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Overcoming Bias Commenter's avatar

Well, yeah, I do want the people running, say, the Strategic Air Command to view it as a position of duty, honor, and trust rather than as a profit-making opportunity.

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Overcoming Bias Commenter's avatar

There are two distinct reasons why some industries are public and some are private: (1) simple management efficiency and (2) ends versus means.

For repetitive tasks, carrots and sticks work just fine. Governments as customers often want to "buy" war. Now war machinery is privately supplied, for it can be built on an assembly line. But war itself (especially modern war) is extremely creative. As everyone knows, no battle plan survives the opening salvo. And a different incentive is required for creative tasks. The incentive that works best, is a higher purpose. If you look at the dichotomy between creative and mechanical jobs, you'll see that it just makes sense for a governmental-customer to buy the first set of goods from public servants and the second set from private sellers.

A second reason, is that for some services only the end product matters (e.g., does the computer work or not), while for other services the means are equally critical (e.g., it is not acceptable for teachers to achieve high test scores by torturing the children). From a management perspective, the government-as-customer purchases products from private suppliers when it doesn't care how it was made - when the only thing that matters is the end. But when the means are equally important (think of the huge placebo effect we get knowing that drugs are FDA approved, or that doctors are licensed), then the suppliers are either public or highly regulated.

So don't think of the government as a small company. Think of the government as a smart customer. The customer is going carefully choose suppliers based on two things: (1) is the product a creative good or a commodified good, and (2) is the end product the only concern, or do the means matter as well. Based on the answers to those questions, the choice of public v. private is pretty straightforward.

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