* Originally posted on October 14, 2011.
On the afternoon session of Day 1 during the recent EFN Asia Conference this week, the topic was “Competition in Public Service Delivery”.
This session was moderated by Wan Saiful Wan Jan, CEO of IDEAS-Malaysia. The speakers and their main messages were as follows:
1. Part Shah, Center for Civil Society-India, Education. Fund students, not schools. Education voucher system will enable students and their parents/guardians choose from many competing schools who can provide better quality education. Diversity and competition can respond to varying needs of students, encourage excellence, whereas centralized government education system offers uniformity and less competitive environment.
2. Dr. Steven Chow, FPMPA-Malaysia, Healthcare. Healthcare has two aspects, business and social. As business, HC is a commodity given to those who need it; as social, to comfort the sick, never to harm. There is high information asymmetry in healthcare, the HC provider knows better than the patient, so free market cannot be relied on. Government must come in to correct market failure. But there are advantages to competition, which is a good business model. Some aspects of HC can be done via competition, others not.
3. Saumura Tioulong, Sam Ramsay Party – Cambodia, Transport. Airline privatization and competition in Europe where she used to be based resulted in better services, planes arrived on time, less strikes. Cambodia to Malaysia, there are two choices, Air Asia or Malaysian Airline. But Cambodia to Vietnam is monopoly, high price. Free competition does not mean being wild, players have to adhere to rules and regulations. State-owned enterprises and monopolies in Cambodia were turned over to private monopolies, not good.
4. Shaifubahrim Mohd Saleh, PIKOM-Malaysia, Telecomm. 17 sectors to be liberalized by 2012 by the Malaysian government. More players to come in, more outsourcing, more competition. Cost of broadband still very high, up to 20x than other countries; local R&D on-going. Telecomm industry needs further liberalization.
I support Parth’s advocacy for school choice. Personally I would like to see all schools should be private, government can provide voucher or fixed amount of money per student per year, at least in the elementary and secondary levels. Parents who want to bring their kids to more expensive schools will have to pay extra. Education is mainly parental/guardian responsibility, not government’s.
Healthcare is another aspect where personal and parental responsibility is more paramount than government’s. While it is true that there is high information asymmetry between patients and doctors/hospitals, patients and individuals are also the ones who manage their own body, not doctors or hospitals or government. People should realize that if they smoke a lot, or drink a lot, or eat a lot, there will be adverse result in their body whether in the short or long-term.
After the Q%A for this panel, there was a “World Cafe” where participants would move from one table to another, one table represents one topic or sector. Four tables to tackle four topics: education, healthcare, transportation and telecommunication, four sectors that are previously known to be bailiwick of “government provision.”
Participants would discuss and answer for themselves, “Should government be the main service provider of _____ sector, or just referee of competition among players?” I was one of the eight table hosts (two hosts and two tables for each sector in order to reduce the participants/moderator ratio). I chose to moderate the discussion on healthcare.
There were four batches of participants then that will come to my table. In order to make my work simpler, I asked them at the onset, “Anyone here who thinks that government should be the main provider of healthcare?”, then “Anyone here who thinks that government should totally step back in healthcare and just be a referee to competition among HC providers?”
The result was rather clear. None of the participants from the four batches said Yes to any of the two questions that I asked. Most if not all of them wanted a combined function for both government and market players in healthcare. In particular, they want competition to be left alone in urban and richer areas where they are plenty of healthcare providers and thus, people will have many choices. But they want the government to provide HC in rural and poor areas where private hospitals, clinics, physicians, other HC providers are either few or zero.
Another proposal was that for infectious and communicable diseases, government should be the main provider of HC, like giving people vaccines and flu shots, getting ride of mosquitoes in wide areas, also for diseases of children. But for non-infectious or non-communicable diseases, competition among HC providers should be encouraged.
Many of the participants shared that in their respective countries — China, India, Malaysia, Thailand, etc. — the poor usually go to government hospitals and health centers, but the lines are long and facilities are often not adequate.
Parth sat on my table and suggested that one option is for the government to give a conditional cash transfer (CCT) type of direct assistance to the poor: X amount as education voucher, Y amount as healthcare voucher, Z amount as transportation subsidy, and so on. Expanding the voucher system to other sectors and services.
We table hosts of the World Cafe then reported to the plenary the summary of the discussions in our tables. After the summary, many of us went to another room to finalize the Conference Resolution. We discussed and debated the draft paper for nearly two hours and we ended up with this brief but straightforward paper.
Competition is an essential engine for prosperity. To prosper, all nations should encourage and nurture competition. Competition encourages innovation and creativity.
It motivates producers to make the best offers to consumers, therefore creating lower prices, higher quality products and better services.
The Role of Government
The primary role of the government is to enforce the rule of law, provide impartial judiciary, protect property rights and individual freedom.
Competition is the best regulator; therefore, the government should foster competition rather than restrict it.
Competition in Public Service Delivery
The people will benefit more if the government does not monopolize the delivery of public services.
Competition can be introduced and fostered in the major public services such as education, healthcare, transport, communications, and utilities by diversifying the providers through various form of private participation.
Competition, Economic Freedom and Prosperity
Free market economy is necessary for progress. Empirical evidence shows that open economies are more prosperous.
Competition is a key element in a free market economy.