When the government does something, there is no profit margin built into the cost. When a project is privatized using the largely contrived argument of “efficiency,” contractors neglect to remind consumers that they plan to skim off 20+% in profits. The very nature of privatization is to add a middle man between public funds and public services. Of course there are inefficiencies in any government, but there is a systematic increase in the cost of public services when a profit must be extracted by an intermediary.
Discussion
Profits serve a function; they’re not dispensable costs. How are capitalists supposed to know what to produce to satisfy consumers, or what resources to use? How would they be incentivized to delay their own gratification to take a risk and invest in production? If we can save money by doing away with profits, can we also save money by doing away with wages paid to laborers? Can you give me an example of an economy that succeeded without profits?
I’m not arguing against profits at all. I am stating that the cost of a public service as provided by government is (labor + admin + materials). The cost of a public service as contracted out to a government contractor is (labor + admin + materials + profit). Contractors wish us to ignore the added cost to public services
The most common reason government agencies contract out work to private firms is to reduce costs.
The most common reason is not to reduce cost, it is to satiate the desires of the electorate. And the electorate are not members of the public; they are controlling members of corporations that sponsor elections and put people in office…for the sole purpose of winning those contracts