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Dogma Premise # 24

Government can never be as efficient as a private actor because there is no profit motive to ensure that government workers be as efficient and effective as possible.

Dogma Premise #24 proposes that the profit motive is required to ensure that workers are as efficient and effective as possible, and there is no profit motive for government work, and therefore govern workers can never be as efficient as private workers.

This one sounds so logical it’s hard to believe that it’s just plain wrong.

But it is wrong.  They key is this: efficiency in organizations of all types -- private, public, and non-profit -- is driven by budgets.  Departments, Divisions, Teams, and Projects are given a budget and a goal, and are required to deliver predetermined results, on a particular schedule, within a particular budget.

If a senior leader believes that the organization could be or should be more efficient, the normal approach is to reduce the budget but tell the organization to nonetheless achieve the same (or better) results.  This happens all the time in every major corporation in the world, and indeed in all large organizations of all types.

From the Capitalist’s viewpoint, it is the profit motive that inspires the budget cut that drives the efficiency, because the organization’s owners get to keep whatever efficiencies are found, so they are predictably keen to squeeze efficiencies throughout the organization.  This is mostly true in corporations, despite frequent gaming of the system (e.g., managers may intentionally build excess funding into their budgets so that they can more easily respond when more senior managers issue budget challenges).

However, there is absolutely no reason to believe that profitability is the ONLY factor that can or will drive budget efficiencies.  Governmental agencies at all levels in all jurisdictions are far, far more experienced at dealing with the forced austerity of budget cuts than any large corporation.  When tax revenues are reduced, either due to declining economic circumstances, broad tax cuts, or simply a reallocation of budget priorities, government organizations get the same iron mandate, and historically much worse.  If you ever compare the expense allowances, travel budgets, and supply allotments for government employees versus their private sector counterpart, you’ll quickly realize which is the experienced low-cost provider.  Government employees often aren’t even allowed to use a photocopier or printer.

The universal tool that drives organizational efficiency is the budget, and budgets may be squeezed in any type of organization (e.g., private, government, non-profit) for any variety of reasons -- both responsibly and irresponsibly.  Private actors do not have greater incentives to cut budgets than other types of organizations, and indeed often feel less duress.

Government can be every bit as efficient as private enterprises, using the exact same technique that private enterprises use, any time efficiency is desire, for any reason, or for no reason at all.

In sum, organizations of all sizes have many incentives to accomplish as much as possible with whatever resources are available. Private profits are one reason to impose budget austerity, but there are many others, too, and there is no reason to suppose that government is less willing or able to squeeze budgets. If anything, experience suggests just the opposite.

Dogma Premise 25

All Dogma Premises

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