Government vs Private Sector

This [Why is reducing government jobs considered a free lunch?] at [Richard's Real Estate and Urban Economics Blog] touches one of my gripes about the current crop of big government haters, they hate things the government does but accept those same things when the private sector does them. a cut..

Is there waste in the public sector? Sure. But for those working in the private sector, particularly large institutions, ask yourself whether everyone you work with is productive. I have no idea what the "correct" level of public sector employment is. I also have no idea how much public sector employment crowds out the private sector, but if the crowding out effect is less than one (and with unemployment above nine percent, I am guessing the effect must be less than one), then reducing government employment reduces total employment. But to think that cutting government employment is a magic pill for economic recovery makes no sense

Sure, waiting at the license branch pisses me off and maybe the post office isn't as efficient as Fedex or UPS but these systems do work and they do create jobs for local people who then spend that money in the local economy. With unemployment over 9% we need jobs and economic activity even at the cost of some efficiency.

But you know, I see a lot of inefficiency in the private sector too.

Many of those state highway departments that used to have one guy working and five guys leaning on shovels wasting my tax dollars have been replaced with private contractors whose crews now have one guy working, four guys leaning on shovels, a CEO drawing a huge salary, extra profits for the investors and lobby money for the politicians. All of this coming out of my tax dollars. Is this really more efficient than a government run highway department?

Dealing with a big corporation doesn't seem any more efficient to me than dealing with big government. Think about headaches you've had with your cable or cell phone company. Are big banks and finance companies easy to deal with? How was you last call to your television or computer's customer service line? Most likely you spent hours on the phone talking to someone on the other side of the planet that didn't really help you much. How did that customer service job help the US economy? How is that any better than dealing with a government office?

I think government programs have a better, more productive, more local, internal economic focus than corporate industry and this may make up for some inefficiencies.

Think about the highway department. A local government highway department may cost a little more to run than a large private contractor covering many localities, (there are some economies of scale but really, to do the work at the same level they'll need about the same number of worker-bees, maybe a few less management types) but, a local, government run department would employ more local people who are more apt to spend their earnings locally, while the contractor will employ more out-of-town employees who won't spend locally and then send a large portion of the profits to the investor class, effectively sucking cash out of the local economy. Would you rather spend a few more tax dollars and have them spent locally or spend a few less and send them out of your area?

Big corporations also suck dollars from the community that locally owned business would preserve.

Think about an old-time, privately owned, local business, maybe a hardware store or restaurant. The owner would employ local people, spend his money in the area, deposit and keep it in the local bank, his profits were poured into the local community. He cared about his business and would generally take care of the place. It was his, he owned it and cared for it. He might pass it along to his family or one of his workers some day.

In today's corporate world, out of town investors own the company. Sure, hey hire local people to work and manage the place but I don't think these hired-guns care as much about the business as an owner would, it's a landlord-tenant relationship, where neither care as much for the place as an owner-operator would. The profits are sucked out of the local economy and shipped out to investors around the world, never to return to the area. They are in-effect mining the local area for dollars, sucking out all they can then leaving when the well runs dry. How can this be better for a local economy? Sure, the consumer may save a few dollars on purchases but at what cost to the local community?

On a larger scale, is letting an illegal alien take a job in the US and then spend his earnings in the US, worse than letting a corporation, just to gain efficiency, ship that job over-seas where the only money that returns to the US is a dividend check to a rich guy?

Government is the wrong enemy here. The true bad-guy is the large corporation. The people are the government and with our local, state, and federal forms, some government is always going to be focused on our localities, on us. That's not the case with the large corporation, they only care for themselves, their profits. Your community is just a resource to be mined for profits, until it's depleted then they move on.

Government is needed to protect us from this but it's losing the battle because the corporations control the message. They own the media. Hell, they are the media and they set the tone they want. They fear and hate the government and to continue to make the profits they require, they need the people to hate it too. So, the message from them is that government is inefficient, evil, stealing your tax dollars and we, the giant corporation can do it better". That is the Corporate message. I don't believe it.

tnb