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Economics of Transition in Eastern Europe

The private companies have been observed to be faster in adopting improved production methods resulting in bigger profits, dividends and better service to clients (Glaeser, p664). There are several examples across many sectors that do support this view. This paper seeks to examine both the private and public systems and arguably determine if indeed the private and market-driven companies are superior to the state-owned systems.The performance of any company can usually be measured by examining four different factors. The first factor is the mean cost to consumers for services provided by the business measured by a convenient unit. Second in this category is the mean cost per unit of service production while the third is the operating and fixed profits achieved by the company. Yet another measure is employment. For each measure, the performance and rate of growth are compared between private and state-owned firms to give clear direction on whether it is on the right track or not (Friedman, Gray, Hessel Rapaczynski, p9).Several arguments are in support of state ownership. The theory of public goods states that some essential services, like say defence, have to be provided by governments as it is only taxation system of the governments that can finance these services. Good defence is considered a national pride and part of sovereignty. The defence can only be provided indirectly by private firms but under very close government scrutiny. The defence strategies applied by governments are kept secret only known by certain government officials.The continued provision of some essential services like health care can only be guaranteed if there is government control of the firms providing health care. In situations where there exist external, environmental and commercial pressures, governments can always step in to ensure continuous provision of affordable and available health care. This is because when it comes to health, the availability of good healthcare is considered more important than making profits.