the blurry line between government and corporations
by Boris Glebov
Published: February 25, 2008
There are two common misconceptions that always irk me. The first is that private companies always do it better than government. The second is that free market economy is in all cases better.
Why are private companies not more efficient than government? The problem here is not political or economic ideology. It is the size of the organization. A 2003 paper by Dunbar and Hill, two UK researchers, reports that mean size of a social network for a human is about 125 people. This means that if you are a part of a company (or a government office) that is more than 125 people, its structure is too large for your brain to handle. Parts of company for you become remote and abstract. That is, you stop caring.
Couple this with the common Office-Space-type corporate setting, and you will see that what kills efficiency of any large organization is its sheer size and lack of managerial insight. This disease affects both the private sector and the government, of course, since for the person in the middle it probably makes no difference whether his bosses were elected or not.
There is a stark example of corporate stagnation right in front of you. Look at your own computer running Microsoft Windows. A free, open-source Linux system can do just about every task you want, all the while using less than half the resources that Vista requires to just barely run itself. Yet, Microsoft is still here. It is dysfunctional and lacking insight, but its market presence is so dominant, that it will not be unseated any time soon.
Proponents of free market say that the economy will always correct itself - a free market is more open to innovation, therefore it adapts to every situation. However, large companies are favored in many cases by the economy. Their rise is inevitable - just look at the early twentieth century in the United States. The behemoth will then use its financial weight to retain dominance by crushing upstarts, not furthering innovation. All the while, it will be sinking further and further into a bungling bureaucracy, thus actually degrading the economy. This is why there is not a single industrialized nation without anti-trust laws.
Ironically, both free market and completely state-controlled economy end up in the same situation - oversized, self-perpetuating bureaucratic mess.
A healthy economy - and a healthy state - offers ample opportunity for progress and innovation. Stagnant entities unable to effectively serve the people are pruned away by choices made by consumers and citizens.
A solution follows quite logically, then. A rejuvenation of the system and clearing out of the stale management - be that careerist politicians or incompetent and self-obsessed corporate leadership - should be the goal of the electorate. Our economy must be a fertile ground for new enterprises and a hostile territory for aging bodies unwilling to change, maintaining their position at a dire cost to consumers and citizens. Our politics must be the domain of forward thinkers and able professionals, not mere executors of office duties.
A solution to our economic crisis lies in a thorough reform of tax and commerce laws, and a subsequent faithful enforcement of these laws, especially the ones designed to foster competition and protect consumers. It does not lie in a pittance of an individual allowance.
These are the unglamorous yet momentous tasks that our elected officials should be taking on with full vigor and passion.
This should be one of the flags of our electoral revolution.
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