Pragmatism, not ideology should guide policy

There has been much talk recently of the failings of private businesses which provide care to the old and the young. Scandals involving crèches and nursing homes run by companies have rightly caused serious concern.

As with any situation in which power is wielded, meaningful checks on those wielding power are needed. Just as importantly, credible sanctions must exist to ensure that those who use and/or misuse their power are held to account and face sanction if they have been found to have transgressed.

This is as true in the case of how services markets work as it is in any other area of human affairs. Those basic and simple principles provide a basis for considering the complex design of mechanisms and structures to provide the best quality of service at the best possible price.

Predictably those instinctively opposed to business have been quick to launch attacks on private provision since RTÉ's Prime Time documentary last week detailing mistreatment of children in crèches. Some have gone as far as to ponder whether private provision of crèche services should be allowed at all.

It is very odd that anyone would believe banning for-profit provision would reduce the incidence of mistreatment of the vulnerable given the cases of State-run and Church-run institutions mistreating those in their care over decades. The truth is that there are unscrupulous people in private companies, just as there are in all walks of life. For policy to favour one form of provision over another is neither desirable nor practical.

It is important that anti-business and anti-market ideologues do not reduce the complexities of provision of services to the Orwellian simplicity of: private bad, public good.

All over Europe, including in the Nordic countries often idolised by anti-market ideologues who usually know little of how those countries actually work, governments have been experimenting with ways of providing the best services at the lowest cost.

Those most deeply involved in these efforts and most committed to getting the best outcomes for people using the services have long ago discarded left-right ideological baggage for the pragmatism of looking for the most effective solutions. Those arguing that the market is always best, or, on the other extreme, that State provision is always best are rarely taken seriously. The world is far too complex and it won’t be made better by the simplicities of ideologues.

Among the most important lessons of recent decades, as countries have experimented in mixing public and private services provision across a range of sectors, is that ownership matters much less than market structure.

This has been seen in near laboratory conditions in the EU where some state owned companies in certain sectors have been privatised and others have not. In areas such as telecoms and air travel, the most important factor in bringing down prices and widening choice for consumers has been the introduction of competition and the design of the regulation in the market, not whether the utilities and airlines were privatised.

Ownership, therefore, has proved to be much less important than free-market ideologues once claimed.

So too is it likely to be the case in the provision of care services. What matters is the design and operation of the regulatory framework. All operators - be they public, not-for-profit or for-profit - should be subject to the same strictures.