Private vs Corporate vs Public Enterprise

There is allot of Ideological rubbish in the debate about public vs private enterprise.
Let me state at the outset that I am not against private enterprise. In fact, I believe it is the backbone of freedom of the individual, and an effective vehicle for innovation.

In it's most basic form private enterprise is the sole operator offering his/her skills direct to the user. As the scale of operation increases we get partnerships and private companies. These businesses have direct feedback from the customer to the ownership. The owners are directly affected by the success or failure of their own efforts. The natural tendency is to good service at a fair price. This of course is no guarantee as, with every aspect of society, there are some greedy and shonky people involved.

I won't include joint stock companies (publicly listed companies on stock exchanges) as these entities are not strictly private enterprise. I will use the term "corporate." The owners of the business are normally not the operators/workers of the business, they are mostly anonymous investors who's motivating interest is profit. These entities attract the most rapacious individuals into management, who then strip as much remuneration as they can from the business, without any real risk. In fact we have seen many instances where some incompetent CEO and team totally ruin the business yet still end up with the "golden handshake." They also have a tendency to use their board positions to "buy" favours from the political sphere. How many companies have ex politicians on the board?
These structures have the ability to develop into immensely powerful, trans national, economic nodes. This creates distortion in the free operation of both the economy and politics.


Public enterprise has been under concerted attack by the corporate sector eager to get it's hands on the assets and the possibility of monopoly inflated profits. Public sector enterprises when properly resourced and managed have been a very cost effective deliverer of services. They have also been used to set standards for the private and corporate sectors, helping to reign in some of the excesses. They also have been used to train workers to a high standard, as quality was regarded as more important than cost cutting. Many of these well trained workers were then snapped up by the private sector. This training role has been undervalued in the private/ public debate. Public sector enterprise is also ideally suited for the provision of "caring" services. Health, welfare, education etc. In these requirements of the population, to have profit as the primary motivation of the provider, is to virtually guarantee cost cutting leading to poor service provision. Too few nurses to do a proper job, poor facilities, heartless administration, etc, etc. We hear of these atrocities all the time.
Unfortunately most of our Governments have been captured by the Corporate Sector and are busily selling off all the best public assets, often way under value, and underfunding the rest to prepare the public, through discontent with the declining service, for the inevitable sale.

 

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Comment by steve davies on January 23, 2011 at 12:50pm
I could not agree more. The other part of the equation is that there is a tendency among public service leaders to regard advice from private sector consultants as superior to that they receive from there own people. Over time this has become something of a self fulfilling prophesy.

Sure the public and private sector should work together. I have worked with many private sector consultants over the years and have found them to have a clear social conscience on a lot of issues.

My view is that we should not be surprised that when the private sector receives a signal that says public services are costs (liabilities), that they try and turn them into assets (profit centres).

Schools struggling, the health system under strain, public transport a mess and even problems with energy production. Something is clearly fundamentally wrong when the place struggles with the basics despite ever increasing fees and charges going into State and Territory government coffers.

All those in favour of governments providing effective free basic services to all citizens raise their hands!

Have not thought about it in any depth for years, but maybe the whole issue of how the public and private sectors work together to deliver services needs revisiting. And maybe we need put a dollar value on the social impact of what is, all said and done, poor delivery.

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