Ganesh Sitaraman: Public Options for Creating Freedom, Opportunity, and Equality

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Transcript by Rey Smith


Jini Palmer: Welcome to Town Hall Seattle civic series. On this episode, Ganesh Sitaraman, professor of law at Vanderbilt Law School and senior fellow at the Center for American Progress, came to our Forum stage to explore the public option, which are some of the most beloved institutions in America and how they hold the potential to transform American civic life. Ganesh talked about the vast improvements that could come from expanding public options and his co-written book with Anne L. Alstott, The Public Option: How to Expand Freedom, Increase Opportunity and Promote Equality.

Ganesh Sitaraman: Thanks so much for that great introduction. Thanks to everyone at Town Hall for putting this on. I was here about two years ago for my last book and it was a totally different place. The renovations here are just amazing. It’s great to see this new building, so I encourage all of you to keep coming back here and support Town Hall. It’s a really great venue to be at to talk about books and I’m sure there are lots of other exciting programs that happen here as well. I suspect a lot of you came here today to hear a talk about healthcare because the book’s titled The Public Option. You thought we’d get into a furious debate about Medicare For All and other kinds of public options. But I’m going to disappoint you because the book is not actually about healthcare.

It’s about much, much more than healthcare. But just so any of you who wanted to talk about healthcare feel like you at least got your money’s worth, I’ll start with a little bit of healthcare and then we’ll get into some of the other topics. So imagine it’s 10 years ago: we’re back in the debates over the Affordable Care Act known as Obamacare. A major part of those debates back then—it was a debate over whether there should be a public option as part of the bill—and the idea of the public option is that there would be a government-provided health insurance option that would be optional for anyone who wanted to buy into it. And it would coexist with private health insurance options like Aetna or Blue Cross. And it would compete with them. This proposal was extremely contentious at the time. The chairman of the RNC said it was socialist. Joe Lieberman, who had been the vice presidential nominee for the Democrats in 2000, was opposed to it, pushed it out of the final bill, and ultimately the public option didn’t make it into law. And today we’re back in a debate about public options, but now instead of it being a public option versus no public option, at least on the democratic side, the debate seems to be between a public option and Medicare for all. And I’ll have a little bit more to say about that as we go on. But what I think is the really interesting thing—and when I was talking to my co-author Anne L. Astott about this and as we were thinking through this book, but also the debate over Obamacare—what struck us was really that the public option isn’t actually just about healthcare. It’s not recent as an innovation. And historically it’s not even that controversial. We actually have public options all around us and we’ve had them all around us for hundreds of years. So if you’ve ever been to a public swimming pool, you have been to a public option. Some people have private swimming pools. If you’ve been to a public library, you have experienced a public option. There’s lots of universities that have private libraries. Some of you probably buy a lot of books. If you’re here tonight, you’re probably that type of person. You have your own private library at home. There are public parks and private parks, public schools and private schools, public golf courses and private golf courses, public basketball courts and private ones, public defenders in the courts and private attorneys. In a lot of different areas we have public options and what they fundamentally are are the government provision of a good or service that’s universally accessible at a free or reasonable price, and they coexist with the private marketplace.

And what I think is so striking is that a lot of notable people in American history have supported public options and a lot of our traditions and traditional institutions are public options. I’ll give you a few others that I haven’t talked about. The post office is a public option; it competes with FedEx and UPS. If you have a problem with the public option and problem with the post office, you should take it up with the founders of the country because the post office is written into the text of the Constitution. It was set up in 1792 and has been with us for hundreds of years now and that’s a really old public option. If you don’t like public libraries, you should take it up with Ben Franklin who was one of the great champions of the library tradition in early America. Public schools and swimming pools had been around since the 19th century. You have a constitutional right to your public defender because of the case Gideon versus Wainwright. So we have these public options in a lot of places. Very notable people have supported them. And the reason we have them is because we’ve turned to them as a way to reconcile our commitment to equality and democracy with our interest in markets and competition. And so let me say a little bit about why public options are good for those things. The first thing is that public options really expand freedom and opportunity. So let’s think about the public library, just as an easy example. Public library allows anyone to read, check out books, surf the internet. And if you have some libraries, you can go to puppet shows and they have little programs for kids that are fun. This expands educational opportunities and guarantees access to information to everyone. But it also doesn’t prevent anyone from buying books in the bookstore; if they have a private library like a university that they’re affiliated with, using that instead. It just expands opportunity.

Public options also benefit competitive markets and they actually make capitalism work better. So think about a public option like schools. Public schools guarantee that we have an educated workforce, which is great for businesses. It’s great for our economy. Public services like subways, transit, the post office provide basic infrastructure that stitched together the country, allows workers to get from one place to another, that allows for commerce to move from one place to another and information to move from one place to another. If we imagine a public option for healthcare, if we think about the public option for retirement, that can put less pressure on businesses to offer those same services to their employees. It can help small businesses compete who don’t have the resources to offer that, and it can even help workers who want to quit their jobs become entrepreneurs and start their own business.

Public option also can compete in the marketplace with private options. That’s a core function of some public options. And this is a really old idea too; Franklin Roosevelt in 1932 called this idea “yardstick competition.” He said that you could have the public option that would compete with the private option, especially when there’s a monopoly, and it would be a check on the private option. You would use it as a yardstick to measure the private option’s success. And finally, I think public options are good for our democracy. So if you think about playing a game of basketball in a public court or sharing a picnic table at a state park, public options stitch us together as a people. They bring people together who might not ultimately bump into each other in the course of their normal day. And as a result, they give us this shared set of experiences and goals that we can debate about in the public sphere. And ultimately that’s what democracy is about: it’s about us choosing our own destiny, choosing our own future. And to do that, we need to deliberate and debate about things we do together. And public options are that kind of shared project. Now of course, this history of public options is not always as positive as this. Just like the history of America, it includes shameful periods of exclusion. Just to give you one example, during the Jim Crow period, public swimming pools were cut off from African Americans due to segregation. But as the civil rights movement made strides to open public accommodations throughout the country of all different types, public options including pools became inclusive as well.

So in the book we argue that because of these benefits, public options can be very useful today as a way to navigate between the urgent need that we have for more equality in our society while also retaining a space for competition and markets. And so I’ll just give you two examples of forward-looking places we might think about expanding public options to. The first is broadband internet. So right now about a quarter of Americans in rural areas lack access to even medium-speed internet, so 25 megabit download speeds, it’s not very fast actually. If you go to high speed internet, almost half of neighborhoods in America have one option for high speed internet and another 36% have zero options for high speed internet. So what that means is for the major infrastructure that we need to connect to commerce, to information—increasingly and in the future—even to things like medicine, a big chunk of the country has no access. And another chunk of the country has no competition for their access. So a public option for broadband could go a really long way to help both of these problems. It could expand access in places that don’t have it and introduce healthy competition in markets that are very concentrated. And this actually isn’t a pie-in-the-sky idea. It’s not a crazy idea. Chattanooga, Tennessee, a city of about 180,000 people, has a public option for high speed internet, for broadband. It’s set up by the electric company there and today it has about a hundred thousand customers, individuals and businesses. And it’s been a huge boon to that community. They have a resurgence in their economic activity in the city and people really like it. It’s worked really well for them.

A second idea is childcare. So in a lot of places the cost of childcare for an infant is actually higher than the cost of sending a kid to college for a year. That’s an amazing amount of money, if you think about it. And for families it’s just too much that many of them can bear. And this is a real problem because not all families are going to have the money to have a private nanny. Not all families are going to have grandparents that can move into the house or move in across the street or even live in the same city and help out. So a public option for childcare, a universal system that would be affordable, is something that can actually transform life and commerce as well. There’s a lot of people who stay out of the workforce because of childcare issues and a lot of businesses have challenges because employees have childcare problems, difficulty finding childcare. So this is another place where a public option could be hugely helpful.

I think what’s exciting right now is we’re actually seeing a lot of politicians talk about public options in a whole bunch of sectors. So for example, there are proposals for a public option for basic bank accounts run through the post office or through the federal reserve. You may have heard of that as postal banking. It’s an idea that we actually had in America for a long time, got rid of and people have proposed bringing it back. There are proposals to have free college. So if you think about free college, we currently have free schooling from K to 12. And you can imagine free schooling from K to 16, right? Free college is an expansion of the public option we already have for education. So we see a lot of debate going on on these areas and people wanting to expand public options. And I suspect some of you are probably thinking, “Well, you know, if this is so great, if these public options are so wonderful,”—I’ve picked out some nice examples; everyone loves libraries—”why don’t we have more of them? Why don’t we already have the public option for childcare or free college or healthcare or broadband internet?” And I think the answer gets to a really important historical fact of where we are in our history. And I think it also explains why there’s resurgent interest in public options right now.

So in the book we argued that this moment is really different from what’s been going on over the last two or three generations. So from the 1940’s to the 1970’s, we lived in one era of history, and in economic policy it was really defined by what’s called the Treaty of Detroit. And the idea of the Treaty of Detroit was that, in the late 40’s, the car companies and the unions got together and they made a deal. The car companies were going to provide health insurance, retirement benefits and good wages to workers, and workers weren’t going to go on strike. And that was the agreement that they had. And this idea of the Treaty of Detroit was about employer-based benefits and the employer-based benefits systems spread throughout our country in unionized sectors and in non-unionized sectors. And so for about that generation there was an idea of justice or a social contract to it and it went something like this: a male breadwinner would get paid a union wage and get benefits from his company for him and his family. So if you work hard and you work for a company your whole life, you’ll be okay. That was sort of the idea behind it. Now, it didn’t work for everyone. Wasn’t perfect, but this was sort of a model, an archetype for how we thought about social policy in the country. We then moved into a neoliberal era from the 80’s till about the present, and the idea of the social contract in this era was people should buy the goods and services that they need in the private marketplace. And so the neoliberal era pushed for deregulation, for privatization, for austerity, not spending from the public fisc on public programs. And to the extent government was going to be involved in helping people, it was really involved in helping them in the private marketplace with subsidies, with vouchers, with tax credits, ways to make it a little bit better to be in the private marketplace and purchase what you need. And I think one of the challenges we’ve seen is that this approach to public policy has been a pretty big failure. We are currently at a time where economic inequality is the greatest that it’s been in more than 100 years, since the First Gilded Age. People call this the Second Gilded Age. We have found that markets don’t guarantee access to important social goods that people need and things like vouchers and tax credits actually don’t work very well. They’re very complicated to use. And in many cases they can actually mean higher prices for the underlying good or service that we’re trying to help people with. The public option, we argue, offers a different theory, a different kind of social contract. And the idea is that everyone in our society should have a certain baseline of opportunities that aren’t tied to their employer and aren’t tied to buying something in the marketplace. The reason we think this is so powerful right now is because of the challenges of the neoliberal era and because that era is now coming to an end and we need to go beyond it.

Now, our argument in the book isn’t that public options are necessary for literally everything or that we should have them for literally everything. There are some things where we don’t need public options. They’re not necessary from a moral perspective, maybe not necessary from a democratic perspective. And in a lot of places, markets work pretty well. And when they’re competitive, the market might be fine without having a public option, but a lot of the time that’s not what’s going on today. And so we think public options are a very helpful way to make progress. At the same time, we also don’t want to be too rosy about public options. Public options can be designed poorly and can fail for a variety of reasons. Lack of resources—just like any other public or private service—can be a real problem. And in fact, we have a bunch of public options now that suffer from these kinds of problems. Public defenders in the judicial system are routinely underfunded. Not all public schools provide the kind of high quality education that we want for our kids. And if they’re going to work right, public options have to be designed in a way to address structural racism and disparities across geography, and often they’re not designed to do that. But we think that this is ultimately what democracy is about. It’s about debating and discussing what our shared future should be. And that means getting into the weeds of: how do we design these public programs? And so what I thought I would do is just talk a little bit about some of the places where we think there are design choices that we should all be thinking about as we think through what kinds of public options might be helpful going forward.

So in the book, the first thing we do is we distinguish between what we call competitive public options and baseline public options. So competitive public option is maybe best explained if you think about mailing a package. So you can mail a package with the US Postal Service, but you literally cannot mail that exact same package at the exact same time also with FedEx, you’ve got to choose one or the other. You can’t do both. So they’re in competition with each other. That’s a competitive public option. We have a different kind of public option in other places, and we call that a baseline public option. So social security, if you think about it, is a public option for a pension, but it’s a baseline public option: it guarantees a pension in retirement, but it coexists with other things that act on top of it. So you could also have a private pension from your employer. You could have private savings that you’ve just squirreled away. You could have a 401k where you’ve saved some money. And none of those things compete directly with social security in the same way. But they supplement it, they work in conjunction with it to provide retirement security. The place where this distinction between competitive and baseline public options shows up most—to tie it back to the start—is healthcare. And the debate over a public option versus a single payer system, we argue, is effectively a debate between a competitive public option and a baseline public option. So even with Medicare today, Medicare exists as a baseline public option for retirees, but people take on supplemental insurance on top of Medicare.

So a second design question we need to think about is: at what level of government should we be providing public options? And what’s really interesting is we currently have public options at all levels of government. Cities provide subways, buses. Public option for broadband in Chattanooga is done at the city level. We have state parks, you can go hiking here in Washington state and there’ll be a lot of state parks for that, and that’s at the state level. And things like the post office or social security are at the federal level. So one of the questions we need to think about is what level of government is best suited to the particular public option that we’re shooting for. And even if we can’t accomplish a public option at, say, the federal level or the state level, it might be possible to do it at a local level. So there’s a chance to make progress on public options even without having to get change in Washington.

The third thorny question is funding: how do you pay for public options? And the answer is that there are a lot of different ways. We actually currently pay for public options in a lot of different ways. Sometimes there’s user fees. If you’re going to go to a park, public beach, sometimes they’ll have to pay 10 bucks to park your car for the day. If you’re going to mail a letter, you’ve got to pay for a stamp. There are places where we charge fees, but the prices are reasonable and people can afford them. So if you’re sending that letter to Alaska or if you’re sending it down the street, you’re still paying the same price for a stamp. In other places we’ve paid for public options through taxes; it’s part of the tax base and that’s how we pay for them. So there’s a lot of different ways we can think about funding these public options. And I think the real touchstone is that, for the public option to work on the benefits side, it has to guarantee universal access at an affordable price. But on the financing side, you can design it in a variety of different ways.

The final question is: how should we frame the problem? An easy way to think about this is to go back to healthcare. We often talk about the public option in healthcare as health insurance, right? So you’re going to have a public health insurance, which is what Medicare is, but it turns out that’s still working with private hospitals, private doctors. You could imagine a public option for hospitals, public option for doctors. The VA is actually sort of like that; we have a system of a public option in that context, but it’s on a different kind of level. Another way to think about it: I mentioned subways as a public option for transportation. They compete with cars and private option. But is that really the right way to think about it, or do we need to think about having a public option for Zipcar so that, even if you don’t own your private car, you can still have access to a car itself? But part of our goal in the book is to start pushing us to have debates about both the merits of public options, the limits of public options, but also the ways that we should design them in these different ways. And that’s what we talk about in the book because the bottom line is we think that as Americans, we don’t have to resign ourselves to a vicious capitalism that means deep, intractable inequality. And we don’t have to accept the notion that public action and markets are incompatible. That’s just simply false. Public options are a way to prevent these worst aspects of capitalism while at the same time creating a common fabric that stitches us together and provides a greater measure of equality, freedom, and opportunity for all of our people. So that’s what we’re trying to do in the book. And I’d love your thoughts and questions. So thank you very much for coming out.

Audience Member 1: As a former staffer for Elizabeth Warren, where do you see the primary difference between her approach towards public option and that of Bernie Sanders existing?

GS: So, I should start by saying I’m here speaking as a professor and author of this book, so can’t comment on the campaign or anything like that. So I’m going to avoid your question completely. And instead of answering your question, I’m gonna answer a different question that’s similar, which is: I think that there are—in the debates right now—a lot of different places where we’re seeing variations on different kinds of public options based in different sectors. So there’s a debate in the democratic primary about Medicare for All, and there’s a bunch of different ways that people have tried to design Medicare for All and they’re different. And if you look at some of the proposals from the candidates, they have different mechanisms for how they’ve built it. And then there’s people who are proposing a more competitive public option version. And there’s different ways to build that too. And so some people in think tanks or otherwise have said, “We should build this on Medicaid.” Others have wanted to build it on Medicare. And there’s different ways that you can think about expanding or contracting the level of benefits that are provided with either one of these. So, there’s a lot of places where we’ve seen that in that debate. To do one more, when we think about higher education, there’s a debate going on: should we have free college? Should we have debt-free college? And what should that include? And so that’s also a debate, in a way, about: to what extent do we really want to have a true public option? So you could think about having free college in a way that it’s just tuition and fees. But for a lot of people, that’s actually still not going to be enough because you have to think about room and board and books and all these other kinds of things that can be very, very expensive. And so there’s a debate about how much do you cover? Do you cover all of it? Do you cover part of it? How much should you expect people to pay in terms of, you know, should they have to get their own job to cover their living expenses or whatnot? So, I think there’s a debate about a lot of these things going on in and among the candidates. And I think that’s one of the exciting things right now from a policy perspective, is that in a lot of these places, what we’re just having is a debate about public options and just different ways to design them, different ways to think about them.

Audience Member 2: One of the areas you didn’t mention that I think there’s a lot of activity right now in terms of what you might call public options and a lot of uncertainty—one of the biggest issues in Seattle and around the country is affordable housing and homelessness. And there are a lot of people who need it.

GS: Yeah. So it’s a great example and we talk about it in the book a little bit. Housing is really interesting as a public option because there’s been, in our history, different ways we’ve done the public option and housing. It actually illustrates some of the different features in really nice ways. So first we have public housing. You’ve heard about or thought about at some point probably housing projects, which are government-built housing units. Some of these are notorious and have gotten a lot of bad reputations. A famous one in Chicago, for example—which was torn down—had a bad reputation in a lot of ways. So we’ve had public housing, just publicly built housing. But the other thing is we had a public option for housing finance. And so starting in the 30’s, 40’s and coming out of World War II, our system of housing finance in America, which created the 30-year mortgage, was built on a system of public option. It was effectively that through Fannie Mae and Freddie Mac, the government was going to buy people’s mortgages, package them up and sell them again. But that process actually created these markets for other mortgage products, particularly the 30 year fixed mortgage, which doesn’t exist in any other place in the world. And it’s a function of government action and this public option. And what’s interesting is: if you look at the history, the public option shifted right around the turn from the Treaty of Detroit era to the neoliberal era. And you see changes in how we regulated housing finance at that time.

And that’s one shift. So the way that Fannie and Freddie are structured and operate changed, and really shifted how the public option worked. The other thing that happened is we sort of moved more towards vouchers, housing vouchers, as a way to solve problems related to affordable housing. And this is a good place to see where there are problems with subsidies, vouchers, coupons, that kind of government policymaking. Because one of the challenges is when you have something like a voucher, what you’re effectively doing is providing a coupon, a discount, that the holder of the voucher can give to whoever they’re buying the thing from, that’s the landlord in this case. And the challenge is when the landlord knows that people who have vouchers are going to get a discount of, say, $100, they can raise the price of rent and the person still gets a discount on what they would have paid otherwise, but the landlord is going to capture some of that benefit. So one of the challenges you see in housing in this context is it actually could mean higher rental costs in part and the amount of the subsidy is not fully going to the user, it’s partly going to the landlord. This also happens in higher education. Another area that subsidized—but here through loans—which means that schools can increase tuition and other fees. You still get something of a discount, but really the government, with subsidized loan programs or other kinds of grants and so on, is partly responsible for some of that. And that’s been a problem in the higher ed context. So, I think housing is exactly another place where we can think about this, but it’s a place where you can see, we could think through public provision directly or we could think through a financing option. And we’ve actually done both in our history.

Audience Member 3: My questions in regards to transportation. So we talked a little bit about subways and buses and transit. I just moved here from the DC area and the big thing that was being touted is the public private partnerships. So I wanted your opinion and your thoughts of that as a middle ground between a full public option versus something that’s still giving a lot of money to private corporations but allowing you to essentially build something out that would act as a public option, but still essentially is sort of subsidizing private industry, but is good because it’s transit and it’s good for the environment and all that kind of stuff. And there are many examples like hotlanes and stuff like that as well. So

GS: Great, yeah. So public, private partnerships are interesting. And part of what the book’s really about is just the line between public and private and how we think about the interaction of public and private. And often there’s this feel that you’re either in favor of the private market or you’re in favor of pure socialism and that there’s nothing in between these two things. And that’s clearly wrong. We have lots of configurations of public and private everywhere in our society. In fact, the so-called private does not even really exist without the public because we have laws that enforce contracts that enforce private property. So to have the private, you also need the public, even at a very basic level. So how do we think through this boundary? And I’ll kind of back into your public private question. What we were hoping to do in the book is pull out this tool of the public option and show that it’s one of these places and it can apply to a lot of things. But we don’t really think of it as a generally applicable tool in the same way that, if you were to ask anyone, ‘What should we do on a policy question?’, people might say, ‘Well, let’s give people a tax credit or a voucher.’ That’s well understood as a policy option and that this exists too. But there are many other ones. So public utilities regulation is another one: the basic idea there is you want a monopoly of some sort for some reason and the way we’re going to stop that monopoly from being exploitative of people is we’re going to regulate it heavily. It’s gonna have non-discrimination rules, it’s gonna be mandatory to provide access to everyone, and you’re going to regulate rates even. And that’s a way to ensure that everyone has affordable access to, say, electricity or sewer systems or water for example, in different kinds of utilities.

So that’s one version. The public private partnership, depending on how it’s structured, can appear something like that. Right? There are places where we have private public utilities, where it’s basically a public utility, heavily regulated, but it’s been outsourced to be fully operated in a private capacity. But you can also imagine a public private partnership where it’s sort of a contract that you have to provide partial services here and there. And in fact, a lot of our big public programs that we’ve had throughout our history have been partly public private partnerships because at the ground level, having capacity to actually do a lot of things requires some relationship or contracting. So a good example of this: you think of something deeply public, we actually have exclusive public control over the military. There’s no private military, it’s just public military. But it turns out federal government employees are not the ones who build the aircraft carriers or the airplanes; we have private contractors and private companies build those things. So there’s a relationship there that’s sort of public and private at the same time. Our banking system is actually public and private as a partnership. Money is sovereign, created by the government. But we don’t actually do it that way: we have all these banks, and the federal reserve works with these banks and they change interest rates and this has an effect on how much money there is in our country. So there are places where there’s a public private relationship that we use in all these different kinds of ways. And so what I would say is that there’s no rule that says you couldn’t have a contract or something, a procurement contract effectively, for some service and still have a public option. But one of the challenges that comes with that is that you have different kinds of opportunity both for fiscal mismanagement but also for political problems through lobbying. And that’s the place where there’s a real tension, I think. When you include that, one of the things you don’t get in the pure public option as much is interest groups who are very concerned because they have a financial stake in the operations of the public option, reshaping it for better or for worse. And so in a public private partnership, you have to think through that relationship as well.

Audience Member 4: You talked about layering: having a public option and on top of that, you can have an additional private option. I think the idea for public education began in Scotland, I think free public schools began in Scotland, I might be wrong. But originally in this country, when we started with free public schools, it went through sixth grade, the eighth grade; it didn’t go all the way to the 12th grade. You’re saying, “Oh, we could change it. We could have a K through 16.” We could also have a K through 23 and include a PhD. There’s various levels that you can provide this good through a public option. And then you have different kinds of services where you have education and you have swimming pools; you mentioned those. And well, I think most people would agree that it’s not as important that there be a public option for swimming pools as some basic level of education and people can make different choices. I seem to recall that in Cuba, when Castro came to power, more or less he decided that ice cream ought to be a public option for every kid, that every kid ought to be able to have two free ice cream cones every month, no matter what. Which was an amazing thing for the children of Cuba, but it’s not, in most countries, a high choice.

And what I’m wondering is, when you throw all these things together and you sort of talk about public education, swimming pools, ice cream, transit, they’re not all of the same equal value. You could say, “You want more than K through 12? You can pay for private college.” We could go back to a system that says, “We’re just going to scale it back and we’re only going to provide public education through the sixth grade and then after that, if you want more,” so I’d like you to comment on how to scale those values. It seems to me like for education and medicine, layering it is not really a fair option below a certain minimum. If you said, ‘We’re just going to cut it back to K through sixth, if you want more than that, you pay for it.’ It’s not fair. If we said for medicine, “We’re going to provide up to 30 days hospitalization and then if we can’t cure you after that, you can pay for more.” It wouldn’t be fair.

GS: So yeah, I think one of the challenges in thinking about a public option is: when do you want them, when should we have them and what are the justifications for that? And in the book what we talk about is that there are a few different ways you could think about this. The first, we think, is starting with: where are there places—where there are deep moral commitments that we have as individuals in a society—where we think that it’s essential for people to have these certain kinds of goods to be able to live? And those are places where we might very much want to think about a public option and we might even want to think about a public option at a very, very high level of quality. And in some cases you might even want to think about exclusive public, which would be going beyond the public option. So national defense, we talk about that as an exclusive thing. The post office: if you wanted to compete with the post office on sending mail on a daily basis around the country, you cannot do that. You can’t actually start that. The post office has a legal monopoly over that. It’s illegal to start a competitor to that at that level. And the reason why is because as a country, we want to ensure that it’s possible to send the mail through even to rural places and to everywhere else. And to make that cost effective, there has to be some amount of cross-subsidizing, because it’s more expensive to send a letter to rural Alaska than it is to send down the street. So there are places like this where we make judgements as a society for moral reasons, as one component. We do it for democratic reasons as well. I think one of the cases for education is that if you’re going to be a democracy and you want to have an educated citizenry to support democracy, you need to have education. And so we want public education partly to sustain our republican form of government. That’s an important feature that we have. We do it for economic reasons also, and that can be thinking about economic opportunity. It can be thinking about economic choices that people should have. So those are ways we’re trying to aim at some good that we want. And that’s a place you might want to think about a public option.

Another way you might think about public options are places where there’s really big market failures. So where is the market not working to provide some good that we really care about and think is important to people? So that’s another place you might think about it. And I’ll just give you one example that shows some of the tensions and complexities of some of this. So I think we’d all agree that food is essential to human life, right? If you don’t have food, you’re going to die of starvation. It’s a big problem. So on a moral level, we probably think that everybody should have access to food, otherwise it’s a death sentence for people, right? So we want people to have access to food. At the same time, we actually have a pretty good market for food in different places in a lot of different ways. You go to the grocery store, there’s a lot of different competition, different kinds of goods that you can buy in terms of food. And so the market is pretty good. But it also turns out that there are places where you can’t find a grocery store at all. There are food deserts. And so those are places where you might want to think about some sort of a public option. Or maybe that’s a place where the market’s not so bad; there are ways to have other kinds of incentives on our spectrum from public to private. But this is a place where you could see: here’s an area where we have a deep moral sense that this is something important but for the most part, we actually don’t have a public option for it and most people don’t really think we actually need one. Our combination of SNAP benefits—which is a subsidy, a coupon, a voucher—and some say nonprofits or maybe some public provision in places where there are food deserts might be enough. So I think there’s a place where there are tensions in how this works, but the real question is: how do we debate this as a society? And I think that’s what’s at the core of it, is we have to decide the areas where we want public options. People wanted public options for swimming pools in part because they were a good way to have kids have something to do in hot summers and to stay out of trouble. That’s a good use because it turns out you don’t have a swimming pool to hang out all summer, kids are gonna find their way into any number of things. So there are benefits to having these and communities come together and decide what are the useful ways we want to engage and think about what kinds of public options are helpful for us.

Audience Member 5: So you’ve talked a little bit about how public options need to be reasonably priced and then you’ve talked about public transit and we talked about affordable housing. I believe that there aren’t any public transit options in this country that actually pay for themselves and affordable housing and the cost of construction is so high that you can’t actually build housing and make a profit on it or even have it pay for itself at a reasonable cost to the person living in the housing. So I think obviously taxes is one way to offset that. Are there other ways? Obviously there’s a lot of debate about taxes and ‘who should we be taxing in this country?’, but are there other ways to offset those costs and what are they? Are there other funding options?

GS: Yeah, so let me just highlight two parts to this. One is taxes, as you said. We have taxes, we’ve had different rates of taxes over our country’s history. Tax policy has obviously been very contentious. But we are at this time where we have massive levels of both wealth and income inequality. And historically, if you think from the time period I talked about—the end of World War II to the present—we’re actually at a low on taxes, comparatively. The top marginal tax rate coming out of World War II was 90%, and then it was 70% for a long time before that dropped in the Reagan years. So we’ve had different rates of how we’ve thought about taxing. We’ve thought about estate taxes; used to be something that operated at a much greater degree with a greater bite than they do now. Now I think the number is that you can pass on something like $22 million to your errors to start. That’s a lot of money, it turns out. And so we can think about tax policy in a lot of these areas whether it’s estates, inheritance, wealth taxes, income taxes. And that’s a way to pay for a lot of public services. A second place to think about it is that in a lot of areas what we use is cross subsidies. And I mentioned it with the post office, which is just an easy way to see it, but it actually applies in a lot of these things that are effectively like public utilities where there’s either a network or some sort of geographic dispersal, where there is higher costs to some people or some areas than there are to others. And you can design the financing of it so that, effectively, we’re balancing out the costs.

And that’s a way to help address some of that. And what that means is some people are paying more than the actual marginal cost of what it would be for them to use it. And so a lot of economists over the last generation or so would be apoplectic at that suggestion. But in fact, the core design of many of our basic infrastructural goods is precisely that. And the reason why is because the people who designed it cared about equity and they cared about equity across geographies, across populations. And so that’s why we’ve built that in, is to address that. And one of the interesting things also about that is it’s, in theory, more stable as a funding source or as a funding structure than just subsidizing certain places because you actually have just built in the subsidy into the overall cost and the structure. So as long as you protect the infrastructural network, you’re protecting how it’s financed. Whereas if you do things like just subsidize a certain community or a certain area, it’s easy for them to get outvoted the next time a legislature comes through and says, “You know what, we don’t want to fund that anymore.” So this is a way where you’d really have to dismantle the entire structure if you were going to try to get rid of the benefits that come from equity. And so that’s another place where we can think about different financing options. Great. Well, if there are no more questions—thank you so much for coming. I’ll sit outside for a little bit and would love to meet you all and I’d be happy to sign books.

Jini Palmer: Thank you for listening to our Town Hall Seattle civic series. I’m Jini Palmer. Our theme music comes from the Seattle artist David Bazan and Seattle’s own Barsuk Records. A special thanks to our audio engineer Jeff Larson. Check out our new season of Townhall Seattle’s original podcast, In The Moment. Each episode, a local Seattle correspondent interviews someone coming to Town Hall. They get you excited about upcoming events by giving you a behind-the-scenes look into a presenter’s content, personality and interests. If you like our civic series, listen to our arts and culture and science series as well. For more information, check out our calendar of events, or to support Town Hall go to our website at townhallseattle.org. 

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