This article was originally posted on the RightVIEWS Substack.

What is government doing about it? The recent rise of the left brings up this question often. Governments should provide

• free vaccines, subsidized health care,

• unemployment benefits, job guarantee, job reservations,

• free education, education loan waivers,

• food stamps, farm subsidy, minimum support prices for food procurement,

• carbon-free, coal-free, non-nuclear free electricity,

• and what not.

Many, like me, point out that governments are very inefficient at providing services. The question is WHY?

Governments are saddled with additional costs.

When a government enters the fray, it is spending someone else’s money. Therefore we need to bring in accountability and we end up adding the following costs:

• Oversight cost: You don’t want people spending other people’s money without those people knowing if it was well spent. What keyboard should government buy? What computer? HP computer with Microsoft keyboard is cheaper than HP computer with HP keyboard. How should you spend for these items?

• Equality cost: The government must treat everyone equally. If there is a high performer who should be promoted against a non-performer? If two companies offer the government the same deal, but it has been observed that one keeps its word and other is sloppy can you choose the straight one? You need to justify these decisions with proper paper work (in triplicate with three different coloured forms – I am kidding of course but you get the idea).

• Fairness cost: The government must be fair. It seems weird but business are not fair – they expedite. To be fair, governments slow down. But then fairness gets traded. Some minister/senator may want a big manufacturing plant in his constituency rather than neighboring constituency.

• Due process costs: Everything must be done by approved processes. This is corollary of the various things above. For example, if you are waiting for a non-emergency surgery and some fellow gets ahead of you in line it will be a problem.

• Approval Costs: everything should be approved through proper channels. Some changes have to go to the level of Parliaments to get approved. These approvals comes in

Private Sector does not have those costs, they take risks with their own money, if they make mistakes they do not survive. Therefore, private sector is more nimble, lower cost and faster at servicing customers.

Then why not privatize everything?

Like everything we discuss in RightVIEWS, it is not that simple.

• We can privatize if there is bargaining power parity between the public/consumers and the private enterprises offering those services.

• Generally competition keeps the bargaining power imbalances in check. Thus we get better products at the best price. People vote with their money.

• However, in some cases enterprises converge to monopolies or duopolies or there is extreme concentration of private service providers. In such cases government has to step in to neutralize the excess bargaining power held by such entities. Thus when YouTube demonetizes people, they have no recourse.

• Therefore natural monopolies like highways, power plants and the likes are difficult to privatize. Any private entity that gets access to such assets tries to impose extractive prices on the people – (either in form of high costs or poor service).

In sum

Governments are good at some things. Private enterprises are good at others. WE must learn to differentiate between these two capabilities and choose wisely. There are however things that neither the government nor private sector can do effectively. We will discuss this in a later post. Please subscribe for more such posts.

Editor’s notes

Government Efficiency

Governments often face criticism for inefficiencies in providing services due to inherent bureaucratic processes. The necessity for oversight, equality, fairness, due process, and approval adds layers of complexity and cost to governmental operations. While these elements aim to ensure accountability and fair distribution of resources, they can slow down decision-making and implementation.

The private sector, operating with its own funds, tends to be more agile, taking risks and making decisions swiftly without the bureaucratic hurdles faced by governments. However, essential services like healthcare, education, and infrastructure often fall under the purview of governments due to their societal importance.

Central to the debate is the comparison between governmental and private sector efficiency. While the private sector thrives on competition and profit motives, which can result in innovation and cost-effectiveness, the government’s role often extends beyond profit-making to ensuring equitable access and social welfare.

Understanding the strengths and limitations of both sectors is crucial. Governments must balance accountability and efficiency while providing essential services, whereas the private sector must navigate competition and profitability without neglecting societal responsibilities. The challenge lies in finding the right balance between these two sectors to ensure efficient service delivery while addressing societal needs comprehensively.

Local Governance and Decentralization

Dharmic religions like Hinduism, Sikhism, Jainism, and Buddhism embrace decentralization and adaptability to local contexts. These religions historically allowed for diverse interpretations and practices, promoting a more flexible approach to religious worship and governance.

Decentralization in these traditions empowered local communities to interpret religious teachings based on their cultural, social, and geographical contexts. This adaptability fostered a sense of ownership and participation among followers, promoting community cohesion.

The absence of a centralized religious authority allowed for the evolution of diverse customs and rituals across regions. Hinduism, for instance, embodies a multitude of deities, rituals, and spiritual practices, each varying significantly from one region to another. Similarly, Buddhism, Jainism, and Sikhism emphasize personal spiritual growth and ethical living, allowing for interpretations tailored to local needs.

This decentralization encouraged dynamic interactions between religion and society, enabling these faiths to resonate with diverse populations across different historical periods. It showcased the strengths of adapting to local needs while preserving core spiritual values.

Temple Functions in Medieval Times

Historically, temples were not solely places of worship but served as multifunctional institutions deeply integrated into societal functions. They housed educational centers where subjects like philosophy, arts, sciences, and literature were taught. These centers contributed significantly to knowledge preservation and dissemination.

Additionally, temples acted as libraries and archives, safeguarding manuscripts, documents, and texts that held cultural and historical significance. Festivals, ceremonies, and cultural events were often organized in temple premises, contributing to the preservation and promotion of cultural practices.

Some larger temples provided community halls and kitchens that served meals to the needy or pilgrims, fostering community engagement and solidarity. Moreover, these institutions also operated as financial hubs, safeguarding wealth donated by devotees and managing vast lands and properties.

The accumulation of wealth, including gold, at temples was primarily due to donations by devotees, endowments, and the management of extensive properties. This wealth and influence made temples central to the socio-cultural, educational, and economic life of the communities they served.

Impact and Significance

The discussions encompassing government efficiency, decentralization in religious practices, and the multifunctional roles of historical institutions reveal a complex tapestry of governance, community involvement, and societal needs.

Both governmental and decentralized institutions possess distinct strengths and limitations. Governments play a vital role in ensuring essential services and regulating critical sectors, but they often face challenges of bureaucracy and inefficiency. On the other hand, decentralized systems allow for local adaptation and community engagement but might lack uniformity and centralized oversight.

The interplay between centralized governance and localized solutions is crucial in addressing diverse societal needs effectively. Finding a balance that harnesses the strengths of both systems while mitigating their limitations is essential for efficient service delivery and comprehensive societal development.

In summary, the debates surrounding governance efficiency, religious decentralization, and historical institutional functions shed light on the complexities and nuances inherent in societal organization and service provision. Understanding the historical contexts and principles guiding these systems offers valuable insights into contemporary governance and community participation.