Government Vs. Business

John Steele Gordon has a great piece on the differences between government and business, which gives seven reasons why government can't run a business. It's a brilliant summary of the public vs. private sector contrast that is the heart and soul of this blog. Well worth reading.

I have two favorites. First, government is a monopoly, and virtually never faces competition, thus voiding the most powerful force driving capitalism toward greater efficiency. Second, Government is regulated by government:

When "postalization" of the nation's phone system appeared imminent in 1917, Theodore Vail, the president of AT&T, admitted that his company was, effectively, a monopoly. But he noted that "all monopolies should be regulated. Government ownership would be an unregulated monopoly."

It is government's job to make and enforce the rules that allow a civilized society to flourish. But it has a dismal record of regulating itself.

Another great tidbit from this piece, for which I couldn't find the source:

In 1913, for instance, thinking it was being overcharged by the steel companies for armor plate for warships, the federal government decided to build its own plant. It estimated that a plant with a 10,000-ton annual capacity could produce armor plate for only 70% of what the steel companies charged. When the plant was finally finished, however -- three years after World War I had ended -- it was millions over budget and able to produce armor plate only at twice what the steel companies charged. It produced one batch and then shut down, never to reopen.

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