I have never liked hybrid organizations that attempt to meld a public institution with a private one. Specific examples differ—George Mason University, the U.S. Postal Service, Amtrak, the Washington Metropolitan Area Transit Authority (WMATA, ‘Metro’), Sallie Mae—yet they share many of the same hallmarks. Most have not maintained fiscal self-sufficiency. Most have usage fees that historically increase higher than the rate of inflation. Most operate with minimal oversight and combine the worst features of government bureaucracy with the worst of profiteering private business.
Students of public universities see this all the time. Virginia’s state schools operate in some nether-region between monopolistic business and faceless bureaucracy. They collude with one another to make transfers between the schools prohibitively expensive (refusing to accept all earned credits on transfer). They fix their tuition prices very close to one another despite drastically different levels of state funding. They force students who live on campus, in addition to their room-and-board, to buy a meal plan whether or not they need or want it. They raise tuition by leaps and bounds (115 percent over the four years I was at GMU), even mid-year despite the published tuition rates in the catalog, making headaches for students who arranged financing for the full year based on the advertised rates. They manage to process one loan application and ‘lose’ another when both were applied for on the same form. They claim a right to prior-restraint on publications to be posted or distributed on campus.
Many of these practices—forcing consumers to buy unwanted services, collusion with competitors, price fixing, false advertising—are illegal for businesses, but when they are brought to schools’ attention the defense is that they are a government institution and thus exempt from antitrust and consumer protection law. But these ‘government institutions’ are also quick to defend their sport team trademarks, which would be property of the people if held by government and thus unenforceable; their prior-restraint on campus publications is unconstitutional; and they are quick to claim that they do not have to respond to Virginia Freedom of Information Act requests. When brought to schools’ attention, their defense to these affronts is that they are private institutions not bound by limitations on government.
So are state universities government or private entities? The answer, apparently, is whatever is most convenient at the time.
In the federal sphere, the U.S. Postal Service (USPS) also plays the same double-sided game. You may have wondered why UPS and FedEx don’t offer door-to-door letter delivery (except expensive same- or next-day delivery). The answer is that USPS has a government-enforced monopoly on non-urgent letter carriage and overseas mail, and an exclusive right to put mail in your mailbox—a mailbox USPS claims they own, even though you paid for it.
The abuse of this postal monopoly would be illegal for any private organization, but USPS, with the help of our elected representatives, holds on to it claiming that they are a government-provided public service. God forbid that some competitor come in and offer a more reliable service at the same or lower price. But this same government-provided public service also loses half the mail and doesn’t provide reliable package tracking. Despite this clear inability to manage itself, USPS constantly asks the government for more leeway to set their prices on their own—arguing that they need to remain ‘competitive’ in their non-competitive marketplace. USPS has no problem claiming they’re a business with unfair, government-mandated price limits, then turning around and saying they’re a government-provided service exempt from antitrust law when the wind blows the other way.
Clearly, the status quo is no good. It’s no good for students of public universities, it’s no good for postal customers, it’s no good for riders of Amtrak or the DC Metro system, and it’s generally no good for America. These public/private organizations do not work, and it is time to change them.
There are two options that I am willing to entertain: privatization and nationalization. Privatization is to take these public/private organizations, remove government funding and direct oversight, and require them to follow the same rules as private business. Nationalization is to take these public/private organizations and make them full government agencies, primarily funded through taxes and overseen by the existing bureaucratic structures, and operated for the public benefit. As a free-market conservative, I tend to believe privatization is the better solution. Either is an improvement from the status quo.
A privatized state university system would not receive any state funding and would be required to follow the antitrust and consumer protection laws. This would eliminate the price fixing, collusion, and false advertising they engage in every day, but they would retain the right to trademark their sports logos and profit from them, charge whatever the market will bear for tuition, pick and choose what credits they accept on transfer from other schools, and be free to limit posting and distribution of publications on their private campuses. A nationalized state university system would be primarily funded through [increased] taxes with each school charging little/no tuition. They would lose the right to trademark their sports logos and profit from them, would have to accept one-another’s credits and most private university credits without question, would have to respond to Virginia Freedom of Information Act requests, and would have to allow unfettered access to their public areas for posting and distribution of publications (per the First Amendment).
Meanwhile, a privatized postal service would no longer be permitted to maintain a monopoly. This would allow UPS and FedEx to enter the mail delivery market and force USPS to improve the quality of its service or go out of business. USPS would be free to choose its own prices based on its expenses, would receive no federal money, and would no longer be allowed to dubiously claim ownership and exclusive use of customer-purchased mailboxes. A nationalized postal service would be permitted to maintain its monopoly, would receive taxpayer funding, would have stamp prices limited by the government, and would be free to make whatever dubious claims on our mailboxes that it wishes.
The biggest reason I vote for privatization is this: I don’t care if George Mason University, USPS, Amtrak, or Washington DC’s ‘Metro’ system go out of business from a failure to successfully compete. Government shouldn’t be giving failed businesses mandated monopolies, shouldn’t be providing them institutional protection, and shouldn’t be sending them my tax dollars. Let ‘em fail. The market will shake it out over time and we’ll still get the service we expect, probably at a lower price. But whether we pick privatization or nationalization, we’ve gone on too long allowing these organizations to play both sides. Pick one and get it over with.