Honolulu Advertiser Second Opinion column by Cliff Slater

November 25, 2002

Competition is our savior

We often hear people discussing government inefficiency but the truth is that none of us are able to tell whether a government agency is performing well—or poorly. The public that is paying for it has no idea, nor do the legislators that fund it, nor even the agency’s own management.

No one knows because, since government agencies are always monopolies, there are no competitors with which to compare it.

Think of it this way. When you go to buy a pair of shoes you find a huge number of retailers carrying a seemingly endless variety. You shop around and hopefully find, from among these myriad shoes, the price/quality/design compromise that satisfies you.

The ability to compare is not merely the fun of shopping but, more importantly, it is the only way you will ever know whether the price/quality of what you are buying is the best possible.

Government itself shops for its large purchases by the competitive bid process because comparing among competitors is the only way they can be certain of getting the best prices.

Where competitive private companies and government agencies differ is in how they get their income. Private companies can only earn income when you, as a consumer, voluntarily exchange your money for their products and services.

A government agency instead has to rationalize to their administration and legislators the need for its funding. It is amusing to consider clothing manufacturers having to rationalize their need for higher prices rather than competing. Fortunately for us, they have to compete and that means they must have the right goods at the right prices—or we walk.

Take garbage collection, for example. You do not comparison shop for it, as is done in some cities. Indeed, you have no choices at all. The City picks up your trash in a gray container on Tuesdays and Fridays. You do not order the service, you do not pay for it (directly), and you have no choice about it.

If you tell the city you do not like the color of their morbidly gray container, city officials will calmly rationalize why you must have the dark gray container and why you can only have it picked up on Tuesdays and Fridays. They will gently, if somewhat condescendingly, tell you that buying one type of container in bulk costs taxpayers much less and, further, the City could not afford pickups more frequently or at different times.

It all sounds so plausible.

Thirty years ago we used to get the same plausible story from Hawaii’s monopoly phone company about why all the phones had to be black. Then someone yanked the rug from under them by making telephone provision competitive and now phones do everything—in every color.

In a competitive environment every supplier has to agonize over innovations and costs in order to outdo their competition and to hopefully be rewarded with your money.

If there were six garbage collection companies fighting for our business we know that if the choice of colored garbage cans in different sizes were economical we would be offered them. The same goes for large pickups on call instead of twice monthly at the city’s convenience. And how about free weekly sanitizing of the smelly containers?

The only reason we would be offered such improved services would be solely because these companies would want our money. It would not be their intention to do us any favors, it is just that they would not have any choice if they wanted to stay in business.

One of these days Honolulu may get competitive bus service and garbage collection and, like telephones, we will wonder why we put up with such nonsense for so long.

Cliff Slater is a regular columnist whose footnoted columns are at www.lava.net/cslater