government waste
While reports of government waste are of no surprise to anyone, there are people who still believe that the government is more efficient and fair than private business. They believe the reports of waste to be hype; this is probably because they do not know why waste is a particular problem for government.
Firstly, lets start with waste in private business, when a company spends more on materials than necessary, or pursues needless projects simply for the sake of it, then all of these costs add up, because of competition in the marketplace the selling price of products or services cannot be raised to cover these costs. This means that waste cuts directly into the profits of the business, this of course means that there is a direct incentive for the business owners to remove waste as much as possible. This is of course not an immediate process, and good times in the economy will inevitable allow more waste than when times are hard, but overall, cutting waste is a high priority of business owners.
Government on the other hand operates with certain slight differences; one of those is the source of income, the government sets taxes that it then uses to pursue its aims. This means that when there is waste in the government the cost does not hit anyone directly. Although it is a great cost to the country, there is no business owner who is losing money directly because of the waste, therefore the cost is accepted, when the government runs out of money all it needs to do is tell the country that it needs to spend more to achieve its “socially responsible” aims, and taxes are raised. It is the lack of incentive to produce efficiency that makes the government a poor solution when compared to private business.
Firstly, lets start with waste in private business, when a company spends more on materials than necessary, or pursues needless projects simply for the sake of it, then all of these costs add up, because of competition in the marketplace the selling price of products or services cannot be raised to cover these costs. This means that waste cuts directly into the profits of the business, this of course means that there is a direct incentive for the business owners to remove waste as much as possible. This is of course not an immediate process, and good times in the economy will inevitable allow more waste than when times are hard, but overall, cutting waste is a high priority of business owners.
Government on the other hand operates with certain slight differences; one of those is the source of income, the government sets taxes that it then uses to pursue its aims. This means that when there is waste in the government the cost does not hit anyone directly. Although it is a great cost to the country, there is no business owner who is losing money directly because of the waste, therefore the cost is accepted, when the government runs out of money all it needs to do is tell the country that it needs to spend more to achieve its “socially responsible” aims, and taxes are raised. It is the lack of incentive to produce efficiency that makes the government a poor solution when compared to private business.
posted by Dan at 8:24 AM
1 Comments:
As you say, the problem with the railways is that they are regulated. They are not a free market. In a free, unregulated system, then there would be no limit to the region in which a company can operate, therefore competition should (and I believe would) occur.
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