APRIL 10, 2009 2:29PM

Private Companies/Corp. Not Always Efficient

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I have noted that several conservatives have been beating the drum about government being generally worthless and that only private companies/corporations can do anything efficiently.  I think this based on a faulty assumption that free market forces create efficient organizations.  My experience working in private industry has been the opposite.  Industries have just as many screw-ups as government entities and go on for a long time in some cases because of the lack of scrutiny.  People working in companies know that their continuing employment is often dependent on not being too critical of what is going on.  People whether in government or private industry have the same destructive impulses regarding the desires to get rich, create empires for themselves, being overly motivated by the desire to control others etc.  I remember one example where chemical companies were discharging enormous amounts of methylene chloride into the atmosphere.  After being challenged by the EPA, the industry groups realized that recovering the methylene chloride would rapidly pay for the costs of the equipment and would reduce their costs.  Companies are always under pressure to increase profit.  This has led in many cases to fraudulent practices that cost way more money that they saved (recent financial mess, auto company safety problems, toxicology lab fraud, etc.)   Companies need the threat of oversight to save themselves from their own problems.  The trick is to focus on real problems and not get entangled with trivial problems.   Another problem is in areas where competition either does not exist or does not work as expected.  Take health care,  there may be multiple doctors/hospitals that provide a service but it is virtually impossible to get helpful information on relative costs.  There is also the problem that in an emergency it is not practical for an individual to make a choice in a way that encourages competition.  One might argue that insurance companies reduce costs by negotiating fees but the point would be that competition is working for the insurance company but not the individual.  European schemes where health care institutions are paid for health outcomes is one way to make the system more efficient for the individual. 

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You've only scratched the surface here, but I agree. The myth that leaving everything to private enterprise and the free market profit system will inevitably and always result in more efficiency is just that - a myth - and it needs to be debunked as loudly, thoroughly, and frequently as possible. Thanks for your contribution to that effort.