The Power of the Public Option: A Q&A With Ganesh Sitaraman and Anne Alstott

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Ganesh Sitaraman and Anne Alstott have co-authored an important new book, The Public Option: How to Expand Freedom, Increase Opportunity, and Promote Equality, making a powerful case for more public provision in several realms of economic and social policy. They discussed the book in email conversation with Prospect Co-Editor Robert Kuttner.

Robert Kuttner: Your book is very astute at explaining that there are areas where both public and private options can and should be available, such as the post office versus FedEx and UPS, or both public schools and private ones, or public systems of health insurance versus private or supplemental ones.

What about the problem of political feedback loops, in which the private players recognize the risk that the public system will prove more cost-effective and attractive, and use their political power to game the rules to make the public option less competitive. You mention this dynamic in the case of the post office, where private competitors persuaded Congress to limit the Postal Service's ability to innovate; and we've seen how it also operates in the case of voucher and charter schools where some voucher schools find ways of sticking the public system with more-costly-to-educate students. Are there some cases where we need public monopolies pure and simple, because of network efficiencies or the tendency of private competitors to try to game the system?

Ganesh Sitaraman and Anne Alstott: It’s a great question, and there are a couple of parts to it. First, let’s take the problem of capture. We think public options fare pretty well when it comes to withstanding capture. Private actors and lobbyists are going to try to influence policy whether you advocate for a tax credit or a public option. But public options have the benefit of being simple and salient. There’s a reason why it’s so hard to cut Social Security and Medicare—they are easy to understand, highly salient programs. People know them, use them, and will push back at attempts to undermine them.

The second part of your question is also a good one. In the book, we don't argue that public options are the answer to every possible situation, and this is a good example. In some areas, such as infrastructure and network industries—those are areas like electricity, water, and sewer—we have and we want there to be a single provider of the service. The reason is we want universal access at an affordable price, like with the public option, but the economics of competition are pretty hard. It's very expensive for every company to put in power lines or pipes, so we instead have a single provider. But to prevent abuse, government regulates those utilities to guarantee we get universal access at an affordable price.

In recent years, the big fights between left and right have been about how to regulate or deregulate capitalism. Yet, as your book shows, straightforward public provision is often more efficient, equitable, and accountable than the attempt to regulate complex private institutions such as banks or insurance companies in the public interest, because of the problem of regulatory capture. With the exception of the proposed public option in the Affordable Care Act, which was discarded early, it's hard to think of a recent, proposed public option that was a major progressive cause. As you demonstrate, public provision has a long and mostly solid history going back to the earliest days of the republic. What happened to public options? Why have they been eclipsed?

The central answer is that we've lived through a neoliberal era over the last generation in which markets and privatization—not public action—were the dominant paradigm through which most people looked at policy questions. The result is that we saw policymakers make use of vouchers and tax credits frequently, but less frequently make the case for public action to offer services directly. Of course, there are often market failures for goods and services, and in many cases, direct public provision offers important benefits in terms of access and simplicity. The focus on private provision to the exclusion of public options missed the important ways in which public options contribute to our society.

I want to push harder on the question of public systems rather than just public options. Your other work has emphasized the increasing corruption of American capitalism, in the way rules are gamed by insiders, how monopolies destroy competition, how concentrated economic influence translates into concentrated political influence, and so on. There was a time when we had regulated private oligopolies or monopolies, such as the airlines, or power companies (which were mostly private) or the Bell monopoly, but we also had public monopolies such as the post office and public power companies in some areas. Conservatives (and some liberals) succeeded in getting utilities deregulated in the name of competition, but after a period of chaotic competition now we are back to largely unregulated oligopolies or monopolies, with neither much competition nor much regulation.

In this book, you go out of your way to make room for private competition to public options, but has the corruption reached a point where it would be cleaner and more efficient simply to have regulated public monopolies in some sectors, like the post office used to be, or like public power companies still are in some places? For instance, why not just have a public internet? Is it your feeling that in the current climate a public monopoly is a harder sell than a public option, or do you feel that public options with private competitors are genuinely preferable on economic efficiency and consumer choice grounds? Or does it depend on the characteristics of the sector?

There is a broad continuum from public to private in how we think of public policy. This ranges from exclusive public provision to public utilities, to regulated markets, to subsidies, and there are many other spots along the continuum as well. Our goal in the book is to show that public options are a policy tool that is underappreciated, understudied, and underused. And we think they should be a much bigger part of policy conversations. As we note in the book, sometimes other tools might be useful—in many network industries and infrastructure industries, exclusive public provision or the public-utility model might be preferable. In sectors where the goods are not morally or democratically essential to everyone and where the market is competitive and works well, then regulation to police bad actors and subsidies for those who can't afford access might be appropriate. It will depend on the particular context—but the bottom line is that public options should be in the mix. We shouldn't think the only choices are exclusive government provision or market subsidies.

Your book is a deft blend of the ideal and politically possible. I read you as wanting to expand the public conversation and leaving plenty of room for private competition so that you do not get branded as socialist. This is also good public policy in most realms. I want to raise one area where it may be time for more of a stretch: platform monopolies. The abuses of Google, Amazon, Facebook, et al. are so extreme that there may be a case not just for tighter regulation and public competitors or options, but even for public monopolies. These giants have defied regulatory attempts. Their entire business model is based on stealing our data and destroying potential competitors. The title of another recent book, Shoshana Zuboff's The Rise of Surveillance Capitalism, captures one of the core abuses, in just four words. So at the very least, why not have a public competitor to Google, whose charter precludes making any commercial use of data? Why not do the same with Facebook? Maybe even shut Google down as inherently predatory and have a public or nonprofit version as a clean public utility, on the model of Wikipedia?

One of us [Ganesh] has actually written about how to regulate tech platforms right here in The American Prospect. The argument there was about the portions of these companies that are akin to utilities and the consequences for policy. It might also be possible to have a public option for a data commons and for other aspects of technology, and although we could imagine a public option for Facebook, it’s not clear why that would be desirable. It’s not clear that it’s a service or good that is morally or democratically important (on the latter, there’s a strong argument it has been detrimental to democracy), and a public option would raise First Amendment questions if the public option set boundaries on speech. One thing we do talk about in the book is a public option for broadband. Almost a quarter of rural Americans don’t have access to even moderate-speed internet. For high-speed internet, most Americans have only one choice—or no choices. That’s an area where a public option could be very useful.

Child care is a very good example of what you address in your book. If you compare universal kindergartens run by local school systems with the patchwork private early-childhood programs—nannies for rich people, decent day-care centers for the upper middle class, and everything from so-called family day care to church basements for everyone else—public is unequivocally better. Quality is better, teacher pay is better, and it's free. The other great example is the universal child-care system run by the military for servicemen and -women. The patchwork of private options also demonstrates the class inequities of the private option: Public kindergarten is for everyone; the quality of private day care varies with what people can pay. It's a hands-down case for the public option. Here is my question: The transition challenge is daunting. Even most sponsors of comprehensive day-care legislation would subsidize and add better standards to the existing patchwork. So how, politically, fiscally, and programmatically, do we get from where we are to universal and public child care? Or is there a decent way of having public coexist with private?

What is interesting about child care is that the public option has become much more feasible, and more often discussed, just in the last couple of years, thanks to two developments in education. One is the nationwide movement toward universal pre-K in the public schools. More and more states and localities are creating public pre-K for four-year-olds, and the success and popularity of these programs has opened the door to thinking about a bigger public option for child care. A 2019 report by the National Academy for Social Insurance makes that connection and suggests how the transition might work. You can imagine phasing in additional years—adding three-year-olds is not a huge step, and then maybe in five more years you add two-year-olds, adding staff and capacity along the way. You can also begin with half-day programs, as schools did with kindergarten at one time; these are less convenient for parents but are an opening wedge. And this could be done at the state level and even at the local school district level as first steps. Or it could be done first in high-needs areas to focus on more disadvantaged kids.

A second development is the growing use of and demand for before- and after-school care, which is a program we discuss favorably in the book as a much-needed public option. Many, but not all, public schools already provide some kind of early drop-off and late pickup child-care program. Parents love these programs: They are affordable, they are on-site, so that kids don't need transportation, and they are safe and predictable. It would be hugely popular for more school districts and states to fund before- and aftercare programs. They make use of existing facilities (for meals, recreation, and study), and they often employ school staff who want extra hours and community members who want part-time work.

You have been very persuasive in making the case that in many realms public options work well and often work better than private ones, as well as keeping private providers on their toes. As you know, however, public approval for government is at an all-time low, and Trump's mismanagement and corruption of government, paradoxically, only lowers it further. Of course, when we dig a little deeper, public support for Social Security and Medicare are rock-solid, so there is a latent approval for government generally that can be built on. Other than commending your book as required reading, how else might we rebuild public support for public options?

There's a paradox here. If you ask Americans generically about their degree of trust in government, you get rock-bottom approval numbers. But that is likely an artifact of 40 years of Reagan-style anti-government rhetoric, and it masks deep support by people who use the actual services that government provides. We see the same generic-specific disparity in polls about public education. The vast majority of public-school parents rate their own school an “A” or a “B” and would support higher pay for local teachers. The numbers are far lower when the public at large is asked to rate the public schools nationally. Social Security, as you point out, is another example. A large majority of Americans, including Republicans, not only support Social Security but would support higher taxes to ensure its solvency.

So what is likely the most promising approach is to emphasize, early and often, the very specific programs and services that government provides. The Reagan strategy is to identify “government” with marginalized programs and people and, sad to say, to appeal to racist stereotypes about “welfare.” One counterstrategy, which we illustrate in the book but can be adopted by anyone, is to point out how public services already help address widely shared needs and could do more. Higher education, child care, and internet access, just to take a few examples, represent innovations with wide appeal, and it is exciting that political candidates have begun to offer concrete proposals for public options.

Ganesh Sitaraman is a law professor at Vanderbilt, and the author of The Crisis of the Middle Class Constitution (Alfred A. Knopf 2017). He is a Prospect board member. Anne Alstott is a law professor at Yale, whose books include A New Deal for Old Age (Harvard University Press 2016).