Market versus government

Look around at the various industries we have today, and divide them between privately owned and operated, or government operated(there are actually more secretly government subsidized industries these days than you might think). Which bring you the most satisfaction? Do you ever notice how much faster private businesses are when it comes to getting back to you? The lines at privately owned industry are short, because the owners know that if they don’t hire enough competent employees striving to meet higher standards, the customer will do their business with someone else. Consider a driver’s licensing facility. The lines can be hours long, or maybe they don’t ever even get to you and you have to come back tomorrow, but they don’t care. They get your money whether or not you are satisfied.

It’s two different types of motivation. A government manager does not have any motivation to meet higher standards, or to compete, because there is no one to compete with, and he is guaranteed his job will stay, because you pay high taxes to support him. Whereas a private manager knows that he must meet higher standards to keep his job, because for any given private industry, there are numerous competitors, and the manager will be fired if the customer is not satisfied.

Is that to say that all government managers are not motivated to do a better job? No, of course not. There are those with good morals who will do a better job despite fewer motivations. But the natural incentives for them to do a better job are not there.

However, there is a balance to be had. Consider the industry of law enforcement. Can you imagine if that was privately owned? That would mean that the richest people would make up rules for everyone else. But law enforcement is something that effects everyone, not just the customer.

Does transportation effect anyone besides the customer? Yes, best to leave its operation to the government. 

Does education effect anyone besides the customer? No. Note how much more efficient private education is than government education. And yet, whether you use the government education or not, you still wind up paying for it. If education was privately paid for, then the prices would fall significantly and the quality would increase.

So the next time President Obama proposes more government spending, regulations, or agencies, consider the effect it will wind up having on your life. With no market incentives, no one will be served to their full satisfaction.

“How is it the government is going to be able to spend a dollar in such a way that it generates a dollar or more in value?” asked George Mason University economist Peter Leeson. “A more likely possibility is that a dollar that government takes out of the private sector is a dollar the private sector doesn’t have to spend anymore.” – Quote used from economist John Stossel’s article Is the Government’s Bailout Just Dollars and Nonsense?

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