Page 1 of 7 123 ... LastLast
Results 1 to 10 of 63
Thanks Tree83Thanks

Thread: The perceived superiority of the private sector...

  1. #1
    Scucca Ęthelfrith's Avatar
    Joined
    Jun 2010
    Posts
    6,658
    Thanks
    1349

    The perceived superiority of the private sector...

    The invisible hand, despite being a minor issue for Adam Smith, is used by right wing pressure groups to suggest the market is necessarily best. However, the practical nature of privatisation suggests that underhand techniques are needed to coerce 'market solutions'. Chomsky summarised it nearly:

    "That's the standard technique of privatization: defund, make sure things don't work, people get angry, you hand it over to private capital."

    Ain't theft grand!
    Thanks from Blueneck, Blues63, chaos and 8 others

  2. #2
    NWO Toilet Cleaner Blues63's Avatar
    Joined
    Dec 2014
    Posts
    5,153
    Thanks
    3342

    From
    An NWO Lunch Room
    I admire your knowledge of this subject, so I would like to venture a question. But first some background (I feel it is a good example of your point):

    Queensland, Australia.

    1950's: the left and right work to modernise the nation through investment in infrastructure. The left give the state government control of the infrastructure and distribution of utilities. Fees were affordable for some decades.

    Later, in the mid 2000's, a left wing state government privatised the utilities (electricity and water) claiming a 'conflict of interest' through continued ownership. They promised that market competition would drive prices down overnight.

    The buyers found a neglected grid, run down since the 1980's. Brownouts and blackouts became common. The tariff per kilowatt/hour rose dramatically almost immediately, and has continued to rise well above CPI ever since. It is now reaching critical where bills are being defaulted in record numbers and safety is being compromised in industry in order to save expenditure on utilities, as these continually rising overheads have now driven down profit margins considerably.

    Anyway, I never understood the 'conflict of interest' reasoning behind the privatisation of the utilities. Perhaps you may be able to explain it?
    Last edited by Blues63; 24th August 2017 at 12:28 AM.
    Thanks from Ęthelfrith and MaryAnne

  3. #3
    Veteran Member DebateDrone's Avatar
    Joined
    Jul 2014
    Posts
    30,115
    Thanks
    25636

    From
    SWUSA
    The ultimate motive for those that advocate alternative schooling funded with public dollars is to get their dollars out of the system and to send their children to private schools paid for by the public.

    Charter and alternative schools are a way to get the public used to the idea of...other than public; but the real goal is to send their children to private schools where the school can still keep autonomy in who is allowed to enroll.

    Private schools tuition paid fully by tax dollars is the ultimate goal.
    Thanks from labrea, Panzareta, MaryAnne and 1 others

  4. #4
    Galactic Ruler Spookycolt's Avatar
    Joined
    May 2012
    Posts
    54,961
    Thanks
    10028

    From
    By the wall
    Chomsky is a theorist and his main problem is that he doesn't take the real world into account.

    He is like Mills who wrote about libertarianism.

    Chomsky is only famous because the left media pushed him to be so, his theories are weak.

    His only good work was in linguistics.

  5. #5
    Veteran Member
    Joined
    Feb 2011
    Posts
    13,933
    Thanks
    3747

    From
    AK
    Quote Originally Posted by Ęthelfrith View Post
    The invisible hand, despite being a minor issue for Adam Smith, is used by right wing pressure groups to suggest the market is necessarily best.
    At what? Be specific.

    However, the practical nature of privatisation suggests that underhand techniques are needed to coerce 'market solutions'. Chomsky summarised it nearly:

    "That's the standard technique of privatization: defund, make sure things don't work, people get angry, you hand it over to private capital."

    Ain't theft grand!
    Privatization is sometimes considered when unions are entrenched in a government's operations and won't make concessions nor operate efficiently. It happened recently in my state, where revenues are down more than 80%, and unions have ruled the roost for decades. The governor suggested privatizing Department of Transportation jobs, and the union filed a class action grievance because he didn't conduct a feasibility study before proposing it. The DOT in our state is extremely inefficient, they get nothing done relative to how much time the book to bloated projects that should be simple.

    Privatization of transportation projects in my particular state would cost less and allow for projects to actually get done, rather than stay hung up in design for years and years, which private engineering and construction firms would not stand for. DOT sits around and wastes time. The DOT's administrative costs booked to a local project are now around 25% of the total project, which is over $7.5 million for a 0.9 mile road repavement. That is asinine, incompetent, and should be criminal. Privatization is not necessarily a solution, but sometimes it is, either temporarily or perhaps permanently.

  6. #6
    Scucca Ęthelfrith's Avatar
    Joined
    Jun 2010
    Posts
    6,658
    Thanks
    1349

    Quote Originally Posted by Blues63 View Post
    I admire your knowledge of this subject, so I would like to venture a question. But first some background (I feel it is a good example of your point):

    Queensland, Australia.

    1950's: the left and right work to modernise the nation through investment in infrastructure. The left give the state government control of the infrastructure and distribution of utilities. Fees were affordable for some decades.

    Later, in the mid 2000's, a left wing state government privatised the utilities (electricity and water) claiming a 'conflict of interest' through continued ownership. They promised that market competition would drive prices down overnight.

    The buyers found a neglected grid, run down since the 1980's. Brownouts and blackouts became common. The tariff per kilowatt/hour rose dramatically almost immediately, and has continued to rise well above CPI ever since. It is now reaching critical where bills are being defaulted in record numbers and safety is being compromised in industry in order to save expenditure on utilities, as these continually rising overheads have now driven down profit margins considerably.

    Anyway, I never understood the 'conflict of interest' reasoning behind the privatisation of the utilities. Perhaps you may be able to explain it?
    Thanks for the case study example. I'm not clued up regarding this specific example, but I've never been too convinced with the conflict of interest angle. The rationale is typically focused on transparency in general, given the perceived difference between private interests and public service. Those private interests could be financial (eg procurement policy twisted in favour of a firm you have involvement in or towards firms giving 'gifts'). However, given regulation is maintained with utilities, conflicts will continue.

    It would be argued that privatisation, given market forces, will ensure greater efficiency. However, folk tend to ignore that privatisation itself creates conflicts (see, for example, NHS gradual privatisation of services, with contracting out intensifying opportunities for personal gain)

    The underinvestment argument is arguably more convincing. Thus the politician will be motivated by the electoral cycle and see little value in long term investment decisions. Easy, for example, to allow services to deteriorate in order to help fund a tax giveaway.
    Thanks from Blues63, MaryAnne and Robert Urbanek

  7. #7
    Veteran Member
    Joined
    Feb 2011
    Posts
    13,933
    Thanks
    3747

    From
    AK
    Quote Originally Posted by Ęthelfrith View Post
    Thanks for the case study example. I'm not clued up regarding this specific example, but I've never been too convinced with the conflict of interest angle. The rationale is typically focused on transparency in general, given the perceived difference between private interests and public service. Those private interests could be financial (eg procurement policy twisted in favour of a firm you have involvement in or towards firms giving 'gifts'). However, given regulation is maintained with utilities, conflicts will continue.
    Privatization of what are typically public goods provided by natural monopolies all but requires continued heavy handed regulation of even "privatized" examples, e.g. utilities. It requires ongoing public oversight, so privatization in these areas is less about ideological free market ideals as it is the practical need to unload the burden of dealing with problematic and aggressive unions, especially in states where statutes have extra generous public sector union rules.

    It would be argued that privatisation, given market forces, will ensure greater efficiency. However, folk tend to ignore that privatisation itself creates conflicts (see, for example, NHS gradual privatisation of services, with contracting out intensifying opportunities for personal gain)

    The underinvestment argument is arguably more convincing. Thus the politician will be motivated by the electoral cycle and see little value in long term investment decisions. Easy, for example, to allow services to deteriorate in order to help fund a tax giveaway.
    It depends on the department being privatized. If teams of state engineers working on a simple transportation project push administrative costs of the project to 30% of total, that is not "efficient" by even the most perverted definitions of the word, that is insane. Many private engineering firms would never let that to happen because, if they did, the projects would stall or go sideways and they'd never win another competitive bid. When the state faces no bidding competition for these projects, it's federal highway money, and the state department lets admin costs consume larger sections of the project pie, and every employee in the department save the commissioner is in a pain-in-the-ass obstructive adversarial aggressive union, it becomes an obvious target for privatization.

  8. #8
    Scucca Ęthelfrith's Avatar
    Joined
    Jun 2010
    Posts
    6,658
    Thanks
    1349

    Quote Originally Posted by Neomalthusian View Post
    Privatization of what are typically public goods provided by natural monopolies all but requires continued heavy handed regulation of even "privatized" examples, e.g. utilities. It requires ongoing public oversight, so privatization in these areas is less about ideological free market ideals as it is the practical need to unload the burden of dealing with problematic and aggressive unions, especially in states where statutes have extra generous public sector union rules.
    Privatisation of utilities is nothing but ideological. Its a standard example of neoliberalism and how there aren't any economic gains.

    It depends on the department being privatized. If teams of state engineers working on a simple transportation project push administrative costs of the project to 30% of total, that is not "efficient" by even the most perverted definitions of the word, that is insane. Many private engineering firms would never let that to happen because, if they did, the projects would stall or go sideways and they'd never win another competitive bid. When the state faces no bidding competition for these projects, it's federal highway money, and the state department lets admin costs consume larger sections of the project pie, and every employee in the department save the commissioner is in a pain-in-the-ass obstructive adversarial aggressive union, it becomes an obvious target for privatization.
    Evidence shows that investment will often be more effective in the public sector. See, for example, British Rail: "...an aggressive outsourcing strategy which raised the real-terms costs of new investment projects to 2–3 times the levels paid by British Rail" (Bowman, 2015)
    Thanks from MaryAnne

  9. #9
    RNG
    RNG is offline
    Moderator RNG's Avatar
    Joined
    Jan 2015
    Posts
    7,263
    Thanks
    4414

    From
    Canada, West Coast
    Quote Originally Posted by Blues63 View Post
    I admire your knowledge of this subject, so I would like to venture a question. But first some background (I feel it is a good example of your point):

    Queensland, Australia.

    1950's: the left and right work to modernise the nation through investment in infrastructure. The left give the state government control of the infrastructure and distribution of utilities. Fees were affordable for some decades.

    Later, in the mid 2000's, a left wing state government privatised the utilities (electricity and water) claiming a 'conflict of interest' through continued ownership. They promised that market competition would drive prices down overnight.

    The buyers found a neglected grid, run down since the 1980's. Brownouts and blackouts became common. The tariff per kilowatt/hour rose dramatically almost immediately, and has continued to rise well above CPI ever since. It is now reaching critical where bills are being defaulted in record numbers and safety is being compromised in industry in order to save expenditure on utilities, as these continually rising overheads have now driven down profit margins considerably.

    Anyway, I never understood the 'conflict of interest' reasoning behind the privatisation of the utilities. Perhaps you may be able to explain it?
    The province of British Columbia has been quite socialist (by Canadian standards) for quite some time and we carry the legacy of that in two glaring examples. Our electric power is government owned and controlled as well as our monopoly vehicle insurance. Both are what are called Crown Corporations, theoretically not run by the government but by a board of directors but are 100% owned by the government and the government of course appoints all the directors.

    Both manage to give a large dividend to the government each year. An out and out hidden tax.

    The insurance, in spite of being more expensive than the the private insurance in the neighboring three provinces has been losing money for a while to the point where major price increases are no longer avoidable.

    And the power system has been ignoring needed infrastructure maintenance and upgrades to the point where the power rates are also being escalated tremendously. And that is because otherwise the dividend to the government would have to be reduced and the fiction that the government run agencies are oh so great. But it has become time to pay the piper for those two.

    There are some things the government can do well. But oh so often they don't for short term political advantage. Way too often.

  10. #10
    Veteran Member
    Joined
    Feb 2011
    Posts
    13,933
    Thanks
    3747

    From
    AK
    Quote Originally Posted by Ęthelfrith View Post
    Privatisation of utilities is nothing but ideological. Its a standard example of neoliberalism and how there aren't any economic gains.
    Privatization of utilities is usually not really privatization because rates and inefficient monopoly profits remain controlled by public utility commissions, so (quasi-)privatization of utilities is more of a workaround to deal with the inefficiencies of overly aggressive unions in states where statutes let unions have their way with public employers.

Page 1 of 7 123 ... LastLast

Similar Threads

  1. Public sector versus private sector unions
    By Amelia in forum Political Discussion
    Replies: 121
    Last Post: 10th March 2015, 06:48 PM
  2. The Private Sector Always Gets It Right.
    By HenryPorter in forum Current Events
    Replies: 62
    Last Post: 27th December 2013, 12:55 PM
  3. Harry Reid has NEVER had a private sector job.
    By mrfurleylives in forum Current Events
    Replies: 99
    Last Post: 7th August 2012, 04:32 PM
  4. A question of private sector ethics
    By Cicero in forum Political Discussion
    Replies: 1
    Last Post: 4th November 2011, 01:04 AM
  5. Private Sector Jobs Grew By Only 38,000 in May
    By Six in forum Political Discussion
    Replies: 7
    Last Post: 2nd June 2011, 01:27 PM

Tags for this Thread


Facebook Twitter RSS Feed