There is an insane belief fostered e.g. by the Tory Party that the private sector always does everything better than the private sector. The Labour Party says the opposite. I'm using the word 'government' in a vague sort of sense, you could say 'the state' or 'the taxpayer' or 'collectively', it's all the same principle.
As per usual, they are both wrong what we end up with is the worst of all worlds:
- The government doing stuff it should not be doing, and not doing stuff it should be doing,
- Even worse, the government sub-contracts stuff to the private sector at a higher cost than it could have done it itself,
You can mix and match these failing and double up the problems:
- the government flogs off borderline state-owned assets (viable in public or private sector) like the post office or social housing at a massive discount,
- the government decides that something unnecessary must be done, and then subcontracts that at a loss, or
- the government fails to provide a public good allowing a lucky corporation to collect the 'rent', see.g. payday lenders.
- We can safely assume, that if there is real private demand for something, somebody will do it, so there is no need to delineate or define what the private sector should be doing. You can have some rules saying how they are allowed to do things, that's a separate issue.
One area where most countries have got it right, and which serves as a good illustration is road traffic.
The government decides where the major roads are going to go, pays for them to be built and maintains them. The government then covers the cost many times over by collecting part of the use value in taxes on motoring (mainly fuel duty and VAT).
The private sector then builds the vehicles and everybody uses the roads for whatever they see fit: haulage, passenger transport, business, commuting or leisure.
That's it. Just think about it.
We've tried nationalising the car industry and it was an epic fail. That's easy.
And if anybody seriously thinks that without government intervention we'd have any sort of road network worth speaking of is clearly living in la-la land:
- Without compulsory purchase orders, not a single road of note would ever have been built. (The same applies to the railway network, even if a lot of it was initially privately financed). As a result, there'd be less incentive to buy a car or vehicle if there's nowhere to drive to.
- "Ah yes," cry the Faux Libertarians, "But what about the M6 toll road? That's private!" For sure it is, but that is a little 27 mile snippet that is plugged into the whole national road system. If the government shut off road access to it at one end, it's value to the motorist would be precisely zero.
Debate Magazine
