By changing the locus of caring and responsibility from the individual to the government not only for the needy, but for oneself, one's parents, one'… - Joseph E. Stiglitz

At the same time I have noted that some of the differences between the public and private sector may have been exaggerated they are differences among the activities being pursued, not differences of the sector within which they are pursued. Private sector organizations face incentive (principal-agent) problems no less than do public organizations.
Some of the differences are not innate but are more a consequence of common practice. The most important of these is the absence of competition and the high degree of centralization. Government organizations no less than private organizations dislike competition. The difference is the government has the power to forbid competition, which private organizations do not and indeed government sees one of its roles as curbing unfair practices aimed at reducing competition.

Perhaps the most successful global monopoly is Microsoft, which has succeeded in gaining global market power not only in PC operating systems but in key applications such as browsers. [...] Microsoft's monopoly power leads not only to higher prices but to less innovation. [...] The failure to develop a global approach to global cartels and monopolies is yet another instance of economic globalization outpacing political globalization.

At the core of the success of market economies are competition, markets, and decentralization. It is possible to have these, and for the government to still play a large role in the economy; indeed it may be necessary for the government to play a large role if competition is to be preserved. There has recently been extensive confusion over to what to attribute the East Asian miracle, the amazingly rapid growth in countries of this region during the past decade or two. Countries like Korea did make use of markets; they were very export oriented. And because markets played such an important role, some observers concluded that their success was convincing evidence of the power of markets alone. Yet in almost every case, government played a major role in these economies. While Wade may have put it too strongly when he entitled his book on the Taiwan success Governing the Market, there is little doubt that government intervened in the economy through the market.