It seems every year a disastrous fire makes its way through Southern California, scorching earth and leaving hundreds of people without homes. Last year was no different. In October 2008, fires ran the destructive gamut, from earth, to home, to Yorba Linda, CA, where the damage to homes was particularly acute. The public Water District there failed to provide the fire department with the resources it needed—resulting in considerable preventable damage. As firefighters struggled to contain flames, they discovered that the water either lacked adequate pressure or, in some cases, there was nary a drop.
There has been a public uproar following the incident. Something went wrong, and so someone has to take responsibility. The problem is: who is at fault? Was the water shortage foreseeable? Was it preventable? And whose responsibility was it to foresee and prevent it?
One reason there has been so much debate and difficulty assigning blame is that the Water District is a public sector monopoly, not a private company. The Water District is, at root, the State taking on the responsibility to provide water to citizens in that area—while forbidding competitors by law. By what standard do we judge the actions of a State monopoly that exercises total control over an industry and assumes total responsibility?
In the public sector, questions of accountability are inherently difficult to answer. No other competitor provides a standard by which to hold them accountable because there are no other Water Districts or businesses in the area. The Water District is the only option. The undisputable fact is that the citizens of Yorba Linda must pay, and have nowhere else to turn, regardless of its mistakes.
Could a private sector water company have made the same mistake? Yes—the mistake itself does not necessarily indicate negligence. But the fact remains that the Water District is, by law, the only merchant available to anyone who wants to obtain water in Yorba Linda. The State has, in instituting such a monopoly and endorsing the Water District, taken upon itself the responsibility of providing water services—including anticipating problems such as the shortage that arose. Rather than giving people the freedom to choose, as the market does, the State requires people to utilize its service—and in logic, however it denies it, invites people to hold it to whatever personal standard they wish.
Therein lies the contradiction. On the one hand, the public sector by necessity accepts total responsibility. On the other, with its bureaucratic hampered, monopolistic menacing, it holds no real accountability. When a public sector business fails to do its job, not only do we have to accept it, but its failure doesn’t necessitate change, repercussion and/or remorse. We’re stuck relying upon the fateful mercy of a government-run business, regardless of whether we deem it worthy or not.
Contrast this with the private sector, in which a business’ success is determined by its ability to satisfy its customers. If it does not do so, it will not have customers for very long. An important aspect of satisfying customers is to anticipate potential problems—such as shortages. Failure to do so can be the difference between success and failure.
However well-intended some public sector businesses may be—and no doubt, specific employees may be incredibly well intended—by its very existence such a business circumvents the process by which a consumer judges the performance of a producer; that is, the consumer retains no meaningful means of input or assessment. We are forced to play the part of consumer even when the producer doesn’t provide what we think he should. Whether or not a private sector company would perform the same way in a given situation, the fact remains that in the private sector, consumers can choose, and new competitors can step in to fill the gap. Choosing to buy an old car that might break down is fundamentally different from being forced to purchase a State car that breaks down in exactly the same way. With the former, we have a choice to purchase another, better car, but with the latter, we’re stuck with a car that keeps breaking down.
But the truth of the matter is private sector companies perform far better on average than their public sector counterparts. Government-run, public sector businesses notoriously fail to deliver. Step into any post office or local DMV and you’ll find countless reasons to criticize, moan or simply bang your head against the wall. The inefficiencies are glaring. Yorba Linda residents saw this first-hand. They had no choice in the matter. Remarkably, concerns and complaints piled up prior to the October fires, noting the need for a reservoir they paid for, but never received. Tragically, the Yorba Linda residents found out what it means to be customers of a government-run business.
With the government now on the march to buy stakes in banks and automobile companies, it’s a lesson we should all learn quickly. Let us shed the belief that the public sector can be held accountable in any meaningful way, and insist that the government get out of the business of running businesses.
If you’d like to learn more about private versus public sector, read this article
from The Objective Standard that spells out the alternative.
http://www.theobjectivestandard.com/issues/2008-summer/property-rights-electric-grid.asp