Public-private ownership economic systems or hybrid capitalist economic system refers to a form of capitalism where private business ventures and public or government service enter into a long term contract with an aim of completing a project that will serve the public. Hybrid capitalist economies can be employed in funding, financing, building, developing and operating projects like infrastructure, health, conventional centers, tourism, transportation networks and sanitation for the benefit of the general public. Public-private partnerships are very crucial in allowing projects to be completed in time through financing.
The private sector often offers a service to the public while the governments provide financial, operational and technical support and skills in executing a certain project. In providing such services and assets to the public, the private sector or entity bears significant management risks and responsibilities, and the rewards are related to the performance of that particular undertaking. Many governments employed this form of an economic system after the Second World War to ensure the delivery of crucial infrastructure and services were offered to the public in a more seamless way. In most cases, the cost of the projects that has been implemented by this form of economic system is met by the public that uses that particular service rather than the taxpayers (Barlow, Roehrich & Wright 2013).
After the Second World War, public-private partnerships became a very crucial ways of sourcing for services and other facilities by using the private sector expertise and innovation by providing financial leverage by the government to meet the obligations of such contracts. In today’s economies, if this form of economic system is executed and implemented in the right way, it can significantly improve the service delivery and provision which will lead to facilitation of economic growth. At the end of the war, new forms of economic policies were being put in place to meet the economic realities of that time.
It is at this period that the Fiscal New Deal was formulated that was meant to reconcile the new hybrid system and the conventional principle of American capitalism. Due to the Great Depression which was widely believed to be the cause of capitalism, the economy was perceived to be stagnant and as a result, Communism seemed to be the new dynamic form of economic system to adopt. The government failed to regulate and provide necessary checks and balances on the private sector’s operations which consequently led to the downward spiral of the economy.
Businesses were more focused on making enormous profits without taking into consideration the welfare of its workers and this factor resulted in the Great Depression. Countries that had adopted Communism after the Second World War were experiencing massive economic development and industrialization and this led to many countries starting to review their policies of which form of economic system to adopt. In the quest to come up with a new kind of economic system, old capitalism which was characterized by less government regulation and no attention to the rights of the workers was replaced by hybrid capitalism which proved to be crucial in saving the system.
Before the Second World War, there was a significant disparity between the rich and the poor. There existed a huge gap between the few individuals who held most of the wealth. The massive unequal distribution of wealth led to low purchasing power which made it hard for the economy to grow. The few rich people controlled the American industries, and this made it possible for them to hold a tight grip on the prices which were always at an all-time high. The patterns of supply and demand were not adhered to and without competition the form of economic system was set to die a natural death. Due to overproduction and low purchasing power led to many industries becoming weak and this also led to falling prices.
The importance of the government in regulating corporations had started to be appreciated and the provision of a favorable environment for private enterprises to carry out business was becoming inevitable. The government had to use economic tools at its disposal like manipulating the supply of money and interest rates to ensure that businesses operated within certain constructs so as to achieve a hybrid economy. The government also had to provide incentives like subsidized loans and creating safety net programs like Medicare, social security and doing away with unemployment so as to achieve this objective.
Therefore, the progressive tax system was essential in ensuring that these goals are conclusively met. Progressive tax refers to increase the tax rate as the taxable income increases (Sommerfeld 1992). The wealthy that made a lot of money or high margin profits needed to pay more taxes. A progressive tax is very crucial in this form of economic system because it makes the revenue of a state more stable besides spurring economic growth. The system also provides the government with adequate revenue for public investment that will, in turn, promote economic growth and provide many opportunities for investment.
A progressive tax system is critical because it offers equality based on income. It acts as a tool of redistributing income to the lower and middle class from the upper class. The individuals or corporations that earn more should pay more to the federal government, and this is very crucial because it curtails the income gap from growing wider between the different classes. The progressive tax system also cushions those who earn a little money from paying a lot of taxes which may, in turn, lead to them straining to meet their basic obligations like housing and healthcare.
If the government does not collect enough revenues from the taxpayers, it may face numerous difficulties in meeting its fiscal targets and requirements. Services to the public may be affected, and it may not provide enough for the public. The founders of this nation envisioned a political system whereby there are limits and confines or parameters where democracy could thrive. Therefore, they set out to devise a political system that restricts some actions by those in power so as to safeguard the common public. Concerning the current political system in this country, the political structure has been closely influenced by the notion and concept that was imprinted by the founders of the nation.
References
Barlow. J., Roehrich. J., Wright. S. (2013). Europe Sees Mixed Results from Public-Private Partnerships for Building and Managing Health Care Facilities and Services. Health Affairs 32(1): 146–154.
Sommerfeld, R., Silvia, A., Kenneth, E. & Betty, R. (1992). Concepts of Taxation. Fort Worth: Dryden Press.
