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Well, there are historical attitudes that
certain kinds of businesses are better run by private and some by the government.
So typically, countries have education in as
a government run more often than they have steel production as government run.
And there might be various reasons why
governments are more adept at handling issues that involve sensitive externalities,
sensitive human issues that are politically difficult.
By the way, it's not just an issue of government versus for-profit,
there's also in-between type organizations, like nonprofits.
Right here we're sitting in a nonprofit,
Yale University is a nonprofit,
and this building was the gift of Mr. Evans who was the CEO of Macmillan Publishing.
So is this government or is this for-profit?
It's neither.
Ultimately, our society is made good by
people who set up institutions either governmental,
for-profit, or nonprofit for their own aims,
which are often- I don't think that it's easy to describe human motivation,
and different people find different approaches toward contributing to society.
I've also read your book
called "Phishing for Phools" and I like the idea of the "phishing equilibrium."
But do you think that the public companies
make their phishing equilibrium maybe less extreme?
For example, if the company is owned by the government,
it will not try to exploit some people [inaudible] like for-profit? Like this is not the good way.
I think it'd take a- government run companies have a different kind of corruption from-
The government run company you
have officials who are stealing money and sending it to havens in other countries,
so that if there's ever a revolution they can
leave and become billionaire somewhere else.
Whereas private companies, or when
you say private there's a distinction between public and
private even within the nonprofit.
A public company is one that is
officially listed on the stock exchange and are open for the general public,
and a private company is one that's held by a small number
of stockholders and is not listed on the stock exchange,
but I'm referring to the private sector which has both of those.
So, private companies might be more important
for more likely to do tricks of the marketing form,
of misrepresenting their product, of jumping on.
One example that Akerlof and I gave in our book "Phishing for
Phools" was of patent medicine before regulation of medicines.
So regulations on drugs that could be sold to
the public began in various countries around 1900.
But before 1900, generally you could sell anything.
The only remedy is if you bought some medicine at the drug store,
and you gave it to your child and the child died right after taking it.
You could sue them for that.
But if it wasn't clear cut like that,
they could just keep selling it indefinitely.
So most medicines were fake.
They didn't test them at all.
They just put something on that they, you claim.
It's fraud.
But those regulations now are not very controversial.
Although, one of Donald Trump's,
one of his nominations for the government said that he thought that we
should not require proved effectiveness of medicines before they're marketed.
Now that is something of a somewhat extreme libertarian view.
I guess you could argue that maybe,
you can experiment with unproven drugs on the general public by marketing them.
Maybe that would work out. I don't think so, though.
Robert ShillerSterling Professor of Economics at Yale University
