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Show A THE VOICE OF BUSINESS ' v Bead incentives 1 bead decisions By Richard L. Lesher, President Chamber of Commerce of the United States Years ago, the advocates of the welfare state used to argue that the government could perform many tasks more efficiently than the private sector. They spoke of economies of scale and the superiority of planning. Today, few would seriously contend that government at the federal, state or local level can compete with private enterprise for efficiency. The evidence is too overwhelming in the other direction. More and more cities are contracting contrac-ting our services to the private sector and discovering that the costs of garbage gar-bage collection, road repairs, and even fire protection can be cut in half or more. Other contrasts between government and the private sector are equally stark. Compare the privately owned United States telephone service with its state-owned counterparts in any nation. Or privately owned farms in America with the miserably inefficient ineffi-cient Soviet collective farms. But we don't need to take out our pocket calculators to see the greater efficiency of the free market. Simply take a walk through city hall or call a government agency for information. Contrast that w ith a private business. Case closed. Okay, so even liberals admit that government is inefficient. The interesting in-teresting question here is why. I submit that it is a question of incentives. The incentives for business are both carrot and stick. If one is innovative and finds new and less expensive ways to provide the public what it wants, the financial rewards can be great. The penalty for excessive costs, sloppy quality or an inability to adapt to a changing market is early retirement via bankruptcy court. The incentives in government, however, are perverse. They reward failure, empire building and excessive spending. A government employee's status, salary and pension are based, not on his or her efficiency, but on & -number of employees he supenss 2 and the amount of taxpayers' rco- .. that passes through his office. Bui: .'' your empire, get a raise. ( If a privri . businessman hired more emploveg Z, than necessary, the extra cost ". price him out of the market, i Incentives in government work is: ;: actively reward failure. -z Let's say you have just beenfc; -charge of an agency designee -j i eliminate poverty. You h-; -j. employees. Billions are spent. Yet: 1 poverty increases, this becoces z - argument for hiring more bureacs :-and :-and spending even more of the z : payers' money. The program be :: failed you are promoted. - On the other hand, if you :: eliminate poverty, you and yr -friends would all be out of a jet x now you know one of the many res:s : why the poverty standard is ci- ; tinuously raised.) - Government "incentives'" als -a-courage wasteful spendir.g. Ii y:c agency spends its annual baie:; three months, the solution is cler You need a lager budget. It ;:c neighbor who produces widgets 'I '-e 1 private sector did this he woulcSf of work. Also, the stories are !ep: 3 bureaucrats "unloading" their tej?-in tej?-in the final days of the fiscal vers: . that next year's budget won't be:. The government simply lacks i : discipline of the marketplace Eve- -day businesses that fail to prp"- : what consumers want at a price will pay go out of business. Yet- e was the last time we heard of ageven- : ment agency closing its doors' On the individual level, err.pl:; in the private sector who do no; form are fired. Governr.--employees, however, are virtual - : possible to fire. Because of these struct:-'- ' disincentives, those services that'.' -' be performed by the private se- : should be contracted out. or pm -ed. Service would improve. would fall and the tax burden c- : reduced. The time to start is no -government simply isn't getti" more efficient with the passing , FUSI S AND SWI1CIII S K. a it S.iluul.'v .it thr l1'-'" whtrh hirw out S,it in d.iv. Ic.ivim: the1 |