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The Hidden Cost of Privatization

ineteconomics.org

21–30 of 174 posts

Re: The Hidden Cost of Privatization

#21

Earlier quoted context omitted.

I imagine the progress in microprocessors, photolithography, search, education, power generation, drugs discovery, communications, etc., etc., do have a measurable impact on progress of the species. Imagine if tech were stuck where it was in even 1999. So many things possible today would not be possible (due to cost or unavailability).

These things are good, but have so far been applied carelessly and unevenly. This is where my comment about conscientiousness comes in. We need to start asking "For what purpose?" and "Who could this hurt?" more often. Packing more transistors into a CPU and working magic with algorithms to squeeze more out of them is not so good if it goes into a machine intended for surveillance and violating privacy, or to wipe ou…

Anything can be used for good or evil. Its the wrong place to attack the problem - we can't live in the stone age because "somebody might misuse fire".

Re: The Hidden Cost of Privatization

#22
post #8
post #4

Earlier quoted context omitted.

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 "personne…

>Imagine if unions were strong and IT were unionized. How would you imagine the progress we've seen in information technology?

I'm not sure this is really a compelling point. Tech companies have made some cool stuff, but technology is also heavily driven by FOSS, which is not really driven by the same factors business are. Union or no union isn't really a question with FOSS, as these projects, many of which drive modern technology, were developed without traditional business incentives. Yes they're are businesses built around supporting open technology, but techs huge advances aren't driven only by companies. I think unionization would have less of an impact on tech advances than is being suggested.

Re: The Hidden Cost of Privatization

#23
post #8
post #4

Earlier quoted context omitted.

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 "personne…

[deleted]

Re: The Hidden Cost of Privatization

#24
Look, I actually argue for social safety nets. I believe government's role can be defined simply as "ensure that the minimum expectations of society are met", with the full understanding that these expectations (running potable water, medical advances, etc.) increase over time and vary from place to place. I am totally fine with decentralizing government functions to the point of neighborhoods – many of you know that I'm in favor of more decentralization in general.

However, even someone like me can say this article falls far short of supporting its audacious title. It's mostly a paean to Keynes and his concepts. In addition, it contains some fallacies:

But, if the government covers the costs of the service, why not provide it itself? Why spend the time and money forming the partnership, and monitoring its outcomes, if it is going to pay for what is done anyway.

Because when providers compete, quality goes up and costs go down. (On the other hand, when buyers compete, costs go up, which is why single payer systems lower costs.)

The answers to these questions center on the greater efficiency of private enterprise and the consequent cost savings of public-private partnerships. Yet, studies of their use in infrastructure investment provide little support for this presumed cost saving

Compare the VA to Medicare.

Yet, many besides the users of a road benefit from it – the businesses on its route to name just a few. These would be hurt along with its users if its tolls reduced traffic flows, so that while tolls can be charged, and the maintenance expense of the road depends on its use, fees for its use must not impede its use.

Well, as Hayek argued, everyone setting their own prices is a far superior system than central planning to set the price of a toll. And whoever would maintain a road would obviously want maximize their wealth by maximizing the number of cars that go through without a slowdown. They would not likely ignore the long tail of cars any more than, say, mobile phone companies ignore consumers who can "only" pay $20 a month.

In short, this is a terrible reason not to have private ownership . In fact, by being a smaller, private organization, they might have moved faster to install EZPass - like solutions, as AT&T predicted back in the 1990s (https://www.youtube.com/watch?v=4PJcABbtvtA)

Much better reasons include simply the guarantee I stated above: people expect to be able to access lots of roads, so they have to be public as a matter of policy. Another reason is standardization: they can expect roughly the same road rules on all roads. And so on.

Perhaps as technology improves, more things can be decentralized and privatized. Self-driving cars can perfectly adapt to local road rules. Communities will be able to install their own wordpress-like government systems that would handle voting, taxation, safety nets, single payer systems etc.

Governments are just management teams of organizations. That's all. Parks in a mall open to all visitors are not much different than public parks. Same goes for community rooms in a co-op.

Recessions can be most easily fixed by giving money to the consumers, to spend on what they need, thereby "voting with their wallet". This is basically "single payer systems" or UBI.

Here is a great debate on it: https://www.youtube.com/watch?v=d0nERTFo-Sk

Re: The Hidden Cost of Privatization

#25

Earlier quoted context omitted.

These things are good, but have so far been applied carelessly and unevenly. This is where my comment about conscientiousness comes in. We need to start asking "For what purpose?" and "Who could this hurt?" more often. Packing more transistors into a CPU and working magic with algorithms to squeeze more out of them is not so good if it goes into a machine intended for surveillance and violating privacy, or to wipe ou…

Anything can be used for good or evil. Its the wrong place to attack the problem - we can't live in the stone age because "somebody might misuse fire".

Someone did invent the fire extinguisher and come up with Stop, Drop, and Roll, though. I'm not saying don't do new things. For example, Bandcamp giving me a way to download a list of people who've bought my music is like a fire extinguisher. If Bandcamp burns, I don't lose everything with it. That's conscientious of them. Most places that sell music don't offer that.

Re: The Hidden Cost of Privatization

#26
post #22
post #8

Earlier quoted context omitted.

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 "personne…

>Imagine if unions were strong and IT were unionized. How would you imagine the progress we've seen in information technology? I'm not sure this is really a compelling point. Tech companies have made some cool stuff, but technology is also heavily driven by FOSS, which is not really driven by the same factors business are. Union or no union isn't really a question with FOSS, as these projects, many of which drive mod…

I could argue that if unions were strong and everyone had to belong to a union to participate in an economy the unions could see an advantage to controlling how you contribute to FOSS because your "free" contribution to FOSS impinges on the rights to another unionized worker's right to work. The FOSS developer would theoretically be undermining the union worker.

Re: The Hidden Cost of Privatization

#27
post #13

Earlier quoted context omitted.

Fair point, the pay you can get elsewhere might be higher. I tend to think anything over $60k a year to be pretty good, which a GSA scale employee can get to in just a few years. Pay raises are almost guaranteed unless there is a budget issue, but even then you get it all eventually. They do max out at about $140k, though. The magic is to retire after 20 years, get the pension, and then get another job in the private…

And 140k is a lot of money if you factor in a guaranteed pension. You have to make a lot of money to finance this yourself.

The pension has been slowly getting worse and worse though. With the newest version of FERS we are at 1% per year at service annuity partially financed with a 4.8% employee paycheck deduction.

Re: The Hidden Cost of Privatization

#28
post #7

Earlier quoted context omitted.

> 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).

Fair point, the pay you can get elsewhere might be higher. I tend to think anything over $60k a year to be pretty good, which a GSA scale employee can get to in just a few years. Pay raises are almost guaranteed unless there is a budget issue, but even then you get it all eventually. They do max out at about $140k, though. The magic is to retire after 20 years, get the pension, and then get another job in the private…

In DC/NOVA area $60k a year qualifies you for rent subsidy and other welfare benefits. That said $60k is not what federal employees in the DC area start at, nor is $140k what they normally end at. It's more around $80k - $155k ($180k-$190k if you hit management).

Re: The Hidden Cost of Privatization

#29
post #27
post #13

Earlier quoted context omitted.

And 140k is a lot of money if you factor in a guaranteed pension. You have to make a lot of money to finance this yourself.

The pension has been slowly getting worse and worse though. With the newest version of FERS we are at 1% per year at service annuity partially financed with a 4.8% employee paycheck deduction.

That's possible but it's still a great deal compared to saving for retirement yourself. And if you work in Congress you often get an accelerated schedule so one year there counts for several years toward your pension.

Re: The Hidden Cost of Privatization

#30
post #27
post #13

Earlier quoted context omitted.

And 140k is a lot of money if you factor in a guaranteed pension. You have to make a lot of money to finance this yourself.

The pension has been slowly getting worse and worse though. With the newest version of FERS we are at 1% per year at service annuity partially financed with a 4.8% employee paycheck deduction.

>And if you work in Congress you often get an accelerated schedule so one year there counts for several years toward your pension.

That's true, but the only real people who benefit is the Member and maybe their CoS. Congress staffers make joke salaries in general. The reason people take those jobs is either a sense of duty or as the requisite training program to become a lobbyist.

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