The problem with the public sector is the private sector

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In case anyone thinks that I believe the FT a purveyor of all that is good, think again. They published an absurd article by Jonathan Guthrie yesterday on supposed inefficiency in the state sector. He gave these examples:

Meanwhile, evidence of public sector profligacy is mounting as damningly as the expenses claims of a corrupt media baron. This week, the Commons public accounts committee reported that the government is spending a jaw-dropping £2.3bn in administering £4.1bn in compensation to sick miners. Last week, taxpayers learnt they were paying GPs 58 per cent more money to work fewer hours.

If that's the best he can do he's in deep trouble. The £2.3 billion charge relates to the costs of private sector solicitors, some of whom have submitted fees of over £100 million for working on miner's claims. This is not an example of public sector inefficiency as a result. It is an example of private sector greed and inefficiency.

As for GPs, the rise was for a simple reason. GPs were leaving the service fast and others would not join when what was on offer was £70,000 a year for a 55 hour week with one night in 4 on average being spent on call (an usually out in the community) on top of that. And very few realise how many nights a year GPSS lie awake worrying about their patients. I do. I live with one. Few other professionals face that stress. So this increase was a simple reaction to market forces, not a sign of inefficiency.

The fact is, the state sector is often more efficient than the private sector. The mistake on miner's compensation was to allow the private sector to handle this. It could have been done so much more efficiently in the state sector. It's not less public sector we need, it's less public sector out-sourcing that we really need. Many of the disasters of the last decade, from IT to creating market mechanisms in the NHS are all based on the false idea that the market knows best.

It doesn't, not when there is no market. And for many things there never will be a market either because we cannot afford the excess capacity (for which, read waste) that market choice requires or because the state sector is supplying public goods. And they're untradeable precisely because the external costs and benefits of them cannot be measured by market mechanisms.