Saturday, February 27, 2021

Beyond market failures

Mariana Mazzucato gives the BBC as an example of an expanded role for the public sector, beyond the correction of market failues and the correction of inequalities, which are the conventional justifications for government intervention in welfare economics (the branch of public economics that establishes the conditions under which markets can be efficient and equitable).

Certainly, the BBC is an admirable institution, and it is difficult to think of it not only without the coercion needed to enforce the payment of its license fee, but also without the public sector ethos that characterizes it. Perhaps one could think of some community organization that replicates a similar effort, but I don’t know of any TV organization that is not in the public sector that has a similar level of quality.

However, it is not automatic that any public TV organization will be like the BBC. In Spain, both at the national level and especially at the regional level (and especially in Catalonia), we have created in some cases propaganda machines that are the opposite of the BBC.

In the era of the Internet and social networks, one hopes that some institution or a set of institutions with the spirit of the BBC can set the standards for good reporting, information and opinion. I am afraid that regulation is not enough: direct intervention is needed, although subject to a lot of trial and error… until BBCs emerge in many parts of the world, or a global BBC in the times of technological platforms and social media.

The direct creation of organizations and institutions is not the only role of government beyond the correction of market failures and the redistribution of initial endowments. A lot of research in economics and other social sciences in the last 10 to 20 years suggests that narratives are very important to activate the support of public opinions to projects like fighting climate change or correcting inequalities. Government institutions can play a big role in the transmission of such positive narratives, through public sector media, through good politicians setting examples, or through the public education system. 

But like public sector TV, government narratives can also be used to promote hate and division. Without understanding the role of governments as story tellers, it is difficult to understand the nation state as an institution that not only provided some public goods (like armies or the military service), but also as an institution that obtained the consent of most of its citizens, and the legitimacy to support large markets and communities as units of solidarity. The challenge now is to expand these communities of solidarity beyond the national level. 

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