Private vs. Public Sector

Economists and historians have long documented the effects of centralized control on the economy in places like the old Soviet Union. These included hardships like bread lines stretching around the block, inefficient production and massive shortages of all kinds.

Americans rarely have to put up with such things, but almost all of the exceptions have something in common: They exist in areas where government has a monopoly.

My fiancée confronted just such an example. After graduating from college last spring, she had hoped to become a substitute teacher. Last summer she applied for a teacher's certificate through a state agency (not here in Michigan), thinking it would be delivered in time for the start of the school year in September. Days turned to months and despite repeated calls, it took more than half a year to finally get word that the agency had misplaced her application, forcing her to start over. But those six months had eaten up most of the school year, and now she is preparing to join me in Michigan.

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In this state, the process for becoming a substitute teacher is more decentralized. Many who get their license apply through placement services, like the Professional Educational Services Group (PESG). This entity's standards are higher than those of many states, because the group wants a reputation for providing good teachers. Along with the application, education history, list of previous employers and other standard candidate requirements, PESG also requires applicants to take a one-time class on effective substitute teaching.

In contrast with the government agency that lost her application, when my fiancée applied at PESG, she had a response in less than six days.

Admittedly, this is an anecdotal example, involving a function that doesn't affect many people. Yet when dealing with government agencies like Social Security or motor vehicle bureaus, experience suggests to most people that they should be prepared for long lines and slow service.

Yes, there are private-sector operations subject to the same dysfunctions, but not surprisingly they tend to be ones where the government exercises a large amount of control, like health care. In contrast, few complaints are heard from supermarket or consumer electronics customers.

What accounts for the different experiences? Competition. Unlike governments, competition forces private entities to continuously strive to improve service and value by adopting innovations and becoming more efficient. Those that don't eventually fail and go out of business.

Go out of business — that's not a risk for government entities. So we shouldn't be surprised that dealings with them are characterized more by disappointment than delight.


Jarrett Skorup is the research associate for online engagement for Michigan Capitol Confidential at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.