What about Private Options?

in Debating the Public Option (Anne Alstott & Ganesh Sitaraman, eds.) (Cambridge University Press, Forthcoming)

21 Pages Posted: 6 May 2020

See all articles by Jon D. Michaels

Jon D. Michaels

University of California, Los Angeles - School of Law

Date Written: April 22, 2020

Abstract

There is considerable enthusiasm today for public options, particularly in the health care and banking sectors. A compromise between entirely private commercial provision and wholly bureaucratic, tax-and-transfer government provision, public options are designed to offer citizen-consumers greater choice and protection. In blending (rather than choosing between) market ordering and state welfare, government agencies experimenting with public options are stepping out of their sovereign lane, forgoing legislative and regulatory tools in favor of commercial ones.

Plenty of thoughtful work on public options already exists. For that reason, this Essay turns its attention to the converse phenomenon—namely, private options. Just as public options involve governments using commercial—not sovereign—pathways to remedy market failures, private options involve firms (or groups of employees) adopting sovereign—not commercial—postures to remedy government failures.

Private, sovereign-like interventions refer to one or more of the following: private actors (1) utilizing democratic pathways and deliberative procedures in furtherance of some public policy; (2) taking on substantive responsibilities that modern liberal democracies are no longer willing or able to direct or fund; or (3) providing principally for the general welfare in ways that suggest they may be voluntarily internalizing externalities, at some profit loss or legal risk, and reducing rather than exploiting power and information asymmetries.

Private options of this quasi-sovereign variety include such things as Facebook’s proposed digital currency and its self-styled supreme court tasked with rendering adjudicatory decisions as to user and advertiser content. They also include Apple and Google’s planned stewardship over what are in many respects twenty-first century reboots of old-school company towns. We may even look beyond the C-suite and consider workforces that are fashioning their own private options, and thus functioning as commercial analogs to the body politic. Specifically, worker strikes over their companies’ participation in politically and legally questionable government programs may likewise constitute private options. These workers are not protesting to augment their own wages and benefits. To the contrary, they are risking their own financial security to stand in for the American electorate when that electorate is (for structural reasons) unable to democratically influence U.S. immigration or defense policy.

This Essay drills down on private options, identifying their defining characteristics, explaining how they respond to today’s serious government failures, and contextualizing their role within the larger ecosystem of government and market institutions and actors.

Keywords: Government Market Participation, Administrative Law, Regulation, Privatization, Dysfunctional Government, Neoliberalism, Law and Political Economy, Facebook, Google, Amazon, Apple

JEL Classification: H11, H4, H53, H54, H55

Suggested Citation

Michaels, Jon D., What about Private Options? (April 22, 2020). in Debating the Public Option (Anne Alstott & Ganesh Sitaraman, eds.) (Cambridge University Press, Forthcoming), Available at SSRN: https://ssrn.com/abstract=3582415 or http://dx.doi.org/10.2139/ssrn.3582415

Jon D. Michaels (Contact Author)

University of California, Los Angeles - School of Law ( email )

385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States

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