PS2013 asked in Social ScienceEconomics · 9 years ago

What is imposing user charges for goods and services?

1.Imposing user charges for goods and services: Savas argues that goevmt, should do this whenevern possible in order to expose the true cost of services and , thereby, to increase the chances that alternative delivery methods will evolve.

2.Restoring competition and minimizing government monopolies.

Can someone explain the meaning of both strategies??

Thank you

1 Answer

  • 9 years ago
    Favorite Answer

    1. In all developed economies, and many developing ones also, there are many goods and services provided free to the user. Typical are child education, emergency healthcare, medication supplies, travel for the disabled and elderly, clean drinking water, citizens advice offices and so on. Many economists argue that these goods and services are abused and subject to corrupt practices such as black-market selling by recipients and officials. Also, they are not valued even if they are life-saving; and become accepted, over-claimed, and wasteful in their allocation and distribution. Even in a highly developed economy such as UK, there is frightening waste in the "free" National Health Service because patients visit clinics for the most trivial of injuries and sicknesses, that could be treated easily with a remedy from the local supermarket. Finally, the official administration [the Civil Service usually] is a very expensive way to manage such goods and services, and imposes an unnecessary burden on taxpayers. Making a charge, maybe not the full economic cost, would bring home to people the fact that these goods and service are not actually free. They are supplied from taxation or government borrowing or from foreign aid. Then users will value their supply more and also entrepreneurs will seek to find ways to make better allocations with greater economy, and savings to the government.

    2. Arguments in favour of government monopoly usually centre on essential services that private industry cannot, or will not, or should not, provide. It is argued in many countries that the railway should be a state monopoly so that prices can be kept down to marginal cost, rather than including a large element of economic rent which leads to short term profits for private industry. Similarly, social healthcare is a state monopoly in many countries because the recipients [patients] are usually unable to pay the full costs - so they are funded from taxation. Even where this is not the case, and minimal charges are made, the service is operated at a low level of quality - "...good enough for poor people..." The major problem is that the civil administration is often much more expensive and wasteful [and corrupt] than would be the case in private industry, in almost all state monopolies. And government employees gain lifetime security whether they do a good job or not - so laziness and waste become central to the operation of state monopolies. In some famous cases, the cost of monopoly administration exceeds the cost of the service. In communist and other command-economies, this is very often true. Recent studies in Cuba, South Yemen and North Korea have exposed considerable corruption and inefficiency in all state monopolies. Many economists believe that this structure should be broken down and state monopolies offered to private sector organisations.

    Even so, in both of these instances, it may be important to reserve the view on the police service, rescue and fire services, the military, and some scientific research. But almost everything else should and could be substantially privatised.


Still have questions? Get your answers by asking now.