The irony of privatisation arguments

The irony of privatisation arguments is that the private sector will “make things more efficient” or deliver “higher quality services”.

There’s no doubt that from time to time, under certain conditions, private sector operators will do things better than their public sector counterparts.

But there’s no clear evidence at all that this occasional relative out performance justifies sweeping changes to how certain functions of government are performed.

The inability of many economists to rationally examine these sorts of contracts for the hidden incentives and unintended consequences within highlights the myopia that even an economist can’t escape when their livelihood depends on not highlighting the obvious to the public at large.

This isn’t intentional on their part – they’re just preaching from their ivory tower, like every other expert on offer in the media, unaware of the irony embedded in many of their proclamations.

Raw commercial experience makes none of these “unforeseen” goings on surprising. It’s patently obvious that the economics of contract law get forgotten by a lot of people who should know better.

It would be smarter for people to acknowledge that some public functions will never be “efficient” or “optimised” and move on to “problems” that can actually be worked through appropriately through public policy.