Capitalism works for you(3)?: We could also have "public service" market

Newark’s Booker Lures Wall Street Millions to City Few Have Seen Bloomberg(Oct 3, 2012)
This is a case that Capitalism/Market economy indeed helps people to improve their conditions.

When people talk of Capitalism and criticize about it, they usually cite how "unjust" of these phenomenons: millions bonus, luxurious mansion,  super cars and excessive spending on meals and clothing.  However, that is only "the surface" of how a group of people exhibit their fortune. These, frnakly speaking, has little to do with Capitalism. Along the course of history, any of the "have-it-all" class would do the same.

Yet, capitalism is about competition, about marketplace, and about how marketplace could be an efficient mechanism to allocate resources. This news also tell us that, capitalism can also be applied in political occassions and do "good" to the public.
As I mentioned in the previous articles, we have to exercise some imagination to picture what sort of market can really exist in the world. I also mentioned that government as a player, collecting taxes and offering services to everyone. Should government being an unnecessary thing, or we could use some "market" ideas to shake it up a bit.

Let's picture a public services market does exist. Supplied by the government with collected tax revenue, demanded from the people. And the price? the tax everybody pays to keep these services alive.

We can immediately see some problems kick in. First of all, it is a market with little competition. Even in democratic society, the public only choose their leaders in a fixed interval: the term of elected figures. His/her announced policies during election could be seen as an offer. Yet, no one will compete with him/her within the given term.

How the project runs? Little monitor, or even punishment, could be imposed. As a result,  we can see a lot of waste on the tax revenues. The executive branches of governments waste money in services that few people desire. Even they render some, they are in poor quality. All in all, public services are a mess!

This news is important and interesting in this market. When the city really run out of money to render services, the mayor has the idea to "liberalize" the market a bit. He allowed the new service providers enter into the market: the charity funds. What he has to do? He has to bring up good plans for those charity fund, after donation, these funds would naturally review the progress of these donations. In other words, there are more participants, briniging in more supervision.

If we try to frame this as a "market", how does it work? The mayor of Newark, acting as a agent of collective wills (the Newark public), demands the services, or say, funding of the services.  Their projects have to "compete" with other projects that is on the list under the review of charity funds. If it is good enough, these funds would "pay/supply" the price, which is the donation of funds. And the public gets the services. Voila...! the market works!

This case has two features to make such "public services market" works, and it works very differently from what we thought": Competition and transparent information.

1.) Competition: The competition part is rather tricky. The news explain how this mayor has contacts with Wall Street people that could pull the money into his project. So, we cannot be sure whether there is a competition between his projects and other charity projects. At least, he, as a person, is competing with others to convince his contacts to place the donation. Furthermore, unlike other public service projects, this case presents a need to compete. The charity funds only have limited resources, so, Newark projects have to be distinct from others to win the donation. Such competition makes these projects more desirable.

2.) Transparent information: Considering every taxpayers are supplier of public service funds, what market would a taxpayer prefer to enter? Honestly, if this case can work out well as it seems, why we need to pay a very high tax without knowing where it goes? I would rather donate to a "project" that I clearly see the plan. In other words, I would rather enter into a market with "transparent information"

So, this is an example how "thinking in market economy way" can actually help people. Says who a free market is bad? Actually, that can be better!!