Public-sector Enron

I think the average hedge fund Sharpe ratio is about 0.8-1.0, much higher than that for index funds (about 0.4 Sharpe) with a beta much closer to 0 (the market has a beta of 1), and that includes a generous accounting for the occasional failure that gets eliminated from databases. Look at a hedge fund like a stock, so one loses 75%, no big deal if you have 20. For a multibillion dollar pension fund, you would be foolish not to invest in a variety of hedge funds (or pay 2% and get a fund of funds). Poor retail investors are precluded from this via an overbearing regulatory structure. As the song goes, one bad apple don't spoil the whole bunch.

AK is dead right about public sector mistakes going un-punished.

In the UK, following massive increases in public sector financing (eg. doubling of the GDP percentage devoted to the National Health service in less than 10 years - even before this the NHS was the biggest employer in Europe) there have been multi-billion dollar losses due to incompetently executed IT schemes in the NHS and elsewhere.

These epic losses to UK taxpayers have attracted little more than tut-tutting. Indeed, they are often blamed on the private sector suppliers of IT.