Does this mean countries should privatize companies like Ethio Telecom (in Ethiopia), or can government-owned companies work well if they are properly managed?
I would say as a general rule it's far better for these services to be privatized rather than for them to be left to the control of the government. One important question to ask is how do you evaluate whether or not they are "properly managed" without a system of profit and loss that can only come from the market process.
Not only is it hard, I'd go as far as to say that it's virtually impossible to measure. The only way to know these things is for markets to be allowed to function so competition, profit, and loss can help reward those who do well. But, under government control you end up with a monopoly provider as well as a no true prices for what's being provided.
Does this mean countries should privatize companies like Ethio Telecom (in Ethiopia), or can government-owned companies work well if they are properly managed?
Hi Briole!
I would say as a general rule it's far better for these services to be privatized rather than for them to be left to the control of the government. One important question to ask is how do you evaluate whether or not they are "properly managed" without a system of profit and loss that can only come from the market process.
That makes sense. It's definitely hard to evaluate. It’s harder to tell if a service is actually being run well.
Not only is it hard, I'd go as far as to say that it's virtually impossible to measure. The only way to know these things is for markets to be allowed to function so competition, profit, and loss can help reward those who do well. But, under government control you end up with a monopoly provider as well as a no true prices for what's being provided.