Some forward-looking free market thinkers may realize that we should give these eaters more choices. We'll allow a few charter restaurants to be created. They will receive funds from the state and the eaters will get vouchers to dine at these quasi-private establishments. These charter restaurants will be loathed by the public restaurants. The employees of the public restaurants will not like the employment practices at the charter restaurants such as firing waiters who are under-performing or giving some cooks bonuses because their food is better. They will say that these charter restaurants don't meet the same standards as the public ones and demand that this be fixed to protect eaters. The charter restaurants will be forced to comply with the thousands of pages of regulations created by the public food bureaucracy, but it will be very difficult for them because they don't have their own giant bureaucracy for ensuring compliance. Some charter restaurants will stay around but only enough to placate the most unhappy eaters and not so many that the overall system is destabilized.

Now, isn't this so much better than the current model of having those profit-seeking restaurants of varying quality all over the city. Some of them are mom and pop places that go out of business when their customers don't like their food. How unjust is that!

There are those of you who may think this is a pretty silly idea. But if it works so well for primary and secondary education, why not replicate it to other areas. Hopefully, I've convinced the naysayers.


mamund said...

Here's something my capitalist friends might love.
We'll privatize all law enforcement and fire protection
You only get protection if you pay for it. The more you pay, the better your protection.
Wealthy districts will be able to high better staff and provide better equipment for them.
Poor districts will receive less protection. If they want better protection, they can pay more and/or move.
Hey, it works great for restaurants.

David Seruyange said...

It's not that I disagree entirely with you but you build your satire around the assumption of the following extremes: the "rich" pay for everything - by rich do you mean MD rich ($300k / year) or CEO ($40 million annual income) rich? In your model is there a middle class whose collective resources benefit people of similar status?

Alex Power said...

At first I thought you were talking about municipal wi-fi, and then about Universal Health Care. The fact that your argument applies pretty much equally to any government-provided service seems to indicate that it's flawed. As mentioned in the comments, it can apply just as well to law enforcement; why should people have to pay for the police if they want to be able to use a voucher to hire a security company?

Vijay said...

Mamund has the right idea but draws the wrong conclusions. When you privatize functions like fire fighting and police protection you will find that prices for those services will drop and quality will increase, making better service available to those with lower incomes. Just as computers that were incredibly expensive only a decade ago are now available for prices that even quite poor people can afford.

Jon Perlow said...

I don't know if it applies to law enforcement or fire protection. Maybe there are some things that the government is just fundamentally better at and there are things it's bad at. I personally don't like government subsidized monopolies. I prefer competition and letting people have choice. Government subsidized monopolies/cartels haven't worked well with money (the Federal Reserve), with mortgage lending (Fannie Mae and Freddie Mac), and with public schools (our entire public school system is a disgrace). Maybe fire protection has worked okay and maybe we don't want to give the coercive power of policing to private companies, but I think we'd be much better off if we ended the public education system as we know it. A system of public funding of vouchers to private schools would likely result in a much better education system in this country with more choices for parents and students.

Keith said...

Vijay writes: "When you privatize functions like fire fighting and police protection you will find that prices for those services will drop and quality will increase, making better service available to those with lower incomes."

Um, I'd suggest that what generally happens when you don't have public police protection is that you get organized crime, which is neither low cost nor high quality. I'm not saying that this extends to education, but I'm not sure that any of these analogies are really apt. All I know is that for my highly-taxed dollar I would *much* rather have our highly flawed police system than have some dystopian corporate police state.

wombatron said...

Keith writes: "All I know is that for my highly-taxed dollar I would *much* rather have our highly flawed police system than have some dystopian corporate police state."

I hate to break it to you, but "dystopian corporate police state" describes the current American system quite well, especially as regards the War on Drugs and intellectual "property".