Krugman: Spend Now, Save Later

[Squilliam]

HappySqurriel said:

Squilliam said:

I wonder how many people complain because the U.S. government is inefficient. Would the same issues be raised if the people here were from Australia for instance?

I’m from Canada, and while there are areas where our government does a dramatically better job (education), I see the same kinds of incompetence and inefficiency across all levels of government in Canada that plague the United States; and I believe incompetence and inefficiency is a characteristic of all governments.

Consider that when a private organization sees a reduction in income they have an incentive to improve efficiency to maintain the quality of their services in order to prevent their competition from stealing their customers. In contrast, when a public organization sees a reduction in income there is an incentive to become less efficient and to make cuts in the most noticeable way possible so that the funding will get returned. This is why teachers are always the first to lose their job (and often the only people to lose their job) when education funding is cut even though the cost of bureaucracy has been estimated as high as 33% of the cost of education in some systems.

Im from New Zealand and this is how we tend to run a government department. We have politician : appointed head (usually from the private sector) : Organisation as a whole. Many departments have been corportatised, we are one of the few places from what I gather which has a government owned businesses which turn profits comparable to publicly held private entities.

All large entitities have inefficienciencies. Theres a very good reason why companies have been moving away from the (in)corporation model for many years. There is actually very little difference in the potential inefficiency of a corportation which employs >10,000 people and a government department which does the same. The major problems come from when the politicians themselves either micro-manage or force their department to do this which are counter the best interests of running the department efficiently.

BTW from what I have gathered, in the recent history of my country the only cuts to education have come at the expense of management I cannot remember a single case where teachers have been laid off en-masse. At worst there has been a slow down/under-hiring of new teachers.