Explain why private industry > government

[Skelron]

the private industry doesn't have to worry about changes in management direction every 4 years. which just with that alone gives it a sizable edge.

A little bit misleading as you don't find the day to day running is effected much by politicians, who mostly just set targets and agendas. The actual affairs are usually ran by a Beurcracy of people who don't change.

For example in the UK you have the Civil Service. ((For a wonderful parody of the Civil service see 'Yes Minister' and later 'Yes Prime Minister')) These are the people who serve no matter which party are in power and who will be dealing with the day to day running, and the actual make up of the organisations not the Politicians.

[Stormbringer]

the private industry doesn't have to worry about changes in management direction every 4 years. which just with that alone gives it a sizable edge.

A little bit misleading as you don't find the day to day running is effected much by politicians, who mostly just set targets and agendas. The actual affairs are usually ran by a Beurcracy of people who don't change.

No, but the fact is that the general goals and such can be changed ever two years or so depending on the elections. That's not a lot of stability and that does have something of an affect on general government behaviour. The defense realm has a lot of examples of that and I'm sure the rest do, if less dramatic.

[Darth Wong]

No, but the fact is that the general goals and such can be changed ever two years or so depending on the elections. That's not a lot of stability and that does have something of an affect on general government behaviour. The defense realm has a lot of examples of that and I'm sure the rest do, if less dramatic.

Heh heh ... big corporations change their schemes every time some new hotshot executive comes in and tries to prove his worth by making big changes.

[Imperial Overlord]

Very true Darth Wong, especially about something said big shot knows next to nothing about.

[Skelron]

Very true Darth Wong, especially about something said big shot knows next to nothing about.

HEHE can't resist urge... ' Like TV execs and Sci-Fi Shows'
*Runs and hides*

[White Cat]

This is just theorizing on my part, but I suspect that a government monopoly would be a lot more lax about enforcing ethical (and possibly even safety) standards than a private monopoly. After all, when an Enron-type scandal breaks at a private company, the government can ride in and enforce heavy penalties and show off to the voters how they're standing up for the little guy. If it was a government company, they would essentially be regulating and punishing themselves, which seems like a conflict of interest. Furthermore, sweeping it all under the rug would be the quickest way for politicians to get the issue out of the spotlight and avoid getting blamed themselves.

To use a purely hypothetical example, supposed that the president of the government postal monopoly was discovered to have claimed $2 million in travel and hospitality expenses without bothering to provide any receipts...

[Bugsby]

The new semester is just beginning, and I have two economics courses on my plate. I can share what wisdom I have learned from two weeks of micro and macro economics, but a complete functional knowledge will not be available to me for another three months or so. Here goes:

The problem with most of the arguments here is that they present too small a picture. The people attacking industry are doing so by pointing out potential flaws within individual corporations, like Microsoft. Thing is, each corporation is not the unit of study, rather the market in which that corporation operates. Even in the case of monopolies, the corporation, while it may control the market, does not consitute the entirety of the market. Even Microsoft, the stereotypical uber-corp, has to deal with competition from Apple and the like. Microsoft has to constantly innovate to stay ahead of Apple, because Apple, while small now and forever, will only stay that way if Microsoft makes an effort.

The result is that any corporation, anywhere, ever, has some competition. This is what is beautiful about capitalism. It fosters constant competition so that even the most powerful companies have to search for more efficient methods of production. Even if there were a scenario where a monopoly had complete control over the market, it would rapidly become inefficient and thus allow a competitor to break into the market by using more efficient means of production.

Also, no matter what the size of the corporation, they still have to make thier quarterly numbers. And the larger the corporation, the higher thos numbers are expected to be. If Microsoft (cuz everyone loves this example) started projecting earnings well below their potential, investors would lose faith in the stock. That's the burden Microsoft is under now... they are making massive amounts of money, but now they have to keep it up or it all falls apart.

When it comes down to it, the government just can't compete. There are no incentives. The US is not under competition from a rival government within the US that will take over if they go into defeceit. You might say that defeceits will cause the government officals to lose their jobs, but that's only the case some of the time. Defeceits have become such a staple of budgets that no one cares anymore. And by stressing non-economic issues at around the time of an election, politicains can dodge the flak. Sure, there is some accountability in government. But there is a lot more in industry, on the level of the market, the corporation, and the individual workers and executives.

Despite all this, I still believe in a large degree of government regulation. Even though the market can produce more efficiently, it won't distribute the wealth of its production fairly. Microsoft makes billions, and it all goes to Bill Gates and his ilk. Health care is high-quality and efficient, but a large percentage of the population can't afford it, and that number would be even less without the existing government regulation.

In three months I will able to cite specific examples, but what I've just said was stated to me as a basic assumption about the way economy works by a respected professor, so I tend to trust it. Corporations are more efficient. But the inherent injustice in distribution when the market is controlled by a corporation makes government involvement in the economy necessary.

[Defiant]

I've worked in private-industry union shops where we couldn't fire a deadweight employee thanks to the union, and this fucking idiot didn't even know how to read. He was hired decades ago and we were all waiting for the bastard to retire so we wouldn't have to worry about making goddamned pictograms to help him find things.

There are problems that can crop up in private industry that handicap it in some ways closer to the level at which the government operates. However, on average many services can be provided for cheaper by private industry than they could be by the government.

I can only speak to the IT industry, but I work for my state government, and I would disagree.

There have been numerous occasions where someone needed a technical solution to resolve some issue. Well, instead of keeping the work in-house with staff who are well equipped to do the job, more often than not the politicians will choose to outsource the job and use external contractors. I have personally seen cases where the private-industry solution was 5 times more expensive than the in-house solution, and greatly inferior. But the politicos decided to return some favors by hiring a company that contributed to their campaign.

[Master of Ossus]

I can only speak to the IT industry, but I work for my state government, and I would disagree.

There have been numerous occasions where someone needed a technical solution to resolve some issue. Well, instead of keeping the work in-house with staff who are well equipped to do the job, more often than not the politicians will choose to outsource the job and use external contractors. I have personally seen cases where the private-industry solution was 5 times more expensive than the in-house solution, and greatly inferior. But the politicos decided to return some favors by hiring a company that contributed to their campaign.

That's obviously retarded and it should have rightly been done in-house. The thing to remember, there, is that outsourcing a job is not some sort of catch-all, solve-every-problem solution. There are LOTS of examples in which privatizing is vastly superior to any government's solutions. In fact, there are literally too many examples of this to list anywhere. Sometimes, though, the cost of describing a problem and sending it to someone else outweighs the benefits, and this only becomes more egregious when the government actually has MORE qualified people already capable of solving the problem (as is the case here). The issue, however, is not whether or not the private industry is more efficient than the government. The issue is WHERE private industry is more efficient than the government. That question does not presuppose one must always be superior to the other, and leads to much better solutions in the long run.

[Darth Wong]

The problem with most of the arguments here is that they present too small a picture. The people attacking industry are doing so by pointing out potential flaws within individual corporations, like Microsoft. Thing is, each corporation is not the unit of study, rather the market in which that corporation operates. Even in the case of monopolies, the corporation, while it may control the market, does not consitute the entirety of the market. Even Microsoft, the stereotypical uber-corp, has to deal with competition from Apple and the like. Microsoft has to constantly innovate to stay ahead of Apple, because Apple, while small now and forever, will only stay that way if Microsoft makes an effort.

Speaking of small pictures, your argument only applies to a commoditized market. Microsoft's well-known business strategy is to deliberately "decommoditize" markets by using their leverage to introduce proprietary standards and then using those standards to "lock out" competitors. They do not need to be as innovative or as hard-working as their competitors; not even close. Case in point: your web browser. Microsoft hasn't updated their web browser in YEARS, because they know that they don't have to. They control the market.

[Master of Ossus]

Speaking of small pictures, your argument only applies to a commoditized market. Microsoft's well-known business strategy is to deliberately "decommoditize" markets by using their leverage to introduce proprietary standards and then using those standards to "lock out" competitors.

This is true. It's called "rent-seeking" behavior in monopolies and oligopolies.

They do not need to be as innovative or as hard-working as their competitors; not even close.

True. A company with other advantages does NOT need to match its competitors' products. In an open market place, many monopolies would be killed by a competitor, but they're NOT in an open market place because they already have huge advantages. In Microsoft's case, they have HUGE networking externalities that allow them to stay ahead.

Case in point: your web browser. Microsoft hasn't updated their web browser in YEARS, because they know that they don't have to. They control the market.

This is true, and the costs of changeover are high. However, consider that the government is a LEGAL monopoly in virtually every industry it's in. Defense, customs, travel--all of these are huge industries that are effectively run by only the government. In essence, the government is a monopoly in virtually every industry it runs, and when it goes up against private businesses to provide the same service, it loses regularly. Just as there is little incentive for a company with huge networking externalities, a massive market share, or ungodly returns to scale to get better, there is little need for the government to do better, either.

[Darth Wong]

This is true, and the costs of changeover are high. However, consider that the government is a LEGAL monopoly in virtually every industry it's in. Defense, customs, travel--all of these are huge industries that are effectively run by only the government. In essence, the government is a monopoly in virtually every industry it runs, and when it goes up against private businesses to provide the same service, it loses regularly. Just as there is little incentive for a company with huge networking externalities, a massive market share, or ungodly returns to scale to get better, there is little need for the government to do better, either.

True. However, they lack private industry's incentive to conduct flagrant and deliberate gouging of the consumer. If one compares private monopolies with government monopolies, one is comparing highway robbery with waste. Neither is good, I'll grant you, but to suggest that highway robbery is preferable is rather questionable.

[Bugsby]

Speaking of small pictures, your argument only applies to a commoditized market. Microsoft's well-known business strategy is to deliberately "decommoditize" markets by using their leverage to introduce proprietary standards and then using those standards to "lock out" competitors. They do not need to be as innovative or as hard-working as their competitors; not even close. Case in point: your web browser. Microsoft hasn't updated their web browser in YEARS, because they know that they don't have to. They control the market.

It's a bitch. The only way to do things is to have more effective anti-trust legislation. When a corporation accheives true monopoly like this, it is hard to deal with.

But in the event that a business achieves true monopoly, I am willing to drop all arguments that corporations are more efficeint. It's not that there is something inherent to the corporate structure that creates efficiency: far from it. The reason corporations are more efficient is because of the competitive environment they operate within. It's not the corporation that is an efficient system, it is the market that is efficient. Inefficiency only sets in when a corporation solidly controls the market. Which, by the way, the government does in nearly every market it is in (as Ossus pointed out).

Therefore, it would be better to restate the position that most pro-corporate people hold not as "corporations are more efficient," but rather as "the competitive markets in which corporations deal breeds efficiency." Take away the competition, and corporations become evil quicker than Darth Vader with a bag full of baby kittens and nothing to do.

[Master of Ossus]

True. However, they lack private industry's incentive to conduct flagrant and deliberate gouging of the consumer. If one compares private monopolies with government monopolies, one is comparing highway robbery with waste. Neither is good, I'll grant you, but to suggest that highway robbery is preferable is rather questionable.

That's not a good analogy. With a private company--even with the most powerful and monopolistic companies--there is SOME competition. If another rich man sees someone massively gouging consumers, he'll step in and gouge them a little bit less. Moreover, monopolies' powers to establish prices are not infinite by any means, and the monopoly is charging only people who actually use a service as opposed to the government, which charges everyone who pays taxes.

[tharkûn]

True. However, they lack private industry's incentive to conduct flagrant and deliberate gouging of the consumer. If one compares private monopolies with government monopolies, one is comparing highway robbery with waste. Neither is good, I'll grant you, but to suggest that highway robbery is preferable is rather questionable.

Not necessarily the case, if the monopoly in question actually shows a "profit" for the government then the government may well engage in rent seeking in order to shore up other programs that don't. For instance, if the government charges a flat fee nationwide to provide broadband to every household on the government monopoly then obviously the government is gouging the city dwellers and reaping immense "profits" to subsidize a loss in the rural areas. Or maybe the government wants to pay for a large military and lower the impact of a ballooning debt, in which case they gouge everyone on the price of broadban and divert the proceeds to the general budget.

The government is not without incentive to price gouge, if they can use the monopolistic profit from one endeavor to fund another without raising public ire they will do it.

The only control on a government monopoly is that the voters will be sufficiently inconveinenced that they either vote for change or scare the incumbents that they might. At least with non-governmental monopolies there is possibility that the government might actually have the balls to enforce anti-trust legislation and bust up their price-gouging monopoly.

[The Yosemite Bear]

Mind you private industry with government contracts is not exactly a good thing....

I still have a bitchfest because Coca-Cola has the National Parks exclusivity deal, meaning that we can't shop their compettitors and they regularly ream us with a chainsaw...

[The Yosemite Bear]

Which you can guess why I don't exactly like bush's plan for medicare