Thinking About Privatization and Government Control

I have alot of fiscal conservatives, both of the Republican and of the Libertarian sort, in my family. What this means is that, ever since I became aware of such things as a teenager, I have routinely heard that private business is always more efficient than government, and that most government duties should be privatized.

This has always seemed very odd to me, as the evidence that most of these folks give for their beliefs is their own interactions with government agencies - time at the DMV, dealing with building permits through the county or city government, and so on. I fully agree that this sort of interactions absolutely does reveal a slothful and often bloated bureaucracy that typically seems more concerned with following draconian procedures than with getting anything done.

The problem is that private industry is often not much better. Have you ever dealt with a telephone company? A bank? An insurance company? Hell, even most large retailers? They are generally just as bad. And that's not even getting into the weird jungles of government responsibilities that get privatized - private jails, defense contractors, etc.

I also live in Santa Cruz, which means that I have regular interaction with people who want things that are currently private industries made government functions (look at the recent health care shouting match - no, it wasn't a debate, because there was little actual discussion), and they will often cite the very same sorts of inefficiencies, draconian rules, and corruption that those who want everything privatized.

A fair-minded observer has to ask if the problem isn't so much that one is government and one is private, but rather that you are dealing with large bureaucracies. Proponents of privatization will point out that private companies are capable of making sudden changes that can improve efficiency - this is sometimes true, but often other factors (both within and outside the companies) influence against this. Proponents of government agencies will often point to the corruption within large companies (due to the large sums of money taken in) as a problem that makes them untrustworthy, also fair, but also a problem with government agencies.

What is fascinating to me is that, whether one is pro-privatization or anti-privatization, all of the arguments are big on rhetoric and assumption, and pretty much empty of hard data. In fact, many researchers have looked into the benefits of having various functions be handled by private vs. government agencies, and when one brushes away the "studies" performed by political organizations on both sides, what is left is a simply data that indicates that some functions are most efficiently performed by private industry, while others are most efficiently performed by governments, and which function falls into which category is dependent both on the service/purpose in question, and the time and place where it is being executed.

So, I find myself really quite amused (and when they influence policy, quite disturbed) by people who are absolutely convinced that, say, government health care will unquestionably be better, or that privatizing police forces will lead to safer cities. Both groups seem equally convinced of their position based on just-so stories with no real data (aside from maybe a bit generated by someone with a political rather than reality-based agenda) to back them up. Both fall to the confirmation bias and fail to take into account disconfirming data.

Generally, when someone routinely insists on the privatization or nationalization of various different functions or industries, they probably haven't bothered to actually do their homework.