Rethinking Public/Private Partnership

Since the establishment of Koizumi cabinet, a strong momentum has taken root to shift operations and authorities from the public to the private sectors, which is quite likely to be succeeded by Abe Cabinet. People used to share the sense that “the private sector does its commercial business, while the public sector does state-run business.” However, recently, some “private” sectors have been replacing the role of the “public” even, transcending the traditional division of labor.

Indeed, some public works could be operated by businesses in a more effective manner. However not everything could be managed well by them. Rather I suspect that more issues need to be handled under the appropriate cooperation between the public and private sectors.

One of the intrinsic roles of the “market” is to ensure optimal distribution of resources through rational selection on the part of the supply and demand side. However, the market does not necessarily work under the warranty of perfect performance. The market alone can hardly resolve issues including: provision of social capital; safety and security; and environmental integrity. Similarly, risk-bearing technology development, improved education level, advanced cultural activities, and optimized work conditions cannot be addressed exclusively by the market.

In recent days, we have witnessed increasing numbers of corporate scandals in relation to product liability and social responsibility.

Under certain conditions or contexts, market may fail to distribute resources optimally, which I think, should be calibrated by policies and measures. Without human endeavor to rectify such failures politically, social well-being and welfare will not be ensured.

Then, who is in charge of fixing market failures? It certainly is the government. The problem is that the government may sometimes happen to fail as well. Most democratic governments have their dependable parliamentary cabinet systems to which their nations would trust and refer. Yet, in political arenas, total optimization is likely to be distorted by stakeholders’ political interests or by political campaigns. I believe this is exactly where the government and the business should work in tandem to bring better results.

Public/private cooperation should serve its role in various aspects. The first would work to develop consensus on which policy or measure should be adopted. Normally, research and analysis should be conducted to assess what are to be addressed in formulating some policies. In order to ensure public objectivity, relevant public and private sectors must cooperate in the process.

Take global warming for example. We might have to make objective evaluation to select a policy on whether or not a cap and trade system in the Kyoto Protocol is necessary and what inductive measures or drivers should be appropriate to diffuse energy-saving appliances and low-emitting eco vehicles in order to reduce emissions and promote energy efficiency.

Amidst a spate of recent corporate scandals that have undermined our trust for product safety, a sound judgment and consensus should be developed by both the public and private as to how far the market should be regulated and intervened by the public and how much it should be reviewed and monitored afterwards.

In selecting a policy, comparative analyses and evaluations are required to measure if specific approaches are necessary and effective without causing any harm. Currently, general opinions are widely gathered through councils and other meetings as well as public comments are at times openly invited.　Advanced manners of public/private cooperation would only enable a right policy selection.

The second relates to the effectiveness of an implemented policy. It will never produce its full effect without the understanding and cooperation on the side of objective side of a related policy, namely, industries and citizens, be it a regulation or inductive mechanism.

Without private cooperation, unilateral call from the government to increase imports for reducing trade surplus; to conserve energy at oil crises; and to reduce energy consumption for averting impacts from global warming, would have only brought less productive results.

The third is to monitor and review how the policy is implemented. Currently, product safety is monitored by regular inspections by consumers and commodity trading. Discount sales are also on the subject of monitoring to ensure proper trading practices. Similarly, environmental assessment system functions as a mechanism to ensure civic monitoring as do the safeguarding measures for those who disclose information in the public interest.

Now, what are required to further promote public/private collaboration?

First of all, information should be provided for all stakeholders in a proper manner. As social conditions and general awareness changes over time and technology advances day by day, public/private information sharing should be taken as a basis for reinforcing public/private partnership.

Secondly, communication should be enhanced between the public sector and the private sector. It is because good communication is the only way to facilitate mutual understanding and trust.

Thirdly, the quality of discussion and awareness should be enhanced. Optimal policy could be chosen by highly developed capacities with objective analyses and scientific findings conducted from public and private perspectives respectively.

When the public and private sectors work together for further cooperation, the Japanese society can truly enjoy the fruit of empathy and trust. We might have to take more interest in restoring the awareness and good practices of public/private partnership once again.