income taxes through a different organization. Of course, elected politicians can assign new leaders to

government agencies and instruct them to reorganize or to emphasize a different mission. The pressure

government faces, however, to change its bureaucracy, to seek greater efficiency, and to improve customer

responsiveness is much milder than the threat of being put out of business altogether.

This insight suggests that when government provides goods or services directly, we might expect it to do so

with less efficiency than private firms—except in certain cases where the government agency may compete

directly with private firms. At the local level, for example, government can provide directly services like

garbage collection, using private firms under contract to the government, or by a mix of government

employees competing with private firms.

A Balanced View of Markets and Government
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