Why might the private sector be more efficient than government?

Because the private sector has to be more efficient, because if they're not, they'll go out of business.

 Before jumping to the unwarranted conclusion that the private sector is more efficient than the public sector, you might ask yourself this question: Over the last 110 years, how come we've had 22 recessions, two of which were depressions? Mathematically, that's an average of one every five years, isn't it? Does that sound efficient to you? And who do you think comes to the rescue when a recession occurs? And who do you think demands to be helped?

The second answer above is irrelevant and misleading. The answer is about the performance of the economy, while the question is about the performance of private sector firms. The efficiency of firms has little to do with recessions. But since you brought it up ...

A recession is a completely natural part of the business cycle. The economy cannot expand ALL the time. Sometimes it has to contract. Leave it alone, and it will rebound in short order. But when the government tries to do something about it, it just makes things worse.

The 2 depressions, in fact, were direct results of government interference in the free market. The Great Depression of the 1930s began as a recession, caused by problems in foreign nations, beyond the control of US firms. It did not turn into a "depression" until the Smoot-Hawley Tariff Act stifled foreign trade. Business leaders of the day begged the President to veto this Act, and he was personally inclined to do so, but ended up bowing to pressure from his own party and signing it. Of course, the foreign nations retaliated with their own tariffs against US-made goods, and US businesses, especially farms, started going under. Then FDR got elected, and enacted all kinds of (essentially Socialist) legislation to try to end the depression. And, rather than end the depression, this socialist agenda just prolonged it.

The current economic crisis (if that's what you're calling the other depression) was caused by the government forcing banks to issue home loans to people who were not able to pay the loans. Liberals try to blame it on the shenanigans that the banks pulled, first to try to comply with government regulations, then to try to get these risky loans off their books, but they wouldn't have had to do this if they hadn't been forced to make the loans in the first place. (And it really didn't matter who had the loans when they were defaulted on - someone was going to take it on the chin, and whoever it was, it was going to kill the financial sector as well as the real estate sector.) The availability of loans to low-income home buyers resulted in a huge demand for homes, but the supply was not there, at first. So home prices sky-rocketed, well above what was reasonable. So banks started offering "no down payment", "interest-only", and "adjustable rate" loans to those who couldn't afford large down payments and large monthly payments. If they hadn't made these moves, they would not have been able to comply with government orders to increase loans to minorities. Meanwhile, the home construction industry was catching up to the demand, and taking advantage of the outrageous home prices. And right about the time they caught up, home buyers started defaulting on their loans. Then banks stopped loaning money. So now you have a whole bunch of new homes out there, but no one can buy them because no one can get a loan. So the prices of homes plummeted. Construction firms went under. Banks lost assets, big time. Insurance companies who were insuring home loans failed. The Stock Market started falling. Unemployment started rising. All because the liberal do-gooders thought it would be a good idea to make credit more available to low-income home-buyers, and used the power of government to make that happen.

It is yet to be determined whether the current economic crisis will be prolonged by more government interference in the free market.