Messrs Tonkovic and Longland take issue (13/9) with my earlier letter which argued that private decisions rather than those of government bodies will offer greater prosperity.
Mr Tonkovic suggests that private firms do not have the capacity for longer-term planning. None of us is able to predict the future accurately, but a casual examination of the capital investment of firms like BHP can detect expenditures that are not expected to pay off for five years or even 10 years. By contrast, the objectives of government usually revolve around the next election. Moreover, since the Government is in the game of allocating the money individuals have earned rather than producing goods and services itself, it relies on the use of individuals' money, which it seizes through taxation.
Countless studies have analysed government investment and business operations against those of the private sector. The fact that the latter is almost invariably shown to be superior is the cradle in which privatisation has been nurtured as a worldwide trend. As Mr Tonkovic was writing, privatisation was even being adopted by communist China.
Mr Longland argues that the general public is now paying for the costs of the "insane lending practices of banks in the 1980s". Not so. The banks' shareholders are paying. Any attempts by banks to recoup losses through fees that do not reflect costs will see other financial institutions undercutting them and taking their business.
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