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Public Sector vs Private Sector

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The public sector is economic activity controlled by a government. The private sector is economic activity controlled by private citizens.

The Difference

All economic activity can be classified as either public or private sector. The public sector is funded, controlled and/or derives its authority from a government or governments. For example, an airport authority that is funded by airport fees that derives its authority from the power of government. The private sector includes businesses and non-profit organizations that are controlled and primarily funded by people who don't work for a government.

Role of Public Sector

The public sector provides foundational systems and infrastructure that are the basis for the quality of life, risk management, resilience and economic efficiency of a nation. A society typically designates services public sector where they are considered above the profit motive such that they are to be governed according to the values of society. This typically applies to areas that relate to morals and the human experience. For example, a disability pension program that is funded and run according to the values of society as opposed to the profit motives of a company. The public sector also plays a critical role in regulating the private sector in areas such as competition, standards, consumer protection and environment. Without these regulations the private sector would cease to function as firms would adopt anti-competitive practices or create more economic bads than economic goods.

Role of the Private Sector

The private sector is the productive engine of a society driven by market forces such as the profit motive and customer needs. It is far more productive than the public sector and is able to allocate resources efficiently to produce the goods that people want. The private sector also provides economic freedoms such as the ability to start a business or buy what you want.

Notes

A communist society has no private sector such that economic freedom and efficiency is replaced with a large and typically inefficient bureaucracy that centrally plans every aspect of life.

Summary

Public Sector
Private Sector
Definition
Economic activity controlled by government.
Economic activity controlled by individuals.
Function
Infrastructure
Risk management
Resilience
Quality of Life
Justice
Regulation of private sector
Economic freedom
Efficient production
Efficient allocation
Innovation
Driven By
Politics
Bureaucracy
Value
A society aligned to values with social and hard infrastructure that provide economic growth, resilience and quality of life.
A society that is efficient, innovative and free.
Types
Public Services
Public Enterprises
Businesses
Non-profits

Public Sector vs Private Sector

This is the complete list of articles we have written about public sector vs private sector.
Authority
Bureaucracy
Communist
Consumer Protection
Customer Needs
Economic Activity
Economic Bads
Economic Efficiency
Economic Growth
Fair Competition
Goods
Human Experience
Market Forces
Productivity
Profit Motive
Public Sector
Quality Of Life
Resilience
Risk Management
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