The real difference between private- and public-sector production

[ClaytonB]

Bob Murphy says it spectacularly:

In Mises’s view, the fundamental superiority of the market economy over socialism was not that entrepreneurs happened to be bold innovators, while government bureaucrats were dull yes-men. No, the problem was an institutional one. In the market economy, the factors of production are privately owned, which allows the generation of market prices for every unit of every resource. Thus people in the private sector get immediate and constant feedback on the success or failure of their operations. There is nothing analogous in government, because its “customers” cannot withhold their purchases if they don’t like the “services.”

I think that the caricaturization of the free-market view as a simplistic platitude that private-sector entrepreneurs are “just smarter and bigger risk-takers” than government bureaucrats who are “boring, dull and overly careful” really plays into the hands of statists. It suggests that any sort of occupation which ought to be boring, dull and provided by overly-careful people ought to be monopolized by the State. Which occuptions? Oh, how about law, national defense, banking, insurance, medicine… just to name a few.

It’s important to grant that even if government bureaucrats are smarter than everybody else, even if they could overcome institutional stasis and take necessary risks, even if government bureaucrats had the jump on creativity, they could still not calculate how much of what to produce in the absence of the price mechanism.

Clayton -

[Gero]

What I dislike is how this argument, like other sound libertarian arguments, is ignored by government advocates.

[Autolykos]

Well, from what I can tell, most government advocates don’t really care about the big picture. They care about “What’s in it for me?”

Edit: To respond to the OP, I think the issue isn’t about calculation so much as it is about supply and demand. After all, as Dr. Murphy writes, government is mandatory on the part of its subjects. Hence demand is effectively out of the picture. And if demand is out of the picture, there’s no way to estimate how much supply at what price(s) is enough to satisfy the demand…

On second thought, that’s probably what is meant by “calculation”. I tend to think about the word in the sense of math.

[Bill_Smith]

It’s important to grant that even if government bureaucrats are smarter than everybody else

If they were smarter than everyone else they wouldn’t need to create a monopoly by force and require that everyone else buy their product.

even if they could overcome institutional stasis and take necessary risks, even if government bureaucrats had the jump on creativity, they could still not calculate how much of what to produce in the absence of the price mechanism.

Risk? What risk? They are able to run deficits to infinity and are not bound by a profit margin or competition. The only creativity they show is new and improved ways to force payments.

You know I watched some “talking head” from a government union the other day as he was trying to justify the fact that government workers made twice as much as their private industry counterparts. He made the assertion that these workers were better educated and more productive. You have to wonder what alternate universe these these pompous jacka$$es live in. Does he even realize that it is these private industry yokels that sign his check? If these people were not more creative, more productive and more capable of managing risk his check would bounce. Without the element of force government services would cost half as much. Of course then there would be a flood of super intelligent super productive ex government workers in the market. I’m sure they’d be able to convince willing participants in a free market that their shoddy services are worth twice as much.