Milton Friedman’s Healthcare

In last week’s post, I discussed why healthcare should not be left to the free market. Since then I’ve done some more reading and have come across some pretty interesting stuff by Nobel Laureate Milton Friedman. Milton Friedman doesn’t like third-party payer systems, and he really doesn’t like government-sponsored healthcare. He believes the government has no role in regulating, purchasing, or administering healthcare services. If we had it his way, he would even do away with medical licensure. Fine. But what about people who cannot afford healthcare? He thinks that poverty-struck people should be given a negative income tax to the point that they are capable of subsisting at a socially-acceptable level. From there, people can then choose how to spend their money, whether it be on healthcare, mortgage payments, or highly marketed-high-fructose corn syrup products. While giving impoverished people extra money to survive is fine enough an idea, I must question how much people at the subsistence level would really demand health insurance when faced with many other options to spend their minimal income.

The problem with Friedman’s argument is people without health insurance likely will pose a higher cost to society through more extensive utilization of emergency care services instead of primary care physicians. By getting people invested in their own health and taking advantage of preventive measures, our healthcare costs will likely fall.

Healthcare doesn’t lend itself to the Free Market

Healthcare in the United States is big business, and that’s a big problem. We spend around 16% of our GDP on healthcare, nearly double that of other industrialized nations. Additionally our system does not provide coverage for all Americans, and our life expectancy falls below other developed nations as well. For the amount of money we’re spending on healthcare, we aren’t getting a very good bang for our buck. So what’s our remedy? A healthy dose of preventive care.

As Americans, we tend to believe the free market will solve our problems better than the government can. And with some pretty inefficient government programs in our past, I agree sometimes. The problem however is that our current system is failing to deliver what it should, so we need to figure out a solution. There’s a fundamental divide between people who believe healthcare is a birthright and those who believe healthcare is just like any other good or service and should be priced/sold accordingly. To the latter, I applaud your libertarian ideals, but I also chuckle. Although Americans largely fund their healthcare directly, through insurance, or through the government, some people cannot afford coverage. And while these people do not get flu shots or go in for annual checkups, they can get very sick and receive hospital treatment that they cannot afford and won’t pay back. So while some people currently believe our healthcare system promotes capitalist ideals, everyone already has access to healthcare (however clumsy the arrangement).

A chief issue with our current healthcare arrangement is that many medical issues-and the resulting expenses-are considered tomorrow’s problems, not today’s. While this saves money in the moment, no strategy can prove more costly in the long run. A simple yearly checkup might supplant the need for hospitalization later. So instead of providing hospitals as an unaffordable last-resort, we need a system that allows all people to receive non-emergency treatment. Through providing non-emergency treatment for all Americans, more illnesses will be treated earlier and at a lower cost to society.

Although I doubt the American healthcare system is likely to drastically change in the near future, we need to attempt to provide more low cost medical services to more people, regardless of the distribution method. This is one way in which we can save money (down the road) and provide more efficient medical care to all Americans.

Get the Middlemen Out! Why we need to eliminate 3rd party payer systems in education

The Blaine Truth argued a few weeks ago about the usefulness of college considering the soaring costs of education. While this is an important question to answer, after reading that I started to think more about the root of the problem: why are education costs soaring? They have far outpaced inflation in the past many years, and the reason for this is the current funding system that relies upon a third-party payer system. In the current model, students who cannot afford college tuition receive funding from a variety of sources until their ‘demonstrated need’ has been met. Most typically, the educational institution and the federal government supply the necessary scholarships to enable students to attend college.

Poor Greg Mankiw and Why People Think the Facts Lie

Greg Mankiw seems to be the blogosphere’s favorite economist punching bag. Openly criticized by Paul Krugman and Matt Yglesias, bloggers seem to be waiting in the wings in anticipation of Mankiw’s next words. Why, you ask? Take a look at this post, in which Mankiw posts a table and link that compares income-tax progressivity across developed nations. The US comes in as the most progressive on the list (determined by comparing the share of total income and total tax revenue share of the wealthiest 10% of each population).  This isn’t fun news for the progressive community, so naturally some public intellectuals are going to be upset. The chart proves that the US more heavily depends on wealthy tax payers than do other countries, but it does not speak on the individual countries’ ability to redistribute wealth with said tax revenue.

But the bloggers are in a fury more that Greg Mankiw posts the chart without explanation than about the troubling news found in the chart (and what the chart means about the US’s low redistribution of wealth). The bloggers claim that Mankiw is forcing incorrect information upon readers when it’s just as simple that the bloggers don’t understand the information Mankiw shares. That said, I think Mankiw enjoys the controversy he stirs up by posting facts without much explanation.

Moral Hazard and the Company Expense Account

You’re in a buffet line and although you’ve already stuffed yourself, you think about getting another plate. On one hand you probably don’t need another serving. But then you think “I already paid for it, so I might as well get some more.” Perhaps you, being the health-conscious person that you are, avoid going back for a second (or third) helping. But most people will inevitably return to the buffet. Is this because portion sizes in America are sky high? Perhaps. But it also can be explained by an economic theory known as moral hazard. Moral hazard is a phenomenon that explains that people make decisions differently when they are protected from some of the consequences of their actions. In the case of the buffet, people are protected from the cost of an additional plate because they prepaid for the meal, regardless of their portion. Moral hazard shows up everywhere. Do you treat rental cars as well as you treat your own? Are tenured professors as likely to care about course evaluation as those still hoping for tenure? And what about corporate expense accounts? Chances are you’re more likely to buy that filet mignon when the boss is paying for it. Of course most expense accounts have limits, but how efficient are those limits? Because a limit exists, there’s a high likelihood that people will utilize the expense account up to the limit, not actually based on the person’s need.

While this is more a theoretical exercise than a proposal to amend corporate reimbursement strategy, expense accounts should be managed more effectively. When people don’t bear the full responsibility of their actions, they are likely to behave differently, which results in outcomes that aren’t socially optimal. Thus by somehow forcing employees bear some cost (monetary or not) of expense accounts, corporations are likely to see a drop in expenditure without a loss in happiness for its employees.

Eliminating moral hazard can benefit not just expense account providers but a whole host of industries and sectors. When consumers of a good are different than the people who pay for the good, moral hazard is likely present. College students are more likely to order another round of drinks if they do so with mom and dad’s credit card. Although moral hazard will still appear unless the person paying is the person receiving the good, the goods recipient should feel some cost. In the case of the college student, a hearty guilt trip or reprimanding could suffice. For expense account holders, more knowledge (or reminders) about nutritional values might prevent him or her from ordering dessert with dinner.

Although economics is largely based on mathematics, it is still a social science. In trying to understand how the world works, economics must dissect individuals’ actions to try to make sense of trends and behaviors. Thus studying the theory behind individual decision-making can help to better understand how people act as it pertains to economics. And hopefully it can figure out a way to make people think twice about going back for seconds at the buffet.

Idle Hands Make for Tweeting Fingers

I can’t help but make the connection between Chinese Internet and a Fisher Price toolkit. Those bright shiny hammers and screwdrivers might look like the real deal, but the heavily censored Chinese Internet, just like the plastic choke-proof toys, won’t ever be able to build the framework of a free society.

In fact, China’s censorship of Facebook, Linkedin and Twitter, along with service interruptions for Gmail is reminiscent of many a fallen repressive Middle East regime. Aimed at crushing the public’s ability to organize protests and express dissent, China’s web-censoring arm – affectionately dubbed the Great Firewall – has garnered massive foreign media attention. But should we expect the Chinese citizenry to overthrow the Beijing government in the coming months?

Probably not.

Although the governments of Tunisia, Egypt, and China equally despise dissent, the Middle East differs from China in a key area: money. While the Middle East (along with most of the world) has suffered from the Great Recession, China’s economy has continued to grow at incredible rates. Protestors in Tunisia and Egypt weren’t just angry about civil-rights violations; many could no longer tolerate living in poverty. It’s this key difference that will make any sort of widespread revolt in China unlikely.

I don’t mean to suggest the Chinese population will give up free speech entirely for the ability to buy cups of Starbucks coffee and Nike shoes. But because China is economically stable and continuing to grow, the Chinese people will tolerate more censorship than their counterparts in the Middle East.

Sounds bitter or dismal? Maybe. But let’s take a step back and see that money has been at the center of many previous rebellions. America’s revolution started because our founding fathers refused to pay some taxes. The South seceded out of fear of losing the free labor of slavery. The US involvement in the Middle East in recent decades has stemmed from our desire to secure resources.

Good or bad, in the world in which we live, cash is king. And Beijing knows. Beijing, by focusing on economic progress and leading China’s workforce towards economic advancement, has sidestepped civil rights in favor of ‘looking to the future.’ The government believes that so long as the population continues to improve its economic position, the masses are unlikely to revolt.

In my last op-ed, I talked about the nearsightedness of US politicians in their poor handling of current budget deficits. Although detrimental to the long-term health of the US economy, Beijing doesn’t exhibit this type of economic myopia. However by focusing solely on economic development, Beijing demonstrates unprecedented levels of tunnel vision. But for their current goals, the strategy works. Dissent and opposition extend decision-making processes and prevent unilateral actions. However ignoring civil rights and denying people the ability to speak freely will likely bring about harm for China in the future. The question remains about what type of harm China’s government can expect and when they can expect it.

As it stands, the most visible opposition for China’s stringent Internet censorship programs come from abroad (with Chinese citizens unable to vocalize their opinions, this shouldn’t come as a surprise). In a recent speech, Hillary Clinton expressed US’s official view on internet censorship: “The United States continues to help people in oppressive Internet environments get around filters, stay one step ahead of the censors, the hackers and the thugs who beat them up or imprison them for what they say online.” This clear attack on China’s current practices led a Chinese spokesperson Ma Zhaoxu to declare that China opposes “other countries using Internet freedom as a pretext for interfering in others’ internal affairs.”

China calmly appears to refuse to listen to foreign governments. And I’m doubtful that’s going to change anytime soon. With ever increasing wealth and political clout, China is poised to do as it pleases (for the time being) without regard to internal or foreign dissent.

A Socially Conscious Business is still a Business

I’ve been struggling to get my head around (and approve/dismiss) the concept of socially conscious businesses for a while. Socially conscious businesses are those who claim to conduct business and sell products in a way that does not negatively impact consumers, employees, and the environment. All right seems nice, but what does that entail? How are these businesses able to improve working conditions and manufacturing processes (adding to a firm’s costs) while still selling goods at prices consumers will pay? Business won’t exist for long if they aren’t making a profit. In Wealth of Nations, Adam Smith sums it up perfectly: “It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self interest.” Companies cannot act altruistically and sell products at market price (below their cost). Well turns out they don’t have to remain competitive in price compared to others, and economics can tell us why.

Consumers across the market for a product are believed to have unique (yet sensible) preferences. More is preferred than less, and cheaper is better than more expensive. However consumers will pick the cheapest good only when the goods are completely identical. This is hardly ever the case; laundry detergents have different brands, car models have varying features, and televisions come in different sizes. The above lists examples of differentiated products. Just as many consumers prefer Tide to generic detergent, shoppers can be led to purchase a more expensive item as long as they believe the pricier item contains more value. Value can come in a variety of forms: better quality, more appealing packaging, assumed reliability, and even satisfaction from purchase. Providing consumers with self-satisfaction is the key to socially conscious business. Socially conscious businesses won’t be able to sell their products if consumers are unaware of the philanthropy that the product brings to the world. Those businesses wishing to sell their goods (with purported added value) must therefore 1) make consumers aware of the difference between their product and that of their competition and 2) appeal to buyers such that they will select their product over others’.

The problem with socially conscious businesses is measuring consumers’ additional satisfaction from purchasing the differentiated, generally higher-priced product. How much will consumers pay to go to bed feeling like they changed the world? Will coffee drinkers spend $10 extra on free-trade products knowing that farmers are bargained with fairly? Economists can attempt to model consumer preferences to predict the ‘sweet spot’ to price a good, but not accurately. Therefore, socially conscious businesses should attempt to loudly make their intentions known and keep costs as low as possible.

 

Myopia Isn’t Just an Eye Condition

Since the economic crisis in 2008, governments have struggled to balance budgets, and many have cut spending across the board in an effort to regain financial health. While these attempts at fiscal responsibility have quieted some taxpayers, they are ultimately quick patch jobs that do more harm than good. Seeking reelection in the near future, deficit-hawk politicians aim to give voters what they want at this instant instead of using the brains we believed them to have upon election to develop a long-term strategy to improve America’s economic prospects. Just as Mr. Magoo required thick eyeglasses to see anything beyond his nose, politicians today exhibit dangerous amounts of myopia that if left uncorrected will derail America in the decades to come.

First let’s talk education. The crown jewel of human capital investment now faces a dramatic decrease in spending. Classroom sizes are up and American students are not competitive with their peers in other industrialized countries. Though education often suffers dramatic cuts in rough times, this should not be the case. Education is the lifeblood of industrialized societies. Without strong education for all, fewer innovations may be realized, and the entire workforce of the future will be less skilled (and paid less in today’s dollar).

From the politician’s viewpoint, slashing education spending is an easy fix. Primary and secondary students can’t vote, and the negative effects of decreased budgets are not immediately felt. Additionally, by the time America suffers because of a less-educated citizenry, someone else will be in office.

Healthcare marks another crucial investment opportunity for the government. Just as much part of human capital as education, healthcare is pivotal for the long term -ahem- economic health of the US. Healthcare cuts oftentimes encompass things that reduce costs today but produce significant future financial burden. Take preventive care. Offering services to Americans to prevent disease or future illness seems like a logical enough thing. But preventive measures are often the first to go. Preventing future disease does nothing to improve people’s positions today, so the eyeglass-less politician says. Many of the drawbacks of cutting preventive healthcare measures will not be realized for many years. However when those costs come about, they will be drastically larger than the costs associated with administrating preventive care. Preventing an illness or detecting one at the onset (and treating it) saves significant costs for the government.

But tomorrow (or rather the day after tomorrow) is of little concern to today’s politicians. They believe that cuts of any kind, other than defense, must occur today and must occur in huge quantities. They couldn’t be more wrong.

But can you blame them?

Despite these politicians making drastic, foolhardy budget reductions, they’re just acting to gather votes for future elections. As much as I’d like to bemoan the politicians’ actions, maybe we should focus our anger on voters.

Voters, like all of society today, demand everything and demand it now. We live in a world in which we expect things to happen almost instantaneously. Corporate executives are rewarded for quarterly performance (not long term strategy), Twitter can cause a revolution overnight, and viral videos can garner millions of views within hours of their release. Information is widely available to us today in ways that previously were impossible. As a result, the public expects politics to keep up.

But just as your father always said, some things in life are worth waiting for. Not that waiting by itself is a good thing, but there’s value in spending time devising thoughtful actions. Although politicians and impatient voters believe that the current budget deficits must be conquered at this instant, we need to realize that budget deficits aren’t going anywhere until the economy improves and the government can collect higher tax revenues.

So instead of cutting funding to programs that will contribute to future economic improvement, let’s put on some corrective glasses, spend wisely and develop a plan to protect our economic future.

The Ideal Market Includes an Ideal Government

Capitalism rests firmly on perfect competition theory; prices are solely determined by a buyer’s and seller’s interactions, each of whom cannot affect the price of goods being exchanged. If a seller attempts to charge a price above that of his competitors, no one will purchase. Similarly if a buyer is not initially willing to pay what everyone is charging, he or she will purchase less (or none at all) or belly up and pay market price.   But as is the case with any theory, the economists who developed it employed abstractions and made assumptions to first explain the free market. The core to the ideal market’s theoretical soundness is the conflict of self-interest and competition, a checks and balances of competing forces that should allow all players in an economy equal market power. However only in rare cases do both buyers and sellers possess the same dominance. Just as an older sibling can concoct a scheme to get more of the younger’s prime candy during post-Halloween divvying-up, interests who hold more power in a market will naturally take more. The government should therefore promote conditions under which worthy buyers and sellers interact as pound-for-pound rivals in order to preserve the foundation of perfect competition. Unchecked market power results in inefficiency and overall loss to an economy.

Before we begin, I want to first explain the scope of this paper. I am not proposing (nor wish to meddle in the details of) any new regulatory agency that might be necessary to administer intervention. My point is that government regulation at times is necessary to preserve perfect competition for the benefit of the overall economy. That said, the government is not always poised to intervene. In the case of changing technology, the market acts appropriately to determine winners and losers. However the government should intervene to promote stability for all agents across markets. In the case of monopolies, the government should force them to behave as though they have competition. But all cases for or against regulation rest on the regulatory agency’s ability to collect accurate and fair data, something very difficult to achieve.

But how do we know when it’s appropriate for the government to intervene? Indeed this question regularly arises amongst economists. Nobel Laureate Joseph Stiglitz in a 2006 interview asserted the following:

“the real debate today is about finding the right balance between the market and government. Both are needed. They can each complement each other. This balance will differ from time to time and place to place.”

Although this clear-as-mud explanation fails to identify when, where, or to what extent the government should be involved in market regulation, it highlights the complexity of intervention. In determining whether or not to intervene, there is no defined checklist that prescribes action. However one basic condition can disqualify a market or a firm from government help: changes in technology. Sometimes market participants earn new power due to innovation. As new technologies emerge, patent holders will benefit, and competitors will be left behind. Although this demonstrates market disequilibrium, we need not worry. So long as technology continually evolves, no one individual holds dominance within a market for very long.  Additionally, emerging technology aids in producing competition amongst suppliers, which then benefits consumers. As an example, it would have been foolhardy for Uncle Sam to intervene on Xerox’s behalf as email replaced the fax machine. Under the same logic, the Government should not have bailed out the US auto industry in October 2008. Faced with superior products from Asia, American autos were no longer competitive and showed no signs of being able to catch up to or exceed worldwide standards. In this case, government intervention resulted in a loss to society. Sure, autoworkers kept their jobs for the moment, but government aid subsidized poor management and decision-making at the top. By failing to punish bad behavior, inefficient structures (GM, Chrysler) still exist and will likely fail again. Simply put, any firm or industry that is resistant or unable to change to meet standards other producers can achieve should be left to die, not nursed back to ‘health.’

Although intransigence is a disqualification for government intervention, some necessary – but not sufficient – conditions exist to justify regulation. As stated above, there is no set of circumstances that necessitates regulation. But one element is common among most cases for intervention: unexplained variance. In economics, uncertainty can be lethal. All members of an economy are assumed to have adaptive expectations; tomorrow’s investment decisions are largely determined by recent economic data such as prices, inflation, and interest rates. If that data contains spikes or is inconsistent in any way, buyers and sellers, faced with uncertainty, will not know how to spend in the future. A company that cannot predict a raw material’s future price will have difficulty deciding on future output and what to charge. Alternatively if a consumer is faced with a sharp drop in the price of good, he or she will be unsure whether to buy today or wait and see if the price continues to decline. The cumulative result of uncertainty is that people just sit still, resulting in lower levels of economic activity. Supply shocks represent a situation in which the government should intervene. Supply shocks occur when the availability of a good decreases and the cost subsequently rises. This is most observable in the supply of oil and agricultural products. A drought can cause dramatic shortfalls in production. Rising oil prices due to a decrease in supply may result in widespread economic downturn. Because of the far-reaching nature of some supply shocks, the government should intervene on behalf of all market participants.

Although it is impossible to prevent all uncertainty in a free-market economy, the government should attempt to control for unforeseen change in key areas. As mentioned above, oil and agriculture are prime candidates for government regulation. Any change in the price or supply of agriculture and oil will have far reaching effects. Increased oil prices can lead to overall economic downturn. However not all markets within an economy are as significant as oil and agriculture. A spike in the price of lawnmowers is unlikely to cause a recession. However a sharp rise in the price of steel required to produce lawnmowers (the same steel also required for automobiles, buildings, and appliances) will more likely result in a negative outcome across the economy. Therefore in determining the necessity and scope of intervention, the government must consider not only intervention’s impact on correcting the specific market, but also the degree to which the entire economy is hindered by the specific market imbalance.

In the case of supply shocks that are purely the result of unforeseen circumstances, regulation still must attempt to give all market participants equal power. However in this case there is no clear culprit for the government to punish. It wouldn’t make much sense for the government to tax farmers for low crop yields due to a lack of rainfall. Instead, the government must recognize that some areas of the economy are vital, prone to disruption, and therefore must be stabilized. In the case of markets whose stability (or lack thereof) affects many other areas of the economy, trusting the free-market to regulate itself poses a threat to the larger economy.  The government should therefore stabilize the market through active participation. In the case of oil, the government should hold a reserve of oil such that any significant deviation in production can be matched by government compensation from reserves, in order to maintain prices within an acceptable threshold. In fact, the government does hold a reserve of oil, estimated around 730 million barrels. This seemingly large number quickly fades when paired against US daily consumption of 21 million barrels. The US oil reserve would be depleted in a little more than a month in the event production halted. Additionally this reserve did not help stabilize the price of oil in 2008, when the price of oil reached nearly $150 per barrel. Had the government injected substantial reserve oil into the economy, oil prices would not have increased so sharply, and the economy would have been more stable as a result.

We’ve just discussed a need for government intervention to alleviate uncertainty in an economy. Because uncertainty harms economic growth, it should be combated. But government intervention is also necessary to preserve perfect competition in markets. Buyers and sellers in a given market should hold equal power so both parties will be happy after they exchange goods. However in many cases it is not possible for all market participants to have equal power. The classic example of unequal market power is when a buyer has no choice but to purchase goods or services from one entity, a monopolist. Although the word monopolist is tainted with colors of distrust and greed, sometimes monopolies are inevitable outcomes in a market. Because of the high cost of infrastructure investment for utilities, consumers do not have options when purchasing them; only one entity provides the service. And because the initial investment for utility companies is high, offering consumers choices for utilities would likely increase the cost. Since a monopolistic market is distorted, monopolists will likely charge more money for fewer services, and consumers will be forced to oblige. Thus arises the need for government intervention. With intelligent regulation, the government can force monopolists to behave as though there exists competition to increase output and lower prices. The trick is finding intelligent regulation.

The government oftentimes is in a difficult place. If it attempts to correct a market and fails, it is defamed and marked inept. If it sits idly by as the economy suffers, it faces critique as well. Although the government doesn’t always act appropriately or at the correct time, that is not disqualification for future government intervention. The key to successful regulation is availability of information. In order for the government to enact good policies, it must be equipped with accurate information that allows it to produce regulation that produces optimal results. Acquiring good information is the key ingredient often missing from regulation. Regulation sometimes suffers from depending on biased sources to obtain necessary information to enact policy. One method of monopoly regulation involves setting a maximum price a company can charge its customers. This technique is based on analyzing a company’s accounting records and market demand for the good.  What incentive does a monopolist have (aside from following the law and respecting its community) to be earnest about their cost structures and profit? If a corporation is publicly traded, this information is more widely available, but it does not guarantee unbiased reporting.

Government’s role in the market is a complex one. Because there is inherent inequality in capitalism, some sort of agency should be there to bolster fair competition amongst conflicting self-interests. By carefully examining the need for regulation on a case-by-case basis, the government can best determine when and to what extent it should intervene. So long as the government abides by a few guidelines, regulation can benefit an economy. Disqualifying any organization that is unable to change helps to foster new, continually improving organizations. By promoting stable commodity prices and preventing supply shocks, the government can prevent uncertainty in an economy. Additionally, by making monopolists behave as though they were competitive companies, we can pass along more goods at cheaper prices to consumers. This all however rests on the ability of government regulators to accurately gather its facts. Without balanced accurate facts, regulation cannot yield beneficial results. Fortunately, much information is available to regulators today, allowing for more detailed and appropriate forms of intervention.

Daily Nonstop Service JFK-Mars on Virgin Galactic

I came across this article about new rocket technology that could help get humans to Mars faster. In the article it mentions that the future of space exploration might rest in the hands of the private-sector, making me think about the role of privatization in American government. Heralded by the Right as an effective means to combat the inefficiencies of bureaucracy, privatization makes the Left scream in the opposite direction for fear of uncertainty and risk associated with market-based activities. Despite this fundamental divide, Obama has seemingly crossed party lines to promote the prospects of privatization, a concept that sometimes just makes sense.  In space, Obama feels that NASA is better suited to serve as a contract-awarding agency instead of an in-house R&D entity.  Not that this is anything revolutionary- it’s largely the Defense Department model of utilizing military contractors to develop new technologies (let’s discuss that program’s efficacy later). However, Obama has also utilized the private sector in his far-reaching healthcare law, affectionately dubbed Obamacare. True, the law expands the number of those eligible for Medicaid and Medicare, but for the rest of the US population, the system relies on health insurance companies to provide coverage to individuals. Instead of developing a new administration to provide coverage and treatment for all, the law uses existing structures to expand coverage to most. Now I’m not urging you to write your congressman to demand a European model of state healthcare administration, but instead point out that the private sector, when carefully watched, can work.