Business versus Government, Round 2

Many of us believe that businesses are more efficient than government agencies. I suppose this belief holds regardless of the level of government - local, state, federal - in question. Never mind whether this belief is actually justified by facts. What's more important is to examine the social consequences of the idea.

Here are three things that happen:

1. Functions that could be carried out by the government are left to the private sector.
2. Privatization of public services occurs because of the bias against government.
3. Effectiveness is sacrificied to efficiency.

The last consequence is the one that seems most important. After all, is it really a problem if businesses are doing stuff for us that the government could do? And so what if privatization makes the government smaller and less expensive? What's the problem? Well, I'm getting to that.

Liberals will readily agree with the idea that we don't want businesses managing services like food inspection and sewage treatment that are vital to public health. Libertarians would probably say that businesses would probably do a better job so why not let them do the work?

The answer to that last question is simple: Efficiency is not the same as effectiveness! Efficiency tends to be the goal for businesses. Efficiency relates to profitablility after all. But government services are meant to be effective, that is, they are designed to produce desired outcomes to the greatest degree that resources and knowledge (and political considerations!) will allow.

For how many of our public services are we really willing to replace effectiveness with economic efficiency as a guiding principle.? Think about that for a bit. And tell me what you think!


Effectiveness is not the same as efficiency.