Are private and public really separate?

It has long been customary to talk of “public” and “private” as separate and distinct. But are they really?

The argument often centres on “public sector” versus “private sector”.

So it went at a Fabian Society seminar on Friday. The Public Service Association and frontline workers questioned the wisdom and effectiveness of contracting out delivery of public services to non-state entities.

Private operators have long delivered some public services: for example, most of the public health system’s primary care.

Bill English, who will deliver his annual homily to the Institute of Public Administration on Thursday, wants more. He has long believed private deliverers add value to public services. He reckons they can better target “customers” and can innovate.

Actually, contracts written by his public bureaucrats and their burgeoning phalanxes of lawyers now run to dozens of pages, tying deliverers so tightly they may as well be arms of the contracting agency.

And not all contractors are strictly private. Many are not-for-profits — community-sourced and community-part-funded and so public as well as private. Community part-funding, of course, has a fiscal spinoff for surplus-hunting English.

Other private providers are companies, many of them foreign, channelling your public tax money into foreign shareholders’ private bank accounts.

And they don’t always achieve better public results, as Serco’s prison mismanagement and Compass Group’s frozen food for cash-strapped hospitals show. There can also be private costs to recipients for whom the public has some responsibility, as privatised district health board home care has shown.

English wants private delivery of “social” housing and private funding of social impact bonds for some health services.

So are public and private separate and distinct now?

Take personal privacy. A private event or comment on Facebook or a teenage indiscretion on a smartphone can become public property. Social media are social.

Take private land: constitutionally, it is a grant from the Crown which nowadays in effect is the public’s agent. Land is protected as private only as far as Parliament allows.

In other words, “private” is within “public”, not separate from it.

That goes for markets, supposedly private affairs. With rare exceptions markets are not places of exchange among equals but are marked by asymmetries of information and power.

So governments regulate or try to influence markets for the public good.

Central banks, for example, set interest rates and use supplementary mechanisms to speed or slow economic activity by, in theory, prodding people to buy more, or less, and producers to invest and produce more, or less.

But for Japan since 1990 and Europe since 2008, rate cuts have not got economies humming. Japan’s, the Eurozone’s and some smaller central banks have cut their interest rates below zero. That is uncharted territory.

Central bankers are beginning to look like people who believe that pushing on one end of a piece of string will move the other end and who, when it doesn’t move, push some more.

The result this year — especially last week — has been a dive in “private” banks’ share prices and fears of collapses.

Bank trouble can have public costs, as after the wild behaviour of United States and European banks up to 2007.

Another public cost is the private use of public goods.

Take water. It comes from clouds which no one (yet) can own, so is public. Any personal, farm or company use is not of something they own but of a public resource.

On Saturday Nick Smith will unveil some more steps in water policy at the National party’s Bluegreens conference.

These are a response to the fourth Land and Water Forum (LAWF) report which made 60 recommendations — to add to its previous 153, most of which have not been implemented. The latest batch cover maximising economic benefit within quality and quantity limits, a transition to limited takes, excluding stock from waterways and iwi water right claims.

Last November LAWF chair Alastair Bisley warned that “unless our recommendations are substantially implemented, our consensus is unlikely to last”. In fact, it has already started to fray.

LAWF consists of more than 60 “private” interest groups charged with finding consensus on which to base “public” policy. Again, private is within public.

So Smith’s real challenge on Saturday is not to balance private and public — the traditional story — but to find where private fits within public.

* Note Chief Science Advisor Peter Gluckman’s award last week from the prestigious American Association for the Advancement of Science for his work on science and diplomacy, including establishing the small advanced economies science network, organising the first international conference on science advice to governments and setting up an annual meeting of chief science advisors and equivalents in the Asia Pacific Economic Council (APEC). Small countries can have big effects.