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The Hidden Cost of Privatization

ineteconomics.org

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Re: The Hidden Cost of Privatization

#41

Post by arximboldi »

pizzetta wrote: post #8
yequalsx wrote: 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 imagine less bullshit businesses selling air castles built on top of an exploitative operation. I imagine better democratic processes inside companies. I imagine using collective power to protect underrepresented groups instead of fighting against each other. A net benefit to society.

Re: The Hidden Cost of Privatization

#42

Post by mtdewcmu »

ashark wrote: post #31
pizzetta wrote: post #16

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).

> 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). Where tech directly touches my life, I wouldn't say today's tech makes me any happier or substantially improves my wellbeing over what 1999-level tech did. Worse in some ways. I do different stuff with 2017 tech than I would without it, but I doubt it's actually improving my lif…

The canonical counterexample to "who needs progress?" is medicine. I wouldn't want to be limited to the medical care from 1999 if all else is equal. Who needs to live with hepatitis C now that there's a cure?

Re: The Hidden Cost of Privatization

#43

Post by zip1234 »

fivestar wrote: post #3

The 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…

A lot of them work hard, but there is nothing to ensure that they are working on useful things and governments are veeery slow to shift workforces around.

Re: The Hidden Cost of Privatization

#44

Post by leroy_masochist »

Article is a summary of others' thoughts (mostly Keynes) without a clear thesis.

Would have been nice to read, say, an analysis of why privatizing air traffic control is a bad idea despite the fact that the tech the gov't uses in that space is super antiquated, which in terms drives a bunch of inefficiencies and safety hazards in that particular sector.

Re: The Hidden Cost of Privatization

#45

Post by Consultant32452 »

yequalsx wrote: post #4
sharemywin wrote: post #2

While 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.

It's important to apply context to this. A minimum wage, among other things, forces businesses to prejudice against lower skilled workers. If the minimum wage is negotiated by the union to $18/hr but you only produce $10/hr due to lack of experience, disability, below average IQ, or you went to a failing public school then you're simply unemployed. If we remove this contractual minimum wage, you're right, it would likely have some minimal impact for the people on the margins of having productivity sufficient to justify hiring them on the union's minimum wage. However, everyone below that level of productivity now has the potential for new jobs, and with those jobs comes skills training and economic mobility. Unions do marginally help their members, but they harm everyone below them on the economic ladder.

Re: The Hidden Cost of Privatization

#46

Post by subverter »

The problem in Keynes thinking on "social services" is that it's impossible to gather all of the knowledge necessary to ascertain what those would be. That knowledge is dispersed among ~320m citizens (in the U.S.) who each have particular wants and needs. And even if you could somehow attain that knowledge in one place, the likelihood of finding consensus on how a particular "social service" should be offered is next to zero. The end result? Nearly everyone disagrees with some of what government implements, which breeds resentment and causes gridlock much like we're seeing today in the U.S.

It doesn't have to be that way. By decentralizing decision making down to a level closer to the individual (if not the individual), more people get what they want. For example, right now there's a federal mandate for health insurance. Not everyone agrees with this mandate, so why not at least push it down a level to the states? California can still have a mandate for health insurance, and Alabama can decide not to. And then, why not push it to the city/county level? If you don't agree with San Francisco's mandate for health insurance, simply move to Oakland. You don't even have to move states, let alone countries.

Why do so many oppose such a solution where everyone can much more easily find a place where they agree with the "social services" offered (or not)?

Re: The Hidden Cost of Privatization

#47

Post by pravda »

yequalsx wrote: post #4
sharemywin wrote: post #2

While 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.

>Just compare for profit higher education with public higher education. The wages/benefits for workers former very much lag those of the latter.

And here appears the Broken Window Fallacy!

Re: The Hidden Cost of Privatization

#48

Post by bjl »

subverter wrote: post #46

The problem in Keynes thinking on "social services" is that it's impossible to gather all of the knowledge necessary to ascertain what those would be. That knowledge is dispersed among ~320m citizens (in the U.S.) who each have particular wants and needs. And even if you could somehow attain that knowledge in one place, the likelihood of finding consensus on how a particular "social service" should be offered is next…

Because a lot of people (most, even) don't have the resources required to just up and move cities, let alone states.

Your 'solution' would be massively regressive - what if Texas decides to rescind Medicaid? Are those people who cant afford to move just SOL?

Re: The Hidden Cost of Privatization

#49

Post by matchbok »

subverter wrote: post #46

The problem in Keynes thinking on "social services" is that it's impossible to gather all of the knowledge necessary to ascertain what those would be. That knowledge is dispersed among ~320m citizens (in the U.S.) who each have particular wants and needs. And even if you could somehow attain that knowledge in one place, the likelihood of finding consensus on how a particular "social service" should be offered is next…

Because if you don't mandate insurance, then the entire system falls apart. Sick people need it, healthy people don't want to pay for it. You need everyone to pay to make it affordable.

Re: The Hidden Cost of Privatization

#50

Post by maxxxxx »

mljoe wrote: post #30
mljoe wrote: post #27

Earlier quoted context omitted.

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.

There are two types of staffers. Some of them make very good money (way above 100k) and others do it for the idealism.
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