Your company isn’t performing at a “reasonable competitive level.”
“I know!” You think, “I’ll just go out and extort money from uninvolved individuals so I can reduce my operating costs!”
Sounds crazy, right? Well, that’s one of many reasons government cannot be compared to business as “competition.”
When a government program proves to be too expensive for those using it, the government “bolsters its existence” through taxation (taking typically from uninvolved individuals and supporting the “underperforming product or service” with the resultant “revenue.”)
To be clear, that’s not always how it works, sometimes, the answer is to borrow money to keep such programs afloat. Obviously, that’s much better (most particularly when you’re borrowing from foreign countries, who can use the lending of funds as a lever to advocate for their desired ends where your country is concerned).
Another solution? You can take money from one program and use it to support another (shorting the original program in the process).
And when that’s not enough, we can move to the “quantitive easing” solution. “What’s that?” you ask. That would be where we print money and hand it out to folks, acting like it had the same worth as it did before we “flooded the market” with more currency.
At this point, it should be pretty obvious, that government can never be viewed as “competition” to private industry. Don’t worry, it gets worse.
When a company finds it has overpromised and/or undercharged based on its ability and the associated cost, there are precious few remedies. You can up your cost. You can lower your quality. You can attempt to find some other means to cut costs—like reducing employees wages or hours. Finally, you can cease doing business.
I’m not saying there are no other solutions, but these are the most significant and “reasonable” ones.
Of course, you can try to do things like, cheat people! You can also try to up-sell folks (make it so you charge them more for supposedly better products or service). I’m sure with a little thought, I could find creative ways to keep a business afloat. Would they be legal? Certainly some of them would.
Would they be ethical? That’s another matter, and again a small percentage might be.
Government doesn’t really have these challenges. Why not? For a number of reasons.
To begin with, government goods and services are generally not coupled to cost. You don’t ever have to worry about staying on budget if you use money you don’t have (as indicated earlier in this piece).
Additionally, as a rule, if someone is using your good or service as a private entity, the second you promise what you cannot deliver, you can count on them at least considering taking their business elsewhere. When, on the other hand, your “customer” is “at your mercy” (a thing that’s generally true for government programs), you end up being the “only game in town.”
If you’re not, though it may take a while, people will go elsewhere if they can. In the meantime though, since you’ve convinced people that the government will take care of their needs in a particular situation or circumstance, they come flocking to you, not considering the result to the private entities that have been providing in that space.
The result is obvious. The “private” market shrinks, not having the “customers” it had before the government stuck its proverbial “nose under the tent flap.”
Depending on how things are done, that market may entirely disappear.
What happens when it becomes “unfashionable” for the government to provide the requested good or service? People are, to a large degree, “left without.” The long term effect is that the private sector steps in, to supply what the government no longer does. In the meantime though, people must suffer the need (and there can be consequences that are between inconvenience and horrible adversity in the “transition period”).
Nowhere can this be more readily seen, than in the collapsing states of the former Union of Soviet Socialist Republics at the time of that entity’s dissolution.
Virtually nobody who dealt with the USSR’s government solutions, would have called them good, much less superb or wonderful. That said, the supplied goods and services—such as they were—existed. When the governments in question came tumbling down, the things they supplied, ceased to be available (at least in any simply or easy manner).
By comparison, if Ford stopped making cars, where a portion of the World’s population would be put out for a time, there would be competing auto makers to “fill the void.”
What about those folks who had Fords? You can bet there would be people who would repair and maintain those vehicles, and manufacture aftermarket parts (some of which would have been long in place).
Jobs and equipment from Ford’s factories? You can be sure they would be “gobbled up by” competitors, or others who were able to “use” them.
When government fails, this is typically not the “way of things.”
Part of the reason for this, is that when government takes over some piece of the “production of things,” as has been previously stated, they “hide the cost of doing business” by “robbing Peter to pay Paul.” Put another way, they can show the cost for something in the revenue taken in for that thing, while using money from other places (read here, “Places like Social Security”) to pay for what the anticipated or actual incoming monies don’t “cover.”
By doing this, governments seem to be providing the “same product for less money.” But that’s not the reality.
Another problem, is that it behooves captains of industry, as well as those working under their direction, to become experts in that which they support. They learn hard lessons, and they learn them quickly, else they don’t survive (if for no other reason than the competition of others).
When government takes over such endeavors, they need not be so concerned. They come to “own the space” with nobody else able to compete.
By way of quick example. Running a daycare in the place I live, more or less requires you avail yourself of USDA supplied food. Why? If you don’t you must buy sustenance, and pass the cost on to parents and guardians. The result? The USDA “owns that market.” Among other things this means, it mandates what daycares can do and say—how they may act. Fail to comply? Lose USDA “support.” This is the reality.
Can one really talk about the private sector “competing with” government entities? You decide! I know my answer. It’s a solid, “No.”
Thanks for reading, and may your time be good.