Wednesday, May 20, 2009

Why government can't run a business

In today's Wall Street Journal John Steele Gordon has an op-ed that hits the nail on the head and explains why government shouldn't be trusted to run any private enterprise. All we have to do is look to the past to see that nearly every time the federal bureaucracy gets close to running something once managed by the private sector, disaster is sure to follow. Why Government Can't Run a Business - a must read.

Here are some clips from the op-ed:
When the federal government nationalized the phone system in 1917, justifying it as a wartime measure that would lower costs, it turned it over to the Post Office to run. (The process was called "postalization," a word that should send shivers down the back of any believer in free markets.) But despite the promise of lower prices, practically the first thing the Post Office did when it took over was . . . raise prices.

Cost cutting is alien to the culture of all bureaucracies. Indeed, when cost cutting is inescapable, bureaucracies often make cuts that will produce maximum public inconvenience, generating political pressure to reverse the cuts.
Capitalism isn't perfect. Indeed, to paraphrase Winston Churchill's famous description of democracy, it's the worst economic system except for all the others. But the inescapable fact is that only the profit motive and competition keep enterprises lean, efficient, innovative and customer-oriented.

Posted by: Press Secretary

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