It is clear to anyone not blinded by ideology that some problems are best handled by letting private for-profit organizations deal with them and others cannot be solved by private enterprise. Creating and selling toothpaste, clothes and consumer electronics are not areas the government should be involved in. The products are manufactured and distributed as a matter of routine and are easily exchanged for money from the end users. For larger products such as automobiles lenders can establish systems of payment that are appropriate for those who need those items. No one dies because those goods and services are not provided as a matter of Right.
Providing military defense, police and justice services and gathering standardized date on the entire population are functions best handled by government because those functions cannot be turned into commodities which the end user can easily be charged for. This includes social infra-structure like building and maintaining roads, bridges, port facilities, levees, dams, etc.
Managing a city and a large region fit into the government category. So does planning and preparation for disasters, natural or man-made. Which brings us to Katrina. The problem with protection from a hurricane, evacuation ahead of it and recovery after it is that it requires close coordination, a lot of preparation work, the training and developing of a professional corps of recovery workers, and it all has to be done on a massive scale which is larger any private organization.
If a hurricane or earthquake were a regular and predictable occurrence, then it might be possible to let a private organization charge subscription fees and offer preparation and recovery services. Such an organization would be an insurance company. The problem is that any expenditures for preparation and for maintaining infrastructure would not be supported voluntarily by all of the population getting the services. This is the "Free Rider Problem."
The "Free Rider Problem" alone kicks the situation into one that requires government (with taxing power) to handle it. It fails just as subscription fire departments in cities failed. A fire department can't just let non-subscriber's property burn down because the fires will jump to the property of subscribers.
The next problem is the cost of preparation for an uncertain but massive event. Rick Perlstein discusses that in today's edition of "Conservative Failure."
Conservatives in government ignore warnings that are likely to cost a great deal of money and may or may not come true. In a private business the managers define the market they will serve and then focus on that market to the exclusion of other subjects. This permits tight focus so that the market can be served at the lowest possible cost. It does have the negative that it sometimes prevents top managers from recognizing other opportunities, but private businesses are small enough that if one organizations ignores a market, another will very probably serve it.
Governments are monopolies. They don't allow competitors. [This is necessary, but I will not discuss why here.] They cannot define a limited group of people to be their market and serve only that group. Governments are responsible for everyone withing their borders, and to some extent, for citizens outside their borders. This is not a choice, it is by definition.
The tight focus on a limited market that permits private enterprise organizations to limit costs and serve only those who are easy to serve is an impossibility for government bureaucrats. The problems dealt with by government are also, by definition, those which private organizations cannot handle effectively.
At this point, consider what it means to be efficient vs. to be effective. An organization is efficient as long as it provides output at the lowest possible cost. Serving only the easy customers and focusing on the process of serving them allows for efficiency.
An organization is effective as long is it performs the most important tasks, regardless of cost.
Government cannot choose which customers to serve most cheaply. It must serve those who it is most important to serve. When a few people reached Canada a few years ago with a very infectious form of influenza, they had to be isolated regardless of what it cost to find and isolate them. The problem was of uncertain size and seriousness, but clearly of great importance. It was too large to be handled by private business organizations, even assuming they could afford to throw the resources necessary at the task. Also, there was no room for an individual who might have the flu to tell government to leave him alone. Free riders are not allowed in Public Health problems. Public health is for this reason a government function, not a private business one.
People who think that the private enterprise model should be the model used by government organizations as well simply don't realize what they would have to give up.
If you haven't already done so, go read Rick Perlstein's description of the conservative failure to deal with Katrina. It's important.
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