Editorial: Fundamental public goods

A contemporary state cannot operate if it cannot ensure fundamental public goods – the health, education, and the domestic and external security of its people.

The recent heavy, and long by Greek standards over the last decades, snowfalls left behind rubble and a host of citizens without electricity, heat, and water.

What followed was the customary and interminable Greek dialogue on the repercussion of the power outages, on the responsibilities of services, on those responsible who are nowhere to be found, and on the omissions and inability of competent authorities to repair the damages in a timely manner.

Especially in Attica, where most of the power outages occurred, the branches of pine trees that could not withstand the weight of the snow were blamed, and then there was talk of the responsibilities of municipalities, of the Attica prefecture, of the Public Power Corporation (PPC), and of foresters, as it was not clear who was competent for issuing permits to cut trees and who was responsible in a timely manner for trimming them.

Years ago, when things were unified and clear, everyone knew that the PPC and competent bureaus were responsible for the cleaning and protection of the electrical grid.

However, over time the company changed, responsibilities were sorted out, and the electrical grid was split away from the central bureau even as private stockholders began counting and checking the cost of upkeep and other issues.

Hence, the concept of a public good was at once undermined and underestimated.

In the case of the electrical grid in particular the result is the same and unchanged. Usually, pre-existing investments are exhausted by new, private owners and investment is avoided at least until the expected profits are accrued.

California paid the piper a number of years ago when due to an absence of investment the electrical grid collapsed in the wealthiest state of the US.

A similar problem was faced by New Zealand, which with exceeding fervor hastened to privatise all structures for the production and distribution of electric power.

That is why the British Railways collapsed. It was because an obsessive Margaret Thatcher insisted on privatising the grid as well. Private investors lacked the funds for its upkeep and after a while one was seeing daily accidents that enraged society.

What followed was a steep hike in ticket prices to make up for damages.

Gradually the railways became unprofitable and they were taken under state control in the face of an economic and social impasse.

In general, electrical grids that do not incorporate competitive elements and characteristics obviously need public care and public funding as private funding is simply unavailable.

Production can be privatised fairly easily but the same does not stand true for grids. Clearly, without grids that are well-kept the services provided through them collapse, as occurred days ago with electric power.

These are not the only examples that confirm the importance of public goods. The recent public health crisis greatly highlighted the role of state hospitals, which have been undermined and slandered.

It was through state hospitals that the defences were built against the deadly COVID-19 epidemic. Our hospitals and public health system doctors and nurses shouldered the burden of difficult treatment.

Both rich and poor went to state hospitals to be treated when they contracted the virus.

Moreover, education as a public investment has a long-term impact and increases the country’s wealth.

As public finance textbooks state, public goods are critical and useful for the operation of economies, societies, and countries.

After every major crisis – whether it be in the area of public health, economics, politics, or national issues – they return to the forefront again and again.

A contemporary state cannot operate if it cannot ensure fundamental public goods – the health, education, and the domestic and external security of its people.

It cannot hope for progress and prosperity without building bridges and infrastructure and without ensuring the smooth distribution of electricity and water.

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