The secret is out. Private industries don’t necessarily like competition. This statement goes against all the verities of free market ideology, but it is backed up by a century’s worth of evidence. To be exact, industries do not like the uncertainty and chaos that unbridled competition can bring. The corporate form, the entire financial and legal framework, and the ways in which industry relies upon government to rescue it all reflect their efforts to shield themselves from the effects of market chaos.

For years, industry lobbyists and their ideologues have argued that the private sector does a better job at providing goods and services than the public sector. They have used the ideology of competition to bolster their argument, and to push a privatization agenda. Their narrative goes like this: public programs are sluggish, inflexible, overly bureaucratic and inefficient because they are shielded from competition. Because they are subject to competitive pressures, private companies are more innovative, adaptable,  and efficient. There is another version of the story that needs to be told: instead of welcoming competition, there are many examples where a private industry has undermined a public sector, or collectively owned, option because they feared they could not handle the competition.

Here’s an example: in the 1950s the real estate industry couldn’t stand the notion that public housing developments might expand beyond the inner-cities, and that they might be as attractive as private developments for working class families. There was evidence that expansion of public housing would undermine real estate industry plans to dominate the post-war boom in new housing construction. Public housing began in the early days of the New Deal. By 1946, there were over 350,000 public housing units. Over 195,000 were built during the war. Among them were a handful of projects constructed for families of service men and women. These were constructed under the auspices of the Mutual Ownership Defense Housing Division. Many of these projects still exist today as resident-owned mutual housing corporations.

Real estate interests got behind the 1949 Housing Act, which limited ‘public’ housing to the poorest residents. White working-class families were steered toward the private housing market (and told that homeownership was their pathway to the middle class ‘American Dream’). This led to race and class segregation as well as the inner-city concentration of public housing, which went hand-in-hand with inner-city dis-investment and economic decline. Today, almost 100 percent of housing in the US is privately owned. The recent mortgage meltdown has exposed how much we need social alternatives to the speculative, private housing market.

A similar thing is happening today with health care. The health insurance industry will do anything to stop the Obama Administration from creating a public health insurance option. Why? Because they cannot handle the competition. They admit that it will be hard for them to compete with a non-market-based option that is both more accessible and more efficient. If they have to lower costs while covering more people, it will take away from their bottom line. So the insurance industry is doing a lot of posturing, making promises to rein in costs, expand coverage, do its part to reform the system. It could be that the problem here has less to do with competition, and more to do with the illogic of leaving something so basic and fundamental as healthcare to the private sector. When the bottom line is enhanced by overcharging and under-covering, how can we expect insurance companies to get in line with the goals of healthcare reform?

The good news: these things are discussable today. People are questioning the old market verities. Turns out industry doesn’t fully believe in those verities – like the benefits of competition. They just use them for ideological purposes.

--Sandra Hinson