Thursday, January 20, 2011

Efficiency and the Private-Public Sector Debate

Well, it’s difficult to characterize the distortion of reality that masquerades as a debate about public-private management as a real debate. There appear to be fixed opinions, remarkably like those occurring around the subject of religion. In some recent blog (there are so many) someone wrote in to say, “would you like to have things run by the Post Office, or Medicare, or the EPA, or the Federal Reserve?” He expected, I suppose, that everyone would be horrified at such a possibility. “Heaven forfend . . . the Post Office managing our private businesses . . . I would be shocked, shocked to see such a dastardly turn of events . . .”
Actually, as I read the comment, I was thinking, ‘Hmmm . . . who would I rather see running things . . . the Post Office, or the Bank of America (or choose your own—Morgan Stanley, Wells Fargo, JP Morgan, etc.)? Let’s see, my mail is delivered to my door six days a week, more or less regardless of the weather. The Bank of America, and the other financial geniuses, on the other hand, managed to crash the entire economy of the world, because they didn’t bother to check whether the securities they were selling were actually worth anything, or whether the mortgages they were issuing could actually be repaid?? Yeah, they're the guys I want to run everything.
And almost every time I think of private sector management, I think of The Peter Principle, and the Greed Principle at work, guiding our largest private sector institutions. Maybe the person who reflexively prefers private sector to public sector management has never actually worked in any of those domains. Or maybe, that person is just brain dead.
I have worked in both the public and the private sectors—large and small for-profit companies; large and small not-for-profit companies; and of course the government itself . . . that would be large government I suppose. Oh, and I have also worked with (in a consulting capacity) small to medium sized governments—local, county, state, and regional.
Also, like most people, I interact with big and small “Bidness” as a consumer, and as a recipient of public sector largesse—Social Security, Medicare, the IRS (I’m a payer-in there).
And frankly, my interactions with these various public or private sector entities convinces me that the distinction between goodness or badness, efficient, or inefficient, effective or ineffective is NOT public vs. private, regardless of St. Ronald’s contention to the contrary. Large organizations tend to be less efficient and less effective than smaller organizations. So, large government agencies probably do tend to be less efficient than smaller private sector entities. But large private sector entities are also inherently less effective and efficient than smaller private entities. I remember Hewlett Packard in the old days (when dinosaurs roamed the earth). I studied them as an engineering student and they seemed to me to be the epitome of an advanced technology company. And when they turned to making printers, they produced wonderful printers. If I needed advice or help, I called them. I would actually speak to an HP engineer, who invariably solved my problem. Then enter Carly Fiorina (remember Carly?). She wanted them to grow, so she could earn bigger bucks. So, she arranged to merge with Compaq, a maker of mediocre PCs. The net result was a disaster for HP, which has now morphed into a very large mediocre technology company, one of many.
If we examine industry after industry, we find ineptitude growing as the companies grow in size. Most of the problems can be attributed to greed and the Peter Principle. Some as in the financial industry seem to be more than that—it may be that some industries are inherently prone to ineptitude when they lack some rudder to keep them on track. In finance, there apparently is nothing guiding/restraining them, short of federal regulation to keep them from eventually doing monumentally stupid things.
So as the jackasses on the right in our Nation continue to chatter on about the wonders of capitalism and the private sector, and the evils of government, I wish more people would weigh in to provide some balance. Because balance is what is sorely needed at the moment. But as I have noted in earlier posts, balance is always hard to achieve and harder still to maintain. It requires intelligence and patience, two things in especially short supply in America today.
And on another planet, the Governor of Alabama has pleaded guilty to being an offensive asshole as a public official.
Post a Comment