Public vs. Private Debate is Obstructionist in Itself

Galbraith outlines many of the subconscious thoughts that drive the consumer demand culture we live in today. We all know what is happening around us, but it was very interesting to have an economist place those in a historical timeline as well as economic framework. For instance, consumption  correlates to GDP growth and overall increased welfare, but it also creates a riskier economic environment. The consumption growth is followed by consumer debt, because people are slashing away at their credit cards with neither the cash nor the income to pay off those debts. Debt limits can only reach a certain point before it threatens overall economic security, as shown by the 2008 financial crisis.

One of the major themes that Galbraith tackles in this book is the idea of social balance. For a given level of private consumption there exists a corresponding optimal level of public consumption. I think the social imbalance Galbraith mentions should be viewed more as a mutually reinforcing relationship. When people spend money in the private economy, a portion of that spending goes back to the government. When health care spending increases in the public sector, the government is compelled to provide a public option. When the private sector sells more cars, the public sector takes the sales tax revenue from those cars and improves the roads upon which the cars travel. The more people shop online, the more boxes USPS has to deliver to people's doorsteps.

Instead of positioning the private and public sector at odds with one another, they are more complementary in today's society. Banks sponsor nonprofit education competitions with cash awards for the participating nonprofit organizations, effectively acting as an investment in the nonprofits that do much of what increased public sector spending would also be trying to accomplish. The increased government spending on education, welfare, etc. are all issues that a variety of organizations try to make impact in. In fact, one looks at the chart below and wonders whether governments should increase public expenditures based on the historical trends we see here. While the private sector is roughly 5 times larger than the size it was in 1950, the public sector is a whole whopping 13 times larger than it was in 1950. In any case, there is clearly a correlation (and perhaps causation?) between the two types of spending.

Sure, the public sector does not have money to embark on large marketing campaigns for the sake of marketing the way businesses can. However, the point is that they don't need to, because other people are going to perform similar roles for them, at little cost to the government. In today's changing landscape, there is a continual creation of a bridging space between the public and private sectors. Teach for America, for instance, is an organization that facilitates the process of having qualified teachers that would most likely go into the private sector teach at public schools throughout the country. There is obviously conflicting data out there about the actual impact that TFA has, but under the assumption that it does generally positive things, then we can guess the money these schools would have to spend trying to attract top talent would be much more, and therefore more "inefficient" spending, than if organizations who help bridge this gulf did not exist. In my opinion, whole idea that there is a public sector and private sector which are stark opposites is a theory that is outdated and obstructionist in itself.