Ineffective use of private sector resources by government
Government opposition to private initiative
Protection of public sector agencies from competition
Public regulatory policies have inhibited private providers of services. Although not explicitly part of the public budget, these policies can have large effects akin to taxation and spending. There is no uniquely appropriate balance between public and private sector activity. However, governments reduce their ability to broaden access to education and health, for example, when they discourage private initiatives. In the case of housing, in many cities private housing markets have been overly restricted by rent control, which has often produced results exactly opposite to those originally intended.
In many areas, exposing state-controlled enterprises to domestic and foreign competition would promote economic efficiency. Such enterprises are protected by budgetary subsidies, regulated domestic markets that keep out private competitors, tariffs and import quotas. Such protection inhibits the characteristic ability of the private sector to adapt to changing conditions of trade.