It's an article of faith on the the right that the Free Market will always do better than government run business. This is certainly true in a great many cases, but there are lots of counterexamples. Here are a few
USRA: In the late 19th and early 20th centuries, the railroads were engaged in a "race to the bottom", trying to outcompete each other with lower fares, lower operating costs, emphasizing popular routes at the expense of less popular ones, and so forth. In a lot of ways like the post-regulation airlines of today. They kept maintaining locomotives, track, and rolling stock at the minimum level that would get the job done, and as a consequence, all had very high maintenance costs and poor performance. When the US entered World War I, the extra demand placed on the railroads immediately exposed huge deficiencies, which the private railroads were plainly incapable of fixing on their own. So the government nationalized all of them into an institution called the United States Railroad Administration. They immediately set about rationalizing and repairing routes, designed a new set of state of the art locomotives and freight cars, streamlining management, and more. The railroads never ran better or were more profitable, and when the war ended, the railroads kept all the improvements and continued many of the patterns established by USRA, even dragging their feet on un-nationalizing until almost two years after war's end. It wasn't until the government agreed to fairly major support that the old management finally agreed to go their own paths.
When World War II broke out, many of the railroads essentially volunteered to be nationalized again. Since the reforms installed 20 years earlier were still working, the government didn't see the need, but the railroads willingly submitted to fairly extensive government control throughout the war. This was effective too: the railroads continued to work well. Much as before 1917, loads were fairly high and management was loath to try changes that might possibly cause them headaches, but also might improve things. As soon as the war ended, many of the new innovations that had been deferred were instituted, such as switching from steam to diesel-electric locomotives. These dramatically reduced the time locomotives spent in the shop, at tremendous savings in operating costs. They also made some foolish errors: the "mechanical" refrigerator car allowed huge efficiency improvements over their ice-cooled counterparts, but the railroads almost universally stuck with ice. Private truckers on the new and rapidly expanding highways were more willing to try the newfangled mechanicals and soon completely took over the market. Not having to pay for roads and fuel being close to free also helped them compete.
Interstate Highways, Bridges, and Dams. All of these things had been invented and installed at one time or another by small operators, charging tolls of some sort to recoup their initial investment. But it wasn't until government got involved that these things really took off. No business is big enough to fund even a single interstate or big dam on its own. But building them created millions of jobs directly, and the improvements to the economy they generated created millions more, and in nearly every case completely paid for their costs within a decade or so. Not always directly. For example, the economy of the "East Side" of Lake Washington is about $50B/year. Without the bridges (one is currently being replaced and substantially upgraded at a cost of $4.6B), it would be closer to $5B.
Health Care Insurance: I'm not aware of a single case where private insurers provide better coverage than public. US health care costs are nearly twice those per capita of the second most expensive country, and we leave at least 20% of customers completely without insurance and that many again with inadequate insurance. V.A. and Medicare costs are 20-30% less than the equivalent private insurance, even using what is otherwise largely the same basic health care system. And our outcomes are much worse than most of the countries that pay half or less what we do, even if you account for the poor outcomes of those who have no insurance at all. It's true that in America if you can afford it, there is no better medicine available, but only the 1% can afford it.
The Internet: Between 1970 and 2000 we unintentionally ran a very interesting experiment comparing the private and public markets for networking. The thing known today as the Internet was developed (by a consortium of universities and private companies) at the behest of the Defense Advanced Research Projects Agency (DARPA), hence its original name: "ARPA-Net". For military reasons, it used a decentralized, many-hubbed architecture, reasoning that if part of it were destroyed (by a nuclear strike or sabotage, for example), the rest would continue to function uninterrupted. It was strictly non-commercial and had no billing mechanism, although many private companies joined up and mostly followed the rules. This had tremendous advantages: decentralization meant that nobody was in charge, so new sites could come on-line and expand with a minimum of interference. Very "Free Market". Meanwhile, many computer companies were inventing their own network systems. Nearly all of these (e.g. Compuserve, Prodigy, MSN, AOL) used the "Star" architecture, meaning logging into a central hub, with all the users communicating only through the hub. This made billing very natural, but made it a little awkward for users of competing networks to communicate with each other. . In 1983, a Senate committee headed by Al Gore set about "commercializing" the ARPANet, changing a number of protocols to support billing and larger numbers of users, renaming it "Internet". Within very few years, all of the Star networks found that providing internet access improved nearly everything about the user experience, and after the invention of the World Wide Web (also by a government funded researcher), very few people even remember that there ever was a serious market for Star architectures.
The uniting theme of these examples is that the government institution did what was most effective at solving the problem for the long term, while business always did what was most profitable for the short term. In every case, doing the right thing was vastly more effective in the long term and with only the one exception (health care) vastly more profitable for the businesses that adapted to the government mandate.
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