PUBLIC AND PRIVATE ADMINISTRATION:The Public Interest, Ambiguity, Less Efficient

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Introduction To Public AdministrationMGT111

LESSON 13

PUBLIC AND PRIVATE ADMINISTRATION

At the end of the lecture the students will be able to:

Understand the dissimilarities between public and private sector

Understand the similarities between the two sectors.

It is said that the work in public organizations is guided by commitments to public service ideals.

This is the basic difference between the two sectors. However, public sector organization are involved with

management, and, for that reason, public administration is often confused with business management.

As we have already seen, early writers in the field often suggested that government should become

more like business. The reason to express this device was that private sector organizations were considered

more efficient and effective. The reason to efficiency was often attributed to the profits earned. Observers,

therefore make the primary distinction between business and government that of profit. While government

is concerned with providing services or regulating individual or group's behaviour in the public interest.

The canvass and scope of government is much broader since it provides service to the citizens and not to

specific customer. For example Company that manufactures cars will be dealing with those who can afford

cars. While government provides roads which is used by those who have animal driven carts, bicycles,

motorbike etc. In this way all would agree that the context of public management significantly changes the

work itself.

Differences

The basic differences between the public and private sector are seven which are:

Constitutions

The Public Interest

Ambiguity

Pluralistic Decision Making

Visibility

The Market

Less efficient

We will deal with each one by one:

Constitution

In Pakistan, the federal constitution defines the environment of public administration and from it

originates laws that affect. The executive branch of the government. It tells that laws are to be legislated by

the legislature and the public administration has to implement the laws and the policies. In the case of

private sector, there is no constitution. Although there is legal binding which has different nature and

content.

Basic political science tells us that executive, legislature, and courts are responsive to different

constituencies and political pressures and the all three branches have legitimate interests in public

administration, because all these represent branches that affect it in its own way. Their respective

constituency or the group they represent e.g. legislature represent their vote bank. The constituency of

courts are judges and clients. The executive represents their own group of civil servants. Beside the

constitutional framework creates a system of federalism that allows overlap in the activities of federal and

provincial administration. Often the federal government will create a program and rely on the provinces to

implement it. Such a situation is not found in private business.

The Public Interest

Public interest is a good of larger number of people i.e., any good or service is provided which is

used by large number of citizens. Private interest is limited as compared to public interest. Example:

education for all vs. education for selected few. Private sector will provide education to those who have the

Introduction To Public AdministrationMGT111

ability to pay, while government will provide education to all with low tuition fee. Similarly the benefit of

maintaining law and order is for all and not to the selected few.

Ambiguity

In the private sector profit is the basic measure of evaluating performance of organization in

business. The same is not true in public agencies, and where making or losing money is not the main

criterion for success or failure. The objectives of public organizations are stated in terms of service

provision. For example, an agency's mission may be to protect the quality of the environment or to provide

an adequate level of rehabilitative services to the disabled. In both the situations, the government may

spend more and the purpose of spending may not be making profit but to provide service. In this way we

see that the goals of public agencies are not as clear as private sector. These goals are less quantifiable.

Pluralistic Decision Making

Pluralistic decision making means when more than one type of groups is the beneficiaries or

affectees. Pluralism means that people belong to different ethnic, racial, regional, cultural backgrounds.

Since people are different ethnically and culturally, their demand and needs vary. There would also be

divergent views on issues of public interest. For example people of a region would need roads, while people

of other region might need dams. Since the money available is the same. There is need to build consensus.

In private sector a company would decide to manufacture a two wheeled vehicle, keeping in view the

income of buyer. It does not seek any consensus on that. We can say pluralistic decision making of public

sector is different from the private sector decision making.

How Does Pluralistic Decision Making makes Public and Business Management Different?

Visibility

In parliamentary democracies, managers operate with much greater visibility than their counterparts

in industry because they are constantly being watched by the media.

One comes across reports in newspapers about the inefficient performance of some government

departments that come in contact with public more frequently. So inefficient, undemocratic, injustice

behaviour of public organizations get reported, unlike the behaviour of managers in private organization.

Thus public manager's actions become more visible as compared to the actions of private managers. This

difference is due to the fact that public manager's action affects large number of people.

The Market

Another important difference between public and private sector is the arena of markets. Although

government policies and actions affect markets, but government does not face same challenge of market as

the private sector. The distinct differences between public and private sector in this regard are:

Public agencies do not face competition of other firms as the private sector organisations

would do.

Price of governmental operations is established through budgetary routines rather than

fixed at the market. The prices of goods and services in the private sector are determined

through the principle of demand and supply'. If the supply of a good is short, then it price

would be high and vice versa. The government does not fix the price of its services on this

principle. If the price of a good or service is fixed, it is fixed on its budgetary allocation that

is how much spent on a good by the government in its budget.

The remoteness of market forces from most public administrative operations has profound

consequences. Since the prices are not fixed in the market, governments' operation and

expenditure become too large which has affect on its public financial management.

Some of these services and products provided by government are referred to as public

goods. What are Public Goods? These are goods such as: Defence, Roads, Street light etc.

Characteristics of Public Goods are that individuals cannot be excluded from enjoying and these are

not exhausted or diminished by the use of other. In other words these are non rival. Example can be given

of a road used by all and its value does not diminish.

Introduction To Public AdministrationMGT111

Less Efficient

There is often the allegation that public organizations are less efficient. It means that public

organizations do not maximize output with given resources. This allegation is not new and because of this

allegation there have been efforts to make public organisations as efficient as private organization.

Power

There are different kinds of power that organizations possess. But the power of government is

different and omnipresent. The distinctive power of government is as follows:

Power to regulate: government can regulate private sector by formulating laws. These laws

are binding on private sector and they have to abide by it.

Power to coerce: only government has the power to use force and to put people behind

bars for violating law. Thus power of punishment can only be used by government, and no

private organization has this power.

Pervasiveness: the government laws and regulations have general applicability. The most

common example of this is the application of traffic laws all over the country and its

acceptability by all.

Concepts

Ambiguity:

Vague and unquantifiable goals

Pluralistic decision making: People with diverse ethnic background are involved in decision

making

Visibility:

That public officials working in public agencies is reported in the

press.

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