Socialized ≠ Free

Some economic systems are fully or partially socialized, even in America. For example, our education system is partially socialized. In other countries, education is even more thoroughly socialized. What does that mean?

One thing it doesn’t mean is that the education is free. Public education isn’t free. The teachers, administrators and staff at schools are not providing their services pro bono. They are paid for what they do. But they are paid by some body of the public at large, rather than the individual student/customer who seeks the education that is provided. And correspondingly, the amount of education the student is entitled to access is based on something other than the ability to pay. That’s what it means to have socialized education.

Why do we, and people in other countries, do things like this? It’s one way in which we take cognizance of the fact that we live in organized and cooperative human societies, and are not just aggregated masses of separate, happiness-seeking individuals who happen to live in close proximity to one another. By socializing some economic systems, we express our moral and practical determination that there are certain things every participant in our society should be able to access in equal measure. This builds solidarity, team-work and cohesion, which are fundamental social goods. And even from a more self-interested perspective, we rationally understand that our own well-being depends on the actions and characteristics of other people in our society, and so it is worth our while as individuals to cooperate with others in investing in one another.

In the United States, we do not like the word “socialized” and tend not to use it. We also never say we have adopted a socialist solution to any specific problem – even though in some cases we have. We have come out the other end of more than a century of red scares, Hooverism, McCarthyism and the rest, topped off by a bitter and ideologically fraught cold war against people who, we were told, diabolically believed in socializing things while we right-thinkers believed in the system of individual liberty and self-reliance. So words like “socialized”, “socialist” – and in some quarters even “society” – acquired very negative connotations. If we want to socialize things here in the US, or have socialized things in the past, we are encouraged to adopt more euphemistic terms to describe those things.

I understand the demands of political realism and the pressure to use euphemisms, or at least terms that for contingent historical reasons seem less ideologically loaded. But there are drawbacks to the substitute terms as well: in some cases, they perpetuate an unhealthy confusion about what we are actually doing.

At the aggregate level, no good or service that requires human labor and other scarce resources to produce is properly described as free. When health care is provided via a single payer plan, it won’t be free. A large number of health care professionals will be paid to provide it. But they will be paid by the taxpaying public at large, not by the individual patient/customer to whom they provide it. We will then have socialized health care, and bravo for that. We may also move toward fully socialized post-secondary education, more effectively socialized retirement systems, and even greater socialization of the income system. None of those goods will be free.

One thought on “Socialized ≠ Free

  1. Excellent post, Dan. My time in grad school (MS Public Policy, Georgia Tech) helped clarify concepts like what you’re describing here in my mind and I wanted to extend your points with one of my own: the socialization of risk.

    You spoke here of “socializing a good” such as education or healthcare; other common examples are roads, parks, the military, and air traffic control. But at the same time, there is a less obvious concept of socializing *risk*. One example is that when we drive our cars on the roads, we are all subject to more or less the same risk that we impose on each other; this is a fairly equitable state of affairs and the government requires us to carry some level of insurance to cover the costs arising from those risks.

    Yet we also see situations where a corporation *privatizes* its profits (allow me to let “privatize” cover the corporation and its shareholders) but *socializes* the risks arising from pursuing those profits. Examples would include 1) the BP oil spill in the Gulf of Mexico; 2) the ’08/’09 financial crisis and the associated bailouts; 3) VW and the rigged engine management system software in its direct injection diesel engines; 4) the crude oil train derailments whose frequency has increased dramatically in recent years. When events like these occur, there may or may not be some redress offered to those who suffered losses; there can be issues arising from determining just how much loss a given individual suffered or whether the arrow of causality indeed leads from the risk to a specific externalized loss and therefore redress may never come or take years to arrive if it does. The ongoing Aliso Canyon methane leak (now standing at over 90,000 metric tons of methane or about 7.8 million metric tons of CO2 equivalent) will have some marginal effect on climate change impact (about 1/860th of US CO2 equivalent emissions for the year 2013 thus far) but even if climate change impacts cost in the trillions of dollars out into the future, the well operator isn’t going to be cutting us all checks to compensate us for their rapid incremental addition to the world’s anthropogenic greenhouse gas emissions.

    The phenomenon appears in a macro sense when you consider the US’ continued pursuit of the Carter Doctrine (by which the US backs access to Middle East oil with military power); oil companies and their support industries collect and concentrate their profits while transferring risk to the all-volunteer US Armed Forces and the civilians in the region.

    I harbor no illusion that this “lemon socialism” can ever be eliminated – it’s perhaps an unavoidable trait of a highly interconnected and technological largely capitalist economy and I suppose that ideally socialized risk would be so widely distributed and kept to low enough an absolute aggregate level as to have nearly no impact to any of us. But I’d suggest that the phenomenon be kept in mind by policymakers and voters and I hope that the biggest gears in the American economic engine rely less on socialization of theirs risks and losses going forward.

    Like

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