It has been GOP Gospel since Reagan that the government is an inefficient spender of America’s tax dollars, therefore nearly everything should be spent through the private sector vs. the public sector. Private companies are much more efficient, therefore, having the government hire private companies to run prisons, run schools, even carry out military operations, is the most efficient way to spend America’s tax dollars.
Well, to borrow from Joe Biden, that’s a bunch of malarkey. Here’s why…
The only thing that matters when considering the efficient spend of a $1 of tax money is “how much of that dollar goes toward providing the service, serving the citizens.” So, let’s break that down:
I’m going to assume that the private sector operates 3 TIMES more efficient than the public sector. Private companies also are inefficient – think how many times you complain to your co-workers or spouse about something stupid and wasteful your company does – but this assumes the government is 3X worse (go ahead and make it 4x if you prefer. That’s fine with me.).
If WASTE is all that is taken from each dollar spent on providing citizens services, then the GOP claim would be true – for example, $0.90 of every dollar spent by the private sector would go towards providing the service, and only $0.70 of every dollar spent by the public sector would go towards providing the service (Public sector 3X less efficient than public). But we all know that isn’t all that comes out of every dollar.
Let’s start with PROFIT in the private sector. That is a piece of every dollar that is diverted from providing services into the pockets of wealthy stock holders (the top 20% of Americans own 80% of stock). The profit margins by industry are in the charts below.
Next is something I call “PROFIT MOTIVE.” This is more subjective, but it is real. An example is when a private company building a road chooses the cheapest parts and source materials because their #1 MOTIVE IS MAXIMIZING PROFIT. If the road needs repair sooner because they lowered costs, that will add more profit sooner also, as they get hired to do the repairs. The Public Sector has no such motive – their #1 MOTIVE IS TO SERVE CITIZENS.
Taken all together, the amount of every tax dollar spent by private corporations on actually delivering for citizens, is nearly always LESS than when the same dollar is spent by the government – the GOVERNMENT IS MORE EFFICIENT.
There is one last element to consider – when private companies profit from public tax dollars, they then invest some of that into lobbying in order to change laws and rules that allow them to MAKE EVEN MORE PROFIT (often at the expense of small businesses). This expansion of corruption into the workings of government hurts every citizen.
Examples of all industries and some key industries are below.
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Patrick On Politics 