[temphn]

There is something called "career status" in the federal government that is worth taking into account:

http://www.aphis.usda.gov/mrpbs/hr/job_opportunities/fed_emp...

  Permanent – Career status as a federal employee is 
  achieved by fulfilling 3 years of substantially continuous 
  service as a career-conditional employee in the 
  competitive service.

http://ohmygov.com/blogs/general_news/archive/2010/08/18/dea...

  The service requirement for Career Tenure is 3 years of 
  substantially continuous creditable service to become a 
  career employee, i.e. obtain career tenure...Obtaining 
  Career status is crucial for federal employees, 
  especially, during times of instability and economic 
  downturn like we are in today. 

In short, after just three years in the federal government, you effectively cannot be fired except for gross malfeasance. This radically distorts the cost structure of the federal government.

There are many additional checks and balances on private companies. Perhaps the most important is that a poorly managed company will eventually go bankrupt, while the federal government can defer that for decades via quantitative easing.

[notJim]

> Perhaps the most important is that a poorly managed company will eventually go bankrupt, while the federal government can defer that for decades via quantitative easing.

This would be true in an idealized capitalist society, but many companies are one or more of the following:

   - propped up by the government (automotive companies, financial institutions)
   - in industries with incredibly high startup costs and difficult to obtain special knowledge (defense companies like boeing and lockheed)
   - have effective monopolies or oligopolies (utilities in some places, telcos)

Of course these are all far from immune to disruption, but they operate at such a scale that even when disrupted, the competition is often available only for small projects/few customers. The result is while yes they will eventually fail if they are poorly managed, it is unlikely that will be in our lifetime. Personally, I'd rather not wait that long.

Additionally, as I mentioned before, there are some services that I would like to have made available that can't be operated for a profit without government intervention. I am willing to tolerate inefficiency to achieve those goals. (Just as we as a society are apparently willing to tolerate governments other inefficiencies.)

Regarding your point about career tenure, I've often thought that one of the most effective reforms government jobs could get would be making it easier to fire ineffective employees just like a well-run company would.