When it comes to providing quality services at the lowest cost, private firms are very different from government bureaucracies. A private firm has to compete in an open marketplace where consumers are free to shop around for the best deal. So a private firm has to provide more quality at a lower price or consumers will take their business to a competitor! And the owners and employees share in the profits or losses. They have an incentive to cut costs, raise quality and lower prices. They have a stake in pleasing the customer.
But what about government? Do they have competitors that pressure them lower costs and raise quality? Do the people who run the government benefit financially if they please customers? Do employees of the government benefit if they please customers? Do customers have the freedom to buy from someone else if they are not happy with the price or quality of government services?
Consider this Washington Times story. (H/T John Stossel via ECM)
An audit of the government’s legal aid program for the poor concluded Monday that the purchase of more than $188,000 worth of imported Italian stone to decorate one of the program’s office buildings in Texas was unnecessary and excessive…
The inspector general of the Legal Services Corp.(LSC) said the stone, which adorns three full stories of a newly remodeled Fort Worth office building, “appears only to be decorative in nature” and does not constitute a “reasonable and necessary” expense.
If a private firm wasted money like this, they would go out of business. The directors and employees who run private firms never waste money like this! If they did, the private firm would go out of business. But the government wastes money like this all the time. It’s not their money, after all – it’s your money. Why should they spend it wisely? What’s in it for them?
And they’re aren’t exactly accountable when they get caught wasting taxpayer money, either.
The inspector general quoted officials involved with the Texas program as defending the purchase, saying the high-end imported stone was selected for its beautiful finish and installed as a decorative flourish.
And this applies to government-run health care, too. Why should be expect government to cut health care costs when they have no incentive to be efficient? Private firms have an incentive – to keep their jobs, to be promoted, to get raises, etc. Government has no incentive to be efficient.
Filed under: News, Big Government, Capitalism, Choice, Competition, Competitor, Costs, Efficiency, Efficient, Free Market, Government, Government waste, Inspector General, Money, Monopoly, Pork, Private Sector, Public Sector, Quality, Taxpayer, Waste