Provision of public goods by Private companies is a sign of government Dysfunction

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Provision of public goods by Private companies is a sign of government Dysfunction

When private corporations fix roads and other infrastructure, it is a true sign that such government has failed or is in the process of failing. In this case, we are referring to a case where private corporations identify roads and set aside resources for their construction or rehabilitation.

We agree that it is a good idea for roads to be rehabilitated and people to be housed. The problem is when a private company is doing it.

If companies construct or rehabilitate roads then, we can conclude that the state has failed to perform some of its core mandates on provision of essential services.

The state in most parts of the world provides what we call public goods. These are goods which you can’t exclude other people from using. For instance, street lights and national security among others.

It is normal for bridges and roads to benefit even people who do not drive on them. For example a resident of a town who buys foodstuff transported over the roads from the farms is a beneficiary of that road even if he or she has never personally traveled on the road.

Every society has a moral obligation to providing housing for its people. This promotes the safety and dignity of such people. In addition to that, the action results in a cleaner and safer city.

Usually public goods face a challenge called free rider problem. This is a situation where some people for example enjoy using a road or bridge without paying for it.

It is normal practice for wealthy people in a society to provide some public goods but this is provided for their own benefit.

Economists have discovered that inequality leads to provision of services by the private sector. This is because when a few people get extremely rich, they start behaving or acting like a government.

In most case, these moves of private corporations behaving like government may seem just like any other marketing gimmicks but they also benefit the companies as well. For example when a bank provides University Education for its beneficiaries it sometimes gains from those beneficiaries.

When a company grows to a certain size, it stops making sense for such company to wait for government to take action on some issues. When this happens, it is a real sign that government is failing in its mandate.

 

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Editor-in-Chief

Geoffrey Kerosi is a prolific economics writer and an avid reader in economics, finance, business, politics and technology. He holds bachelors' Degree in Economics and Statistics from Kenyatta University. He has over 4 years of extensive experience working as a Policy researcher and Budget Analyst for Civil Society in Kenya. Contact: Email: geoffrey.kerosi@gmail.com Phone: +254 713 639 776 (Whats-app only) Twitter: @gkerosi

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