26 March 2005

Public Service Efficiency

Is the public sector hugely inefficient? Yes, the public sector is hugely inefficient. Why is it hugely inefficient? Because it is very large, and has been very large for a long time, which means the organisation has its own inertia beyond the control of those whose money it wastes. But what about large private-sector organisations, why don't they get inefficient? They do, but once they get inefficient, they either subsidise their inefficiency from state support or monopoly rents, or else some asset stripper buys in and chops huge chunks off them until they're small enough to be made efficient, or a "new broom" manager does the same thing to pre-empt the private-equity artists from doing the same thing.

Can taxpayer money be saved by cutting out waste? Yes, it can. Without cutting services? No, it can't. The only way to cut out the waste is to cut whole organisations down to a size that can be controlled and made efficient.

Does that mean that every discussion of economic policy in the media is about as relevant to real life as Celebrity Strictly Come Dancing? Yes, it does.

Today's statement of the bleeding obvious, brought to you by Anomaly UK.

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