Finance management major here, I’d argue that governments aren’t inherently inefficient.
On a local level, government organisations are essentially the same as non-profits. The only difference is in who they are accountable to. Even KPI are pretty much the same.
The inefficiency of a government in contrast to the free market is in its inability to adjust to people’s needs quickly on a global scale. Imagine a company that has to sell a little bit of everything and then some. What kind of resource does it need to have to fully satisfy the demand? It’s practically impossible to make a vertically integrated system that would do this amount of research, let alone organize all the production and supply chains. It doesn’t matter if it’s a government or an entity. They all will drown in beurocracy, except the government is usually stricter as they tend to play it safe.
Hence, it’s really a non-issue if a government takes control over parts of the market. And because they can’t facilitate it all, they take over socially significant parts of it, like municipality governance, military, and healthcare.
Also, you (the person reading, not the person I’m responding to) should never be mistaken in thinking that the free market is perfectly efficient. It isn’t. Creating points of inefficiency drives a lot of revenue. Think purposefully limiting demand to drive prices up. This is what’s happening with insulin in the US, for example. If you have perfectly inelastic demands, you can make your product infinitely expensive.
Having worked a decade each in private and state positions in my experience they’re just different brands of inefficiency. The big difference is that in private industry inefficiency doesn’t really matter as long as you’re making money. A business that starts in the right market at the right time can do everything wrong and still turn a profit for decades and no one will question their efficiency because they’re profitable. If they’re well established enough they can be relatively immune to competition because the market doesn’t justify enough investment to create competition, so they dominate regardless their failings but still get celebrated as a successful business.
The state is judged by completely different metrics of success and no matter how successful, people will still ask if it could have been done more efficiently. In private industry success is the only measure of success.
I responded already but a perfect example of government efficiency is Medicare, which is 16% cheaper than private Medicare replacement programs for the same services in the same population. And Medicare has better outcomes as well.
Finance management major here, I’d argue that governments aren’t inherently inefficient.
On a local level, government organisations are essentially the same as non-profits. The only difference is in who they are accountable to. Even KPI are pretty much the same.
The inefficiency of a government in contrast to the free market is in its inability to adjust to people’s needs quickly on a global scale. Imagine a company that has to sell a little bit of everything and then some. What kind of resource does it need to have to fully satisfy the demand? It’s practically impossible to make a vertically integrated system that would do this amount of research, let alone organize all the production and supply chains. It doesn’t matter if it’s a government or an entity. They all will drown in beurocracy, except the government is usually stricter as they tend to play it safe.
Hence, it’s really a non-issue if a government takes control over parts of the market. And because they can’t facilitate it all, they take over socially significant parts of it, like municipality governance, military, and healthcare.
Also, you (the person reading, not the person I’m responding to) should never be mistaken in thinking that the free market is perfectly efficient. It isn’t. Creating points of inefficiency drives a lot of revenue. Think purposefully limiting demand to drive prices up. This is what’s happening with insulin in the US, for example. If you have perfectly inelastic demands, you can make your product infinitely expensive.
I also don’t think governments should be held to business efficiency standards. It’s meant to be social, not profitable.
Having worked a decade each in private and state positions in my experience they’re just different brands of inefficiency. The big difference is that in private industry inefficiency doesn’t really matter as long as you’re making money. A business that starts in the right market at the right time can do everything wrong and still turn a profit for decades and no one will question their efficiency because they’re profitable. If they’re well established enough they can be relatively immune to competition because the market doesn’t justify enough investment to create competition, so they dominate regardless their failings but still get celebrated as a successful business.
The state is judged by completely different metrics of success and no matter how successful, people will still ask if it could have been done more efficiently. In private industry success is the only measure of success.
I responded already but a perfect example of government efficiency is Medicare, which is 16% cheaper than private Medicare replacement programs for the same services in the same population. And Medicare has better outcomes as well.