The Hidden Cost of Privatization
ineteconomics.org
The Hidden Cost of Privatization
1–10 of 174 posts
Re: The Hidden Cost of Privatization
#2While it does cover a lot of interesting points the few things that I think it misses are research/innovation and unions/long term employment contracts of government employees. Not that there are easy answer, but those two things can effect whether a private company could get a job done cheaper.
Also, doesn't talk about software infrastructure. Take Microsoft, Amazon, Google, Apple, Facebook. Customer acquisition costs for lots of fledgling businesses are high because of the ad auctions paid for by consumer attention and net neutrality keeping bandwidth costs down for those companies.
Re: The Hidden Cost of Privatization
#3The problem with privatization is a damned if you do, damned if you don't situation--look at Russia after the USSR caved in and how oligarchs came to own factories and all kinds of infrastructure simply because of the gold rush moment where they could get away with it. Privatization in the US works the same way--the insiders get the deals, the rest of us get nothing. If there was a way to randomize it, we might be able to make it work.
I don't like the current situation in DC where there is a permanent government workforce that is mostly unionized. It is bloated and out of touch and that's where the calls for accountability are coming from. Right-size that government workforce, make the employees actually work (I know many do, so don't downvote me--I was a state employee for awhile once upon a time, I damn well know how many people worked and how many read newspapers and napped all day).
I bet if we were to perform some simple reforms of the federal workforce that the calls for privatization would cease. It's about creating better outcomes, and the last Administration was more about creating a huge dependent class everywhere possible of people who would reliably vote their interests.
Re: The Hidden Cost of Privatization
#4While it does cover a lot of interesting points the few things that I think it misses are research/innovation and unions/long term employment contracts of government employees. Not that there are easy answer, but those two things can effect whether a private company could get a job done cheaper. Also, doesn't talk about software infrastructure. Take Microsoft, Amazon, Google, Apple, Facebook. Customer acquisition cos…
Getting rid of unions will increase income inequality. Just compare for profit higher education with public higher education. The wages/benefits for workers former very much lag those of the latter. Private prisons pay way less too. But the people at the top get outsized pay. The cost savings to taxpayers are not sufficient to justify this inequity.
Re: The Hidden Cost of Privatization
#5The problem with privatization is a damned if you do, damned if you don't situation--look at Russia after the USSR caved in and how oligarchs came to own factories and all kinds of infrastructure simply because of the gold rush moment where they could get away with it. Privatization in the US works the same way--the insiders get the deals, the rest of us get nothing. If there was a way to randomize it, we might be ab…
I can recommend "The Oligarchs" by David E. Hoffman - it makes even the wildest stories of Silicon Valley sound very tame indeed.
Re: The Hidden Cost of Privatization
#6The problem with privatization is a damned if you do, damned if you don't situation--look at Russia after the USSR caved in and how oligarchs came to own factories and all kinds of infrastructure simply because of the gold rush moment where they could get away with it. Privatization in the US works the same way--the insiders get the deals, the rest of us get nothing. If there was a way to randomize it, we might be ab…
I'm a lobbyist in Washington DC and it is appalling The work ethic of federal employees. The governments hands are tied, they can't fire anyone, and if there's no work, they just sit around and do whatever they want. The federal bureaucracy is absolutely bloated, and there's really nothing anyone can do about it. They get amazing pay, amazing benefits, amazing retirement, and if they screw up, there is really nothing you can do to them.
Re: The Hidden Cost of Privatization
#7The problem with privatization is a damned if you do, damned if you don't situation--look at Russia after the USSR caved in and how oligarchs came to own factories and all kinds of infrastructure simply because of the gold rush moment where they could get away with it. Privatization in the US works the same way--the insiders get the deals, the rest of us get nothing. If there was a way to randomize it, we might be ab…
I'm a lobbyist in Washington DC and it is appalling The work ethic of federal employees. The governments hands are tied, they can't fire anyone, and if there's no work, they just sit around and do whatever they want. The federal bureaucracy is absolutely bloated, and there's really nothing anyone can do about it. They get amazing pay, amazing benefits, amazing retirement, and if they screw up, there is really nothing…
> They get amazing pay
Who gets amazing pay? How much are we talking about? I don't know about the USA, but usually public employees don't earn that much (in exchange for high job security).
Re: The Hidden Cost of Privatization
#8While it does cover a lot of interesting points the few things that I think it misses are research/innovation and unions/long term employment contracts of government employees. Not that there are easy answer, but those two things can effect whether a private company could get a job done cheaper. Also, doesn't talk about software infrastructure. Take Microsoft, Amazon, Google, Apple, Facebook. Customer acquisition cos…
Getting rid of unions will increase income inequality. Just compare for profit higher education with public higher education. The wages/benefits for workers former very much lag those of the latter. Private prisons pay way less too. But the people at the top get outsized pay. The cost savings to taxpayers are not sufficient to justify this inequity.
Imagine if unions were strong and IT were unionized. How would you imagine the progress we've seen in information technology?
The impact on progress should not be discounted as an externality. Imagine if taxicabs or any livery service of any kind had to have a union member associated with it. Would autonomous cars make the same progress (for example, we can have autonomous subways/trains but they have to be "personned" due to pressure from unions). Or, imagine if we had them in research (drugs discovery) --the added bureaucracy researchers would have to manage and devote valuable time to.
I am not saying unionization is absolutely bad --they have brought good things about to workplace improvement, but they also have externalities we need to acknowledge.
Re: The Hidden Cost of Privatization
#9The problem with privatization is a damned if you do, damned if you don't situation--look at Russia after the USSR caved in and how oligarchs came to own factories and all kinds of infrastructure simply because of the gold rush moment where they could get away with it. Privatization in the US works the same way--the insiders get the deals, the rest of us get nothing. If there was a way to randomize it, we might be ab…
"I bet if we were to perform some simple reforms of the federal workforce that the calls for privatization would cease."
They would not. The calls certainly use any dissatisfaction with government services, but they originate from a desire to profit off the resulting privatisation. If there was no dissatisfaction, the calls would be coached in ideological grounds ("government should not be picking winners and losers"..), or the relevant departments would get underfunded until dissatisfaction reappears ("get it down to the size where we can drown it in the bathtub.").
Note how rarely, when a market fails (telecoms, banks...), are calls for nationalisation heeded, while the opposite does not hold.
Re: The Hidden Cost of Privatization
#10The problem with privatization is a damned if you do, damned if you don't situation--look at Russia after the USSR caved in and how oligarchs came to own factories and all kinds of infrastructure simply because of the gold rush moment where they could get away with it. Privatization in the US works the same way--the insiders get the deals, the rest of us get nothing. If there was a way to randomize it, we might be ab…
I'm a lobbyist in Washington DC and it is appalling The work ethic of federal employees. The governments hands are tied, they can't fire anyone, and if there's no work, they just sit around and do whatever they want. The federal bureaucracy is absolutely bloated, and there's really nothing anyone can do about it. They get amazing pay, amazing benefits, amazing retirement, and if they screw up, there is really nothing…
A good starting point would be if the political "leaders" would start to lead government instead of fighting each other all the time. When I lived in DC I knew some government workers and they all told me that their agency's top leadership doesn't seem to be interested in managing the agency but just wants to score political points and hand out contracts to preferred providers. Priorities change every few years when a new president comes in.
In the end I think Americans need to stop talking about "government" as something that's separate from them but instead work on the institutions to make them better. You can't expect good performance without good leadership.