Government Versus Private Sector

Moved discussion from YouKnowYoureInaBigCompanyWhen:

Nearly everything on this list sounds like my previous daily experiences with government; first in the Army, then as a PMC (the company wasn't this way, but the contracting offices, even (especially?) in theater were), and later as a full-time government employee. It is painfully obvious to anyone in government why governments can't seem to do anything well, but only if they have experience in leaner environments.

I've worked in both, and have seen vast wasteful stupidity in both. The difference is that the stupidity happens a bit faster in big private co's. And efficiency is only part of the equation. While I agree that government is less efficient, it usually also has less incentive to manipulate the "customer". Thus, less efficiency is often compensated by more honesty. It's a matter of TheRightToolForTheJob. If the "job" is making widgets with easily-verifiable quality, then the private sector is better hands-down. However, if it involves providing a complex service in which it's easy to sneak in loop-holes and gotcha's, then the private sector's propensity to manipulate the customer overrides their efficiency advantage.

In other words, being ripped off quickly is not better than being provided a C+ service slowly. The private sector also wastes resources on esthetic and superficial traits, because they are what naive customers use to make judgements. A government entity cannot justify excess spending on superficial elements and so cut down on that. One could say that a government makes more of an effort to protect people from their own irrationality, at least in a democracy, because if the "trick" is exposed, then those behind the policy will be publicly embarrassed. Some suggest Internet ratings of companies can fulfill the role of corporate watch-dogs, but such tools are often gamed, and things like pollution and safety hazards are difficult to indicate reliably via individual users. For example, if a product kills 1 per 1000 users, then 999 out of 1000 users may give it a good rating if the dangerous "shortcut" results in better (perceived) quality or lower cost. Sometimes SubjectMatterExperts are required to give a decent analysis.

Both systems need to be monitored and tuned by the public. Neither of them are sufficiently self-correcting. It's a bit of GiGo.

Here are my thumbnail estimates of productivity of each organization type based on my lifetime experience:

Small Business:

• 60% Actual Productivity
• 10% Waste and Internal BS
• 30% Marketing, Lobbying, and Promotional

Big Business:

• 50% Actual Productivity
• 25% Waste and Internal BS
• 25% Marketing, Lobbying, and Promotional

Government:

• 40% Actual Productivity
• 60% Waste and Internal BS

(Actually, gov't probably spends roughly 1% to 3% on marketing-like endeavors, but for simplicity I group it under the "Waste and BS" category. Voters typically don't want gov't agencies to spend anything on marketing, but sometimes categories overlap enough such that things like "public service announcements" can be promotional in nature.)

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CategoryEconomics