Public vs. Private

First, some background information.

Definitions

Industry: According to Wikipedia "the production of an economic good or service within an economy." This is too vague, however, and misses the most crucial aspect of an industry, which is specialization. My definition:

     "A form of wealth creation that is both specialized and marketable."

At its core, modern society is a merely host of industries, all of which will fall under one of three  government-recognized categories:

1. Extractive (or 'Primary')- such as mining or farming.
2. Manufacturing (or 'Secondary')- including processing, packing or refining raw goods.
3. Services (or 'Tertiary')- such as teaching or managing.

And each industry is managed by one of two sectors:

1. The Public Sector- the government.
2. The Private Sector- sometimes divided between business, voluntary and individual, and consisting of all non-government citizens.

Since society's founding, the major general trend seen is the diminishing of the public sector in favor of the private sector, especially in the extractive and manufacturing industries. The question often posed is 'why?' Through this post I intend to answer that question, and then explain what that answer means for American society.

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If we take our time machine way back to the caveman era (60,000 years, give or take a couple thousand) we would find, as archaeologists and historians have often described, a culture of scavenging, hunting and gathering humans organized into tribes. Such a lifestyle has since been dubbed membership in a "hunter-gatherer" society, where people sustained themselves at a subsistence level, and risked their lives on a daily basis to obtain the basic necessities of life. This is the way that mankind has spent most of its existence on planet Earth.

The first thought that would come to your mind? "Different." After all, you don't risk your life catching Frosted Flakes at the grocery store. But it only gets more peculiar as you watch the men assemble with the day's earnings to feed. It has been noted of tribal society that they are egalitarian in outcome, and you watch with amazement as one man brings in two large animals and hands one of them to another hunter who returned with nothing at all! Each tribesman then proceeds to give his food to the tribe leader, who then divides it evenly amongst the group. This is the concept of taking an industry, in this case hunting (an extractive industry) and allowing the public sector to manage it. 

Now, depending on who you are, that strikes you as a fair or an unfair concept- either way bear with me as to why it's a problem.

If Jack, Jill and I decide to form a tribe, and agree that whatever food we spend hours to catch will be divided between the three of us, why would I bother hunting for food? I'll sit and wait and rest on my back and surely by evening Jack and Jill will have returned with food for me to share.

It's possible that we could form some sort of binding contract, that each must do his part to the best of his ability, but how can one judge his own ability? Much less the ability of others? Moreover, what if our tribe of 3 is instead a tribe of 10? Or a hundred? Or what of a hundred thousand? Surely, at some point, the contract is impossible to form, knowing that unless every single member signed it willingly, the problem would persist.

As the size of our tribe increases, a leader must be appointed for distribution, and enforcers to carry out the rule, thereby forming a tribal government. This adds the problem of corruption to the equation, as one man alone will determine how much food each person "needs", and may be susceptible to a humble bribe.

But it was not the case that every single hunter-gatherer society was exceedingly stupid. Nor was it the case that every one of them just so happened, in their stupidity, to create the same form of government seen all over the world. It was an evil formed by necessity- the necessity to survive.

Consider the ramifications if our tribe, now formidable in size, chose not to implement an equal distribution law. If I want to eat on any given day, I better spend a lot of hours making sure that happens, because no one's going to pass me a little extra something when I come up short. Unfortunately, I am forced to deal with the added element of uncertainty. Each day that I go to hunt is going to vary in effectiveness, and while some days I'll bring home more than enough, others I may not catch a thing. When my average level of production hovers so close to the amount that I need to survive, a dip can really hurt- or even kill.

So the point is...

The distribution of resources by a government was necessary at the time of cavemen because the variance in individual production was greater than the reduction caused by reduced incentives and it happened that with limited capability to produce, the difference in variance was the difference in obtaining that which one needed to survive.

Now let's go back to that thought of yours: "different." Well we all know that difference is caused by change- so what momentous occurrence restructured society as we know it?

The change: Technology.

The effect: Diminishing of the public sector in favor of the private sector.

If we allow society to play itself out through the years, we'll notice technological progression. Key individuals with big ideas will present inventions to cheapen the cost and maximize the production of a given industry, or to create a whole new industry.

The first big thing to come along, many thousands of years later, was agriculture. Though we aren't sure of a name, some man or woman conceptualized irrigation, and eventually contributed to the formation of the farming industry. Meanwhile, other genius individuals were inventing new weapons and hunting methods, thereby increasing the chance that a man gets the food he needs each day. Thousands of years passed and people were hunting with projectile weapons- bows and arrows at first, and then rifles, and then better rifles. Hunting became so easy and profitable that starving was out of the question- people instead were making *excess* of what they needed, causing entertainment industries to form, such as television and cassette players.

But technological development is not without social development, and when people discovered that they didn't need other people to ensure the bare minimum, they destroyed laws of wealth distribution and removed government from the picture, thereby willingly handing these industries from the public sector to the private sector.

In short, technology has freed man from men.

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Now if Jack takes his shotgun to go hunt for deer and Jill mans her tractor to till her expansive farm, and both will undoubtedly succeed in providing for themselves, and then some, I better get off my butt to go pass out food at my local restaurant if I want something to show for the day. And you can bet I will.