Another Case Study Comparing the Private Sector and Government by Dan Mitchell

 I periodically look at issues (social security, education, infrastructure, TSA, etc) to compare the private sector and the public sector.

This new video from John Stossel gives us another example.

The video reminds us that incentives matter.

Normally, the private sector does a better job then government because of competition. More specifically, profit-seeking companies fight for our dollars by offering goods and services based on quality and/or price.

But even when competition isn’t a big factor – such as the operation of a park, we can see how the private sector produces superior outcomes.

The surrounding businesses benefit if there is a clean and safe park. So when they actually got the authority to run the park, they put in place effective policies.

People in government are not opposed to clean and safe parks, of course, but they often make decisions on the basis of political factors (rewarding certain contractors, providing patronage jobs, etc).

The net result is that government involvement is a bad recipe for higher costs and poor performance (click here for another example from New York City).

P.S. The superiority of the private sector is a big reason to reject industrial policy. As shown in this video, we get better results when businesses focus on attracting customers, not attracting subsidies.