… is from page 132 of the 2016 Third Edition of James D. Gwartney’s, Richard L. Stroup’s, Dwight R. Lee’s, Tawni H. Ferrarini’s, and Joseph P. Calhoun’s excellent Common Sense Economics (original emphasis):
In the private sector the profit rate provides an easily identifiable index of performance. Since there is no comparable indicator of performance in the public sector, managers of government firms can often gloss over inefficiency. In the private sector bankruptcy eventually weeds out inefficiency, but in the public sector there is no parallel mechanism for the termination of unsuccessful programs. In fact … government agencies and enterprises often use deteriorating conditions and failure to achieve objectives as an argument for increased funding.
DBx: Keep this reality in mind if ever you’re tempted to fall for any case, whether issued from the political left or right, for industrial policy. Firms, although nominally private, that are favored by makers of industrial policy will be shielded from losses just as if these firms were full-on government agencies.