Outsourcing

Stephen Bainbridge talks about outsourcing disaster relief. His arguments are nothing new, but they are accurate. Link. Excerpt:

In the public sector, employee objectives tend to be defined around vague concepts of social welfare maximization that lack determinate metrics. In addition, because government compensation generally does not reward managers whose activities increase asset values or reduce costs, incentives in the public sector tend to be low powered. Civil service and other forms of job tenure make it difficult to discipline government bureaucrats who shirk. Finally, the public sector is subject to capture by rent-seeking interest groups whose private benefits from government regulation often are inconsistent with the public good.

In the private sector, by way of contrast, incentives tend to be much more high powered. The capital, product, and labor markets give corporate managers directors incentives to produce goods and services efficiently. Indeed, these high-powered incentives encourage private firms both to reduce costs and improve quality in a way that the low-powered incentives intrinsic to the public sector simply cannot match.