Do you think private businesses can do a better job than government of supplying water, sewer, and electricity to our community? Explain.

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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It is probably true that private business can do a better job of providing these things.  However, it is also true that public utilities do quite well in this regard and that there is no real need to rush to privatize.

In theory, private businesses should do better than public agencies because they have more of an incentive to do the job more cheaply.  If a public agency is given a certain budget for performing a given task, it has an incentive to spend the entire budget.  It gains nothing from saving.  By contrast, if a public company were assigned the task, it would have an incentive to save so that it could make a profit.

However, public utilities do well enough.  Even if private companies did the job, they would still have monopolies.  The government would still have to regulate them to ensure they did not abuse their position.  The public would not see a huge change.

Privatization might, then, give us some cost savings, but it would not result in much better performance in terms of delivery of service.

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