On “Public-Private Partnership”

A little while ago I was asked to speak at an event on the use of “public-private partnership” to implement policy goals. I found I had to be a bit disagreeable on the subject. Here are those remarks, transcribed and lightly edited, in case readers here also find them relatable or clarifying in any way. – N.S. Lyons

We live in an era in which globalization and the geopolitical environment have arguably made a certain level of deliberate coordination between private corporations and nation-states – i.e. “public-private partnership” – a necessity for achieving the interests of both parties.

Nothing better supports this argument than the rise of China and its economic influence around the world. The Chinese economic model notably makes no clear distinction between corporation and state; its government lavishes support on corporate “national champions,” while those corporations act not only in the interest of profit but as agents of Chinese strategic national interests across the globe.

This model, it must be said, has been tremendously successful for China, helping to fuel its rapid economic expansion and allowing it to challenge American and European market dominance around the world. Even sectors traditionally considered critical to American national security, such as the defense and telecom industries, now see their supply chains dominated by Chinese companies.

In this context, the argument for some wise “corporate statecraft” – such as the concentrated application of industrial, technological, and trade policies to restore America’s defense-industrial manufacturing base – makes a lot of pragmatic sense. A degree of such coordination may simply be a necessity now in order to compete with China’s far more extreme use of the same model. Free-market principles are not a suicide pact.

However, I want to take on the responsibility today of warning that the public-private partnership approach also comes with some significant dangers and risks that we here – and our societies as a whole – ought to carefully consider and debate.

There are of course the traditional arguments against state-corporate coordination from both the political right and left that you’ve probably heard before. From the right, we are likely to hear warnings that state inference in the private sector risks undermining market mechanisms, and that “picking winners” risks creating significant inefficiencies and distortions. From the left, we are more likely to hear that corporate influence risks distorting the government’s responsibility to adequately regulate corporate behavior or to look