If a nation is essentially disunited, it is left to the government to hold it together. This increases the expense of government, and reduces correspondingly the amount of economic resources that could be used for developing the country. And it should not be forgotten how small those resources are in a poor and backward country. Where the cost of government is high, resources for development are correspondingly low.
This may be illustrated by comparing the position of a nation with that of a private business enterprise. An enterprise has to incur certain costs and expenses in order to stay in business. For our purposes, we are concerned only with one kind of cost - the cost of managing and administering the business. Such administrative overheads in a business are analogous to the cost of government in a nation. The administrative overheads of a business are low to the extent that everyone working in the enterprise realizes clearly what the objectives of the business are and the means of attaining them. If they are not, the enterprise will have to incur extra costs to clarify its objectives. It may have to set up a committee, spend a great deal of time and money on the plan, and then find out that the plan won't work. In the meantime, of course, the business will have been losing money.
If a nation as a whole is to be more efficient, it has to be better organized. Centralized planning, management, and so on, may be highly efficient by themselves, but from the point of view of the nation as a whole we must be careful about charges of inefficiency. There is always another side to the picture. For example, if we look at the matter of centralization of government functions, we find that while centralization may be highly efficient in terms of economic management, it may also lead to a loss of local self - government. We have to keep in mind that in a large nation there will be great differences in the economic development of different regions. If all the economic decisions are made by a central body, some regions will be left behind. In addition, the large - scale centralization of production that is characteristic of some socialist countries may lead to a loss of the incentives that are provided by a competitive market economy. We have to keep in mind that in a competitive market economy there are always incentives to improve the quality of products and services in order to meet the needs of consumers.
In short, we must be careful when we say that a certain government function, measure, or policy is "inefficient". There may be a complex explanation for the apparent inefficiency. There may be some hidden benefits that we have not yet discovered.