> privatization tends to be the worst option because of one simple fact: in addition to total compensation of all the costs required to provide the service to the public, the private entity also demands that they make a profit on top of that
This applies to all private efforts. Yet history shows the private sector can compete with public initiatives. The difference is competition. Water utilities don't have competition. They're born into a mode of market failure. For natural monopolies, public management seems to work best.
You're right. Competition changes the math substantially. It means the pubic can get tailored services that suit their unique needs and a large number of companies trying to one-up each other fuels innovation.
The public is unlikely to be better off when the service being provided doesn't really allow for competition and utilities and infrastructure are great examples of that. For products and services where competition is desirable, easy, and plentiful I want those options and the government's role should be limited to regulating where necessary to ensure that competition stays strong and the public is protected.
> For natural monopolies, public management seems to work best.
What makes you think so? If the government can't incentivize a private company with a natural monopoly so that it provides an effective service, why would it inherently be easier for it to incentivize public employees to provide an effective service?
It's not like it's immediately obvious from superficial inspection either, it seems to me like there are relative success cases and failure cases of both publicly and privately run natural monopolies. For example, taking rail transport: the UK has privatized it trains and the result is lack-luster, France has a state run railway company which seems to do a pretty good job, and Japan has at least notionally privatized it's railways and provides famously world-class rail service).
This applies to all private efforts. Yet history shows the private sector can compete with public initiatives. The difference is competition. Water utilities don't have competition. They're born into a mode of market failure. For natural monopolies, public management seems to work best.