Public sector seems to be the ideal solution for many of the
problems caused by capitalism. A complete conversion to public sector
enterprises would eliminate the need for business classes. Improvements in
equity in education would remove the distinction between the lower and middle
class. Thus, it has the potential to bring about nearly complete equality and
equity. If only public sector companies worked…
The difference in the efficiencies of public and private
enterprises is probably because of the funding. The sole purpose of a private
enterprise is to make profit. If the company does not make profit, the CEO gets
the boot. Thus, the CEO in his/her self-interest orders his/her staff to work
in a manner that will lead to profit. This command flows throughout the system
and everyone works in a coordinated manner towards a common objective. Profit.
Contrast this with the functioning of a public sector
enterprise. Public sector enterprises are not necessarily created for profit.
They are also supposed to ‘serve the people’ and ‘add value’ to their lives.
Hence they need to give value to the people. This requires money, which creates
a free flow of cash from the government’s coffers to the company. Also the goal
is not very well defined as ‘serving the people’ is a somewhat ambiguous term
and many-a-times public sector companies do what private companies do not, like
reaching out to sparse rural markets or running railway networks. Hence there
are no benchmarks to compare with and any amount of money may be demanded from
the government to fulfil the given task. There is also great political will in
overcharging the government as there is always money to be made from a cash
rich organisation (read: corruption). All this creates a total lack of
accountability for the head of the organisation, who is not interested in
having his/her staff working efficiently. Thus a sense of collective
irresponsibility spreads throughout the system.
This situation can be corrected by making the head more
accountable. For that one must define the goals clearly. While this seems to be
an easy enough task in today’s world of information and statistics, it is made
nearly impossible by the efforts of our competent political leaders. It is in
their interest to obscure issues, as corrupt activities are more easily carried
out when activities and goals are obscure and unclear. Hence, we must find a
way to force politician’s hands. This can be done by legislating a priority
list. A list that prioritises various governmental functions could largely hinder
nonsensical political interference. For example, a railway minister would have
trouble asking for money stating that it is a necessary public convenience given
that education and health are more important and railway can be a profit making venture. But this alone is not sufficient as
some areas such as health and start-ups genuinely need money. Thus, we need
sound statistical analysis of each area to determine which business can make how
much profit.
In short, one way to make public sector more successful is
to clearly define targets. This can be done by formally prioritising
governmental functions to determine where money needs to be spent and where
profits should be made. This should be accompanied by specific targets for the
enterprises based on sound statistical analysis that does not leave room for
subjectivity or political interference.
