Public and private enterprises are similar in that they both must plan. Public planning is, however, fundamentally different from private planning. Public plans are developed by public managers and employees who neither bear the costs of their mistakes nor legally capture benefits generated by foresight. Moreover, public plans are developed by people who do not have to answer to any owners. As long as the planning rules and procedures are followed, a public plan is considered a good plan.
Private planning is quite a different story.
Private plans attempt to anticipate consumer demands and production costs correctly, because the present value of the private enterprise depends on correct anticipation of demands and costs. Needless to say, private planners ultimately have to answer to the owners of private enterprises, who keep a watchful eye on the value of the enterprises that they own. Comparative cost analysis of private versus public provision of goods and services give support to the conclusion that private firms are more cost-effective than public firms. Considerable evidence suggests that the public cost incurred in providing a given quantity and quality of output is about twice as great as private provision. Broader measures also confirm the conclusions reached through economic analysis.