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Clarifying government, market roles
Zuo Xuejin Updated: 2004-01-07 07:28
In the reform of scientific, educational, cultural and public health systems,
what are the respective roles of government and the market" Reforms in these
sectors differ from those in the economic field, which bears a clear goal: to
let the market play a basic role in resource allocation. But controversy exists
in how best to reform the social sectors.
Should a hospital be
welfare-orientated, or profit-driven" Should the country's education sector be
industrialized" For every question there are a dozen different answers, both
from the public and experts in the field.
Some hold that the less
government involvement, the better. A famous economist even argues that it is
unnecessary for the government to run the pension system because it can be
resolved with personal savings.
Others believe that due to their unique
features the social sectors should be put under the complete charge of the
government. Introducing the market system would leave them in a mess.
So
a clear understanding of the roles of government and the market is crucial to
expanding reforms in these fields.
A market system should be introduced
into the development of science, education, culture and public health, while the
government's involvement is also necessary. The government should intervene when
the market fails to allocate resources efficiently.
Products in the
fields of science, education, culture and public health bear a strong feature of
benefiting the general public.
Their supply, if manipulated solely by a
market system, would likely cause shortages, so the active involvement of the
government is a must.
Government involvement would also help reduce
inequities in people's access to these public products.
The government's
involvement, however, should be limited to situations in which the market system
does not work, because the purpose of the government's role is to promote social
fairness and equality.
An emphasis on government involvement, however,
should not lead to neglect of the important role of the market, which greatly
enhances efficiency in the fields of science, education, culture and public
health.
Global experiences indicate a proper combination of the role of
the government and the market works better than exclusive reliance on either
one.
The market system, while not burdening State revenue, can provide
multiple choices in services for people with varying income levels. While
increasing efficiency, the market system also helps promote
fairness.
Currently, most of the government's involvement with education
is concentrated on higher education. There were, however, only 9 million college
students in China in 2002, compared to 120 million in primary school. If
restrictions on social funding for higher education are relaxed, the government
could divert more resources to running the elementary education programme, which
is surely of greater benefit.
Education should not be run as an industry
entirely.
The government holds an unshirkable responsibility for the
nine-year compulsory education programme, which covers six-year primary school
education and three-year junior high school education, but for anything beyond
that more private funding should be utilized.
Concerns have been
expressed that when the market system is introduced into the sectors of science,
education, culture and public health, service quality might decline while
charges could increase.
Such concerns are unfounded. Of course, sound
policy design and stringent public supervision are needed to achieve higher
service quality and reasonable pricing.
When non-public funds are put
into running higher education, for example, the government should strive to
create an atmosphere for open and fair competition. When information on each
school is transparent to the public, those with poor quality will certainly be
driven out of the market.
Therefore, people should not worry the current
propping up of non-public schools of higher learning will result in declining
standards and skyrocketing fees.
For the public health system, collection
of medical insurance funds should be put under control of the government, while
the provision of medical services should be realized via the market.
Similarly, a platform for a fair competition among medical institutions
should be established.
Based on these points, it can be concluded a
proper combination of government involvement and the market mechanism is the key
to achieving both fairness and efficiency in the sectors of science, education,
culture and public health.
(China Daily )
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