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Definition

That part of the economy which is controlled by the government. This includes government departments, state-owned enterprises (SOE) and municipalities. Altogether the public sector is a significant part of the economy both as an employer and because of its annual expenditure. In a laissez-faire capitalist system, the least government is the best government. Ideally, the government should only be involved in those functions which cannot reasonably be done by the private sector - such as the provision of water or policing. If the private sector was involved in these functions there would be a considerable duplication of effort. Everything else in the economy should be done by private enterprise, mainly because companies are usually much more efficient that government employees because of their profit motive. In South Africa the government through its SOE's is involved in many areas of the economy where it should not be. Examples are SAA and Denel both of which are loss-making SOE's and have required continuous subsidies from the Treasury to keep them afloat.

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