Government Can be More Efficient and Effective Than Private Enterprise

Contrasting my Florida DMV with Starbucks.

Just the name “DMV” can be enough to make people groan with apprehension. The reputation of motor vehicle registration offices in the United States is not good. Their infamous sluggishness and bureaucracy has made them the butt of jokes from The Simpsons (“Some days, we don’t let the line move at all.” “We call those weekdays.”) to Zootopia (where the agency is staffed by actual sloths). The internet contains endless DMV misery stories (the host of a video called “Here’s Why Going to the DMV Sucks” says that he has previously avoided renewing his license plate “because the hefty fine if I got pulled over wasn’t as emotionally draining as a trip to the DMV.”) 

There’s a simple, obvious story we can tell about why DMVs are so frustrating: they’re run by the government, and government services are bad because the state lacks the incentives to please consumers that private companies have. A company, to make a profit, must compete with other companies, and the one with the best service wins, which is why the private sector is more efficient. Variations on this story are used to justify school privatization (“school choice”) and warn against the perils of “socialized medicine.” (PragerU asks: “If you try to avoid going to the DMV or the post office, why would you want the government running your healthcare?”) 

But there is no reason why the DMV has to be a painful experience just because it’s a government service. I’ve had my fair share of terrible DMV experiences, but I just had a remarkably excellent one here in my hometown of Sarasota, Florida. My mother had been telling me that the local DMV was impressively efficient, but I didn’t really believe her, because I didn’t think such things were possible. Besides, I had a kind of complicated situation involving a VIN number from the 1960s, a U.K. title and registration, and an out-of-state driver’s license. She was right, though: the people at the downtown Sarasota DMV know what the hell they’re doing. I took my number, sat down, and was called to a station within fifteen seconds. The woman at the station was incredibly kind and helpful and warmly welcomed me. She sorted out my situation within eight minutes. I was in the building a total of 10. I left somewhat shell-shocked. Did that really happen?

The office is just really well-run. They aren’t, like so many DMVs, understaffed. They do not, like so many DMVs, operate on ancient computers. The staff are well-trained, meaning that even complicated situations don’t require a trip to confer with a supervisor. The number of forms you need to fill out has been reduced to the minimum necessary to give them adequate information. The office is clean, well-run, and well-lit. They know what they’re doing. God bless these public servants, who are doing their best to make people’s experiences with government a little less maddening. 

I couldn’t help but contrast my DMV experience with my last visit to a Starbucks. Even though there were hardly any customers, the two staff were struggling to keep up, and someone was complaining their order had been made wrong. The whole place was a mess, with coffee spilled everywhere and overflowing garbage cans. The staff were clearly young, new, and poorly trained: they were still struggling to figure out how to punch “vanilla” in on the computer. This was in an airport, where coffee lines are often long and passengers are in a hurry, and I felt terrible for the workers as I thought about how bad things would be for them if the airport suddenly got busy. (Companies that frustrate their customers, say by understaffing, are also thereby mistreating their workers, who are forced to deal with the anger that arises from problems outside of the workers’ control.)  

When I was in high school, our local Starbucks was great. Big squishy chairs, open well after midnight, strong coffee. But they took away the chairs, the coffee became inconsistent, and much better local coffee shops opened up that made Starbucks a last resort. In fact, it’s gotten so bad that almost any local coffee shop can be relied upon to make a better latte than Starbucks. The often soggy or stale-looking food, which all comes frozen, is no match for anything fresh-baked from a local cafe. This is not just my personal observation. Starbucks has been struggling. The wait times are up. The stores are understaffed. There are widespread complaints about the quality. 

Even as a skeptic of corporate America, I’ve been a little mystified by the decline of Starbucks. They should have had the power to crush upstart competition from local coffee shops. But they just don’t seem to know what they’re doing. Instead of trying to get their workers to care about making Starbucks better, they are at war with them, waging a ruthless campaign against unionization. Maybe their new CEO, who’s slated to get a sign-on package of more than $100 million and will be commuting in a private jet, will turn things around. I’m dubious, because I don’t think such a person is likely to have a great understanding of how to make a fantastic coffee shop that people actually want to go to. 

The private sector can create dismal, terrible experiences. The government can operate efficiently. Simple stories that portray the public sector as inevitably bureaucratic and useless are simply wrong. Now, you may say that government tends to be less effective, because it lacks accountability mechanisms, and even if there are exceptional instances like the Sarasota DMV, they only succeed by defying the natural drift of public institutions toward inefficiency. But I don’t see any reason why every DMV can’t operate as swiftly as my local one. I’m similarly skeptical of narratives about public schools being doomed to failure, because I attended a superb public school and there is no reason why that standard can’t be met elsewhere.

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Of course, my school happened to be well-funded, and a big reason things don’t run well is that not enough resources have been invested in them. The Louisiana DMV, which I had a horrible experience at, was horrible in part because there were hardly any stations open, and there were hundreds of people waiting for hours, and the staff were miserable. But underfunding can happen anywhere, and it produces bad results in both the public and private sector. Starbucks wait times are crazy, and drinks are made wrong or sloppily when the company prioritizes short-term profit and understaffs its locations. While funding isn’t everything—you need capable management, good quality control, and so forth—you do get what you pay for. So if a government is starved of resources and can’t update its computer system, expect the service that slow, old computers deliver. And if the public always believes notions like “government bad” and “government inefficient,” then attitudes like the one expressed by the DMV YouTuber will continue to be common: the host admitted that ultimately he’s fine with bad DMVs, because “[I’m] not a goddamn communist, I’ll take egregious wait times over giving the government any more of my money.” It’s a vicious cycle: underfund government, say government doesn’t work and shouldn’t get more money, and then underfund the government again. 

I am endlessly exasperated with simple stories about how the private sector magically produces good results and the public sector is necessarily sluggish and incompetent. It’s not true. 

A classic example from healthcare that busts the myth of private sector efficiency is overhead costs. Traditional Medicare—a government program!—operates at approximately a 2 percent overhead. In contrast, private health insurance operates with an overhead of around 12-14 percent. This fact is one reason that a single-payer, Medicare for All healthcare system would cost less than our current healthcare system, where private insurers exist purely to make money, which they do by denying people healthcare. In this case, the government really is more efficient because its job is to provide care, not to deny care so that executives can get multi-million dollar compensation packages.

While government often gets a bum rap, Pew polling from this month finds that Americans are particularly fond of federal agencies such as the National Park Service, the USPS, and NASA. Presumably, people enjoy public parks, getting their goods shipped to any address in the country, and the exploration of space. We should eagerly fund these and all agencies so they can provide services for all—not run them to the ground, as has happened with the postal service, which, according to the Economic Policy Institute, has suffered from attacks by “anti-government ideologues and special interests [that] have long sought to privatize, shrink, or hobble” it.

Good public institutions can be built. It’s not easy. It takes resources. But as I’ve written about previously in the case of airports, we have plenty of examples of well-run, dependable, useful public services, and we should not fall for free market dogmas that ignore all the excellent work done every day around the country by government employees. 

 

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