The second panel at the Fourth Danube Institute – The Heritage Foundation Geopolitical Summit was all about the relationship between private companies and public governments. It is a topic that moderator Michelle Watson, a former Strategic Risk Advisor at Deloitte and current Senior Fellow at the Danube Institute characterized as a matter of ‘growing influence, importance, and sometimes even concerns’.
She went on to define public-private partnership as ‘business and government, and sometimes academia, working together in partnership on issues of national security and economic security’.
Professor S. John Tsagronis of the Institute of World Politics, the first panellist to take to the podium to give his opening speech, gave a number of different, but similar concepts to public-private partnerships, which should be treated separately. He listed corporatism, which he defined as ‘essentially policy-making via collective bargaining on the basis of common interests among different groups;’ state capitalism, where the state and state funding directs economic activities, such as in the case of present-day China; crony capitalism, where certain private companies get special, favourable treatment from the government due to unscrupulous relationships; and at last, corporatocracy, where the legal and political system of a country is controlled by corporate interest.
While these were not the most pleasant examples of the relationship between private enterprise and government, Professor Tsagronis stressed that it is a relationship that has its roots in the American Revolution in the US. George Washington, as Commander of the Continental Army, relied on private companies to provide some of its equipment, funding, and even intelligence. Similarly, Article 1, Section 8 of the US Constitution grants the federal government the ‘power to draft business organizations to support the fighting men,’ as he pointed out.
In more recent examples that the Professor brought up, the Defense Production Act was passed by Congress under the Truman administration in 1950, which later led to the scandal involving the attempted nationalization of the steel industry.
In 2004, IBM sold the IP of its ThinkPad laptops to the Chinese tech company Lenovo, which led to national security concerns since many of the US Military personnel used ThinkPad laptops in a professional capacity, in another instance where private business interest had to be coordinated with national interest.
During the COVID-19 pandemic, President Trump instructed some car manufacturers to make ventilators instead; while Congress under the Biden administration passed the CHIPS Act, which provided $280 billion in government funding to boost domestic semiconductor manufacturing in the US, also for national security reasons.
Nathan Levine of the Danube Institute and the Heritage Foundation struck a more sceptical note, highlighting how large corporations use huge subsidies and government mandates to sustain their unprofitable sectors, for instance citing the alleged climate emergency as a pretext. He also highlighted how this has made companies much richer than they would be in real free market conditions. Mr Levine highlighted how nefarious public-private cooperations are facilitating the wave of illegal migrants into Western countries.
‘When millions of migrants illegally cross the borders of Europe or the United States each year, they do not do so without a vast, powerful network of institutional support that helps facilitate that crossing. Hundreds of transnational NGOs dine, ferry, traffic, shelter, and provide legal assistance to these migrants every step of the way. These NGOs are, in turn, often funded by governments and international bodies,’ he explained.
Jeffrey Hoffman, cyber security expert and Senior Fellow at the Gold Institute For International Strategy told the audience that public-private partnerships have been a focus of major institutes and governments for a considerable time now, with established practices and literature in place by now. For example, the World Bank has a Private-Public Partnership Resource Center. The most common areas of PPP, as it is commonly abbreviated, are innovation, public health, critical infrastructure (energy, transportation, and water management), defence and military matters, and, what Mr Hoffman thinks is the most pertinent these days, cyber security.
During the panel discussion, László Jónás, CEO of Design Terminal, was asked about successful PPP projects in his home country of Hungary. He gave the example of a technology patent programme run by the EU, where patents filed as part of their space research programmes can be used by private companies as well. For example, the technology of sterilisation by laser, used by astronauts, can now also be used in kitchens in private homes, with devices produced by private companies. On a broader note, Mr Jónás said that a successful private-public partnership is which has a ‘real business effect’.
Related articles:
