Last week, IIM held a conference on the twin themes of Urban Government and Public Private Partnerships. A lot of different papers from around the world were submitted, and many speakers provided insights on how other countries are trying to innovate in these areas. I’ll put up a link to the the presentations once they’re all compiled, but in the meanwhile I want to draw attention to something that’s been bothering me for a while.

PPPs have typically been taken up to overcome shortages of capacities and funds in government. That is, we begin by saying that something good must be done, and the government has neither the money nor the ability to do this. So we must look for parterns in the private sector to do this. The second thing that is universal about PPPs is the money bit. It is assumed that no one will do these good things except for money, and so we must come up with a model that makes it ‘viable’ for the private sector to be motivated to do them.

There’s nothing wrong with any of this, in principle. But here’s a question worth thinking about – if incapacity in government is the problem, why doesn’t anyone take up a PPP with the objective of building this capacity? Why are we instead conceding so quickly that the government will never be capable of doing the things it cannot do today?

There are four reasons, that I can think of, why we should build capacity within government, and make this a core objective of all PPPs. One, we should eliminate the problem – build capacity within government, so that we are not forced to do things because we lack it. Second, in some cases, transfering government functions to the private sector changes the citizens-expecting-governance relationship into a consumers-getting-service-for-a-price relationship, and I don’t think we’ve fully understood the implications of this.

Third, since both the private and public sectors need each other for overall economic growth, we should not really be allowing capacities in government to diminish endlessly. And fourth, I think that if the government itself took up some of the projects that are now being carried out under PPPs, there would be fewer contentious issues.

One more thing. Profit is important, but I think it’s overblown in some of our conversations. In any society, there is always at least a small group of people who don’t mind putting a lower price on their time and efforts than the market allows, in order to pursue public good objectives. Around the world, scholars in universities and research labs do this all the time. And we can too.

I think it could be quite exciting to put together a research lab to work on solutions to a wide range of social and economic problems. I’d be excited to work at a place like that for a long time, and I have a suspicion many others would too.

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