Common Error No. 74


74. "Essential services are too important to leave to the private sector, and have to be done by the state."

The assumption here is that state provision somehow guarantees that essential services will be delivered. In reality it is the important things that we should keep out of the public sector. The public sector is characterized by high costs, by inefficiency, by lack of responsiveness to consumers, and by a propensity to interruption.

Because they are financed out of taxation, the public services do not have to attract customers, or to satisfy them. They gain extra funds by putting pressure on government through lobbying or union militancy. Since the public do not usually have viable alternatives to turn to, the state services can put their needs as secondary to those employed in them or in political control over them. They respond to their managers and employees, rather than to the general public.

Private firms cannot behave like this or they lose customers and revenue. Their workers are less ready to strike in case their jobs go to rival firms as a result. Private firms, moreover, have to keep their products and services up-to-date and to incorporate new advances lest their rivals steal a march on them. They have to keep efficient or costs will eat into their margins. None of this applies to state services, which seem everywhere less efficient, less modern and less responsive.

The message is clear; it is that important services should be kept out of state control. We can imagine what might have been done to our supply of food or clothing if we had been dependent upon a nationalized monopoly, with no competitors bidding against each other to improve quality and efficiency, and no alternative to turn to when strikes occurred. Some things are just too important to be left to the public sector, and any important services still there should be taken out of it.