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Bureaucracy drives us all crazy. But does that mean selling the family silver to the highest bidder? David Hall suggests a recipe for making the public sector work.
WHEN public services go wrong everyone notices. In some countries it means waiting months for a telephone. Elsewhere it may mean waiting years for a sewer connection. Often it means waiting too long for medical treatment. Usually, this is because of underfunding. But sometimes it's because of corruption and sometimes because of inefficiency - for example, when doctors or customs officials expect bribes, or when the payroll is bloated by political cronies of those in power.
So when Margaret Thatcher, Ronald Reagan and other free-market enthusiasts came along in the 1980s offering privatization as a solution to bureaucratic ineptitude, their message fell on open ears. They promised to sweep away an inefficient public sector and replace it with efficient, dynamic, private companies. Driven by the engine of competition, the companies would cut costs and improve services. Above all they would listen to what their customers - that's us - wanted. Market forces would be cost-effective and responsive in a way the public sector could never be.
Now we are all in that world and it looks different from the brochure. People in Britain wait on privatized stations for trains that are late, overcrowded and dangerous. People in California suffered months of blackouts and skyrocketing electricity prices while private power companies made a killing. The Argentinean economy is a wreck - partly as a result of unsustainable profits extracted from privatized services. Do we just have to live with two discredited systems? Or does the public sector offer better prospects of efficient, accountable services than we've been told?
Let's deal with the mythology first.
There have now been dozens of studies showing that the private sector is not, by definition, more efficient than the public sector. Some have concluded the private sector is more efficient and some that the public sector is more efficient. But most have concluded that there is no significant difference.
If we look at water services, public companies in the Netherlands, Japan and the US look to be more efficient than private water companies in France and England. 1 Electricity is another area where...