Is the push towards privitization all it's cracked up to be?

It's true that corporations aren't always more efficient. But who was arguing that? And do you toss out all arguments about the efficiency of the private sector based on the fact that it is not infalliably more efficient?



But who are you arguing against? I am pretty sure nobody said there are different kinds of workers, I am also pretty sure most people wre comparing the business model.



Your example has a flip side, in which the other corporation is a success story.

<shrugs>

I'm also sure nobody was arguing that some corporations will never outperform others.

But you bring up an interesting case. Airplanes.

I used to teahc people who worked for Embraer (Brazil's airplane manufacturer).

I long marveled at just how much of the plane is outsourced. Most companies just assemble it.

This trend can be seen in automobile production and elsewhere and it strikes me as similar to privatization. Anywho, that's my mind trip for the hour.

The principle argument for privatization is, or ought to be, that it harnesses greed. Those with "entreprenurial" spirit (what debasing of a perfectly good French verb) will find a way to deliver desirable service at a lower cost. Government would then subsidize prospective "clients" based on need.

That is the theory, at least, and it is simply a revanchement of the basic argument for allowing capitalists to live among civilized folk. The problem with the practice is exactly the same with what are adduced by opponents of capitalizism as its faults--greed, venality, larceny. If ever it worked, it would work for the same reasons that the "purer" examples of capitalism have worked.

In 1670, a grateful Charles II rewarded his closest friends, and the supporters of his restoration, or of his late father's futile war with Parliament--with the chartering of The Company of Gentleman Adventurers Trading into Hudson's Bay. George Monck, whose slow march south from Coldstream in 1660 had assured Charles' restoration, was the first Governor of the Company. The selectmen included Prince Rupert of Bavaria, the cousin who had been his father's cavalry commander in the Civil Wars, and a young John Churchill, no one then knowing he would one day be Duke of Marlborough, and many others whose service to the Late King elicited the gratitude of the Then King.

They did not pay a dividend for 15 years. When they did, it was 45% of capital invested (lots of rich widows in 1685). Thereafter, the dividend ranged between about 18% and 35% for a century, except in a few years when, owing to disaster (such as d'Iberville's successful attack on the Hudson's Bay "factories" during Europe's Nine Years War), they paid no dividend at all. All in all, the first century of the company made a lot of millionaires, if not then, in the years to follow.

The "Bay" (as the department store chain is known today) was a very benign capitalist indeed. Their stock in trade was beaver pelt and glands. The pelt has two types of hairs, "guard" hairs which are space throughout the pelt, and are thick, wiry and oily, and the undercoat. A "made" beaver pelt is one which has been used as a sitting carpet, or a part of a cloak, for about two years, after which time the guard hairs have almost all fallen out, and it had lost its water-shedding and heat retention qualities. That pelt, in London or Amsterdam, would have the undercoat shaved off, and pressed into a felt from which the most stylish and expensive gentlemen's hats were made (using mercury in the felt bath--most Hatters before 1851 were likely Mad indeed). The glands under the tail of the beaver were used in various nostrums ("snake oil," for the less latinate), and, as they contain a naturally occurring form of acetasalate(no scientist i, anyone is welcome to correct that spelling), did at least dull the patient's pain.

And what in God's name is Setanta on about now ? ! ? ! ?

HBC had a vested interest in everything so contemporarily PC as to make one wish to puke. In furtherance of the goodwill and productivity of the aboriginal inhabitants, HBC assured for most of two centuries, by active militancy if necessary, that other white boys did not disturb the idyllic slumber of the millenia of their cash cows--the Indians. They provided first-class product to their customers, necessary to cut out the French in Québec, the Anglo-French at Montréal, the Dutch in Albany, and eventually, the Americans coming up the Missouri. They explored and catalogued the wilderness, and took great pains to report regularly on the quality of the habitat of Castor canadensis, for which environment they entertained the most genuine concern.

They also inadvertantly demonstrated how naturally greed and capitalism can arise in any population. A young coureur du bois, a French Canadian boy, signed on with HBC at about age 16, in the late 1690's. He went on a three year trek, which eventually took him from Hudson's Bay to the Bitterroot in what is now Idaho. The agents of the Company were factors, and their warehouse known as factories. At York Factory, on the western shore of the Bay, one could obtain a Hudson's Bay musket, a cleaning kit, patch cloth, a keg of fine grain black powder, five pounds of lead and a bullet mold for 23 made-beaver pelts. The young Frenchman tells us that the same musket, with no cleaning kit, patch cloth, powder, lead or mold, just the bare musket--sold for 200 made beaver pelt in the Rockies.

Capitalism is one of the most basic of individual, unwritten contracts which comprises the larger social contract. Whether one simply discusses the antics of those outlaws, or zeroes in on a topic such as privatization, one might as well be completely clueless as to be unwilling to acknowledge that the basic defining factor in the equation which is that contract is greed. The ramifications thereof are the meat of the topic at hand, as will always be the cases in a discussion of capitalism.

Whether or not privatization "works" or doesn't is the same discussion as whether or not capitalism helps or hurts. I am likely never to be convinced that there has yet been devised a more efficaious means of finding the most efficacious means . . . to do anything. From the Diggers and LeBeouf to Ché and Ho, socialists have quixotically and fatally set out to destroy the very system which could be most effectively exploited to the benefit of the people.

Whether or not privatization "works," and whether or not capitalism "helps" depends entirely upon the vigilance with which we all keep our eye on the hukster. If ever you lose sight of the pea or any of the cards, get a good grip on your wallet, and walk away.

Good point (comparison of Capitalism to privatization).

Essentially the debate is a mini-debate on socialism vs. capitalism.

Keeping an eye on the capitalist is also a good point, as many failures in privatization might have been avoided with some regulation.

I think we all seem to agree that there are upsides and downsides. Is that correct?

If so, I'd be interested in hearing what people have to say about what fields they think should/should not be privately run.

I'm especially interested in hearing Thomas expound on health care. I'm also interested in hearing what people think about privatization of energy (electricity to be specific) as I think LW raises a valid case study with California's experience with it.

Here are mine for a few random ones:

Education: public with the private option.
Healthcare: public with the private option
Telecommunications: private with government-regulated benchmarks.
Prisons: public with outsourcing
Police: public with limited outsourcing
Electricity: public
Water: public
Gas: private with strong regulation

Any takers?

Many of the power plants on the Canajun side of the Niagara River are named Sir Adam Beck, followed by a number. This is because Adam Beck was both responsible for "the Hydro" and worked like a demon to make it a publicly-owned utility as well. He was square up against some of the most wealthy and powerful men in Toronto, so he stumped the "prairies" of southwestern Ontario, getting a lot of support in Berlin (modern Kitchener, the name embarrassed them during Dubya Dubya One). He created a powerful movement, and won his crusade. Theoretically, the Hydro is still a "public" utility in a sense which that term does not connote in the U.S. I've heard, anectdotal evidence to be sure, about as much carping about the Hydro there as i hear about AEP here in Ohio. There will always be an element of dissatisfied customer in any such transaction. I would like to hear from our Canukian friends on the subject of the Hydro, and perhaps they could enlighten me as to its current status as a public institution.

Adam Beck became secretive and megalomaniacal, and eventually had to be eased from his tsar-like rule of the Hydro. Absolute power and all that . . .

more grist . . .

Here's The Bay company store in Toronto.

Yes, Boss, My Sweetiepie has had me in there before on more than one occassion . . . although not in the biblical sense, to be sure . . .

Here's the plaque on the same building. Set, thanks for the brief history on the Hudson Bay Company. I remember studying about it in grade school, and when we passed by this plaque, I just had to take a picture of it, because someplace in the recess of my brain I remembered The Hudson Bay Company.

Just a quick point here before I run into anything else. There has been a bit of discussion about both telecommunications and Electrical power distribution in this thread and IMO, there are a few concepts being muddied here.

Telecommunications in the US was never a public utility. Ma Bell was AT&T - not the government. It was a Government REGULATED company. The same is true for most of the Electircal power grids (in the US at least). These companies were allowed to exist as monolpolies with heavy government regulation.

I just think we need to keep clear here that there is a difference between a true "public" entities (owned and operated by the government), regulated private entities and unregulated private entities.

Didn't know that, but I was talking bout a real case of privatization abroad (SP, Brazil).

Yup. I just wanted to make sure we are all in the same boat as far as the discussion goes!

For the discussion of what can or can't be privatized - I'll go back to a comment I made earlier. IMO, the mistake is in the "all or nothing" thinking. I believe any function can be privatized successfully.

What I wouldn't recommend is turning an entire function over to private enterprise and just reviewing reports (which seems to be the standard way of doing it..). I'd "privatize" as cross-section of the entity.

In a school for example, 50% of the teachers, staff, support people, etc.. could easily be non-government employees. With a 50/50 balance of government and private industry you could still have the government people setting the agenda, making the decisions (course material, etc..) and then have the private employees doing the work and being monitored for contract compliance by the government employees.

The actual mix of government/private employees/functions would vary depending on what efficiencies can be acheived in the particular function. In some cases it may be better for the private corporation of own the facilities for example. In others it may not...

But what would the benefit of having 50% private in education be (50% of public school employees)?

Maybe I'm confused but I don't get the advantage of having a public or private employee without the public/ vs private administration of the employee. I do see the advantage of public or private administration. But if you are talking about 50/50 public/private for teachers I don't get it.

Janitors, cafeteria, maintenance etc are things I think make sense to me to privatize. With the inordinate attention HS football gets I wonder if privatizing the stadiums makes sense as well.

But I just don't understand what the benefit of having 50% of the teachers "private" is.

what am I missing?

Those who advocate privitization seem to be for it on ideological and not particularly pragmatic reasons. It's the Ayn Rand oversimplification which she passed off as objectivism. A corporation achieving greatness in its field does not qualify it to tackle all problems. I don't really believe corporations want to tackle education, for instance, as they don't feel it is profitable. Same problem with our health industry (and it is an industry as much as a public service) -- should everything be run with the idea of a profit? Too much of the profit ends up in executives pockets and it's debatable how much they really deserve to earn that much money. One can cry about incentives until their blue in the face but what they are actually talking about is greed.

Privatisation is good for any government regardless of colour. It provides a huge fund for well timed largesse ( read just prior to an election). All politicians know that a good government is one that gets re-elected.

Personally I don't think much of privatised utilities. After all it took privatisation to bring about water restrictions in London, something that Hitler could not achieve at the height of the blitz.

by what measure?

That's true for some of them. But the same is true for some of those who advocate against privatizing. Ideologic thinking isn't a specialty of any one group.


Quite possible. Why don't we introduce a voucher system that covers the whole cost of schooling a given child, let private and public schools compete on a level playing field, and find out?


Sure, why not? Privatizing the health industry is a problem -- and possibly a bad idea -- because we have good reasons to expect a large degree of market failure there. But the profit motive in the health market isn't a bigger problem than the profit motive in the food market. And nobody has a problem with the food market being private.

Well, from my own viewpoint - the objective of governmment (as related to this thread anyway) is to ensure the necessary services are available/provided on as "near to equeal" basis as possible to all citizens in the most efficient and cost effective manner. The government has a dual responsibility here. They have to ensure the the service is provided but also control the expense of taxpayer $$. Government is the tax collector but it is also the auditor.

Mixing in non-government employees is one way to keep down the overall costs of providing the service.

Speaking of oversimplifications....

I'm aware of this. But a heavily regulated entity whose monopoly power is protected by the gov't, either by legislation or by subsidy, is near enough to the public end of the spectrum to merit inclusion in the conversation, I think. Think US Postal Service...

Of course they should be included in the discussion. No doubt about that from me!

It should be understood though that there IS a difference. True "public services" are paid for through taxpayer $$. People that work for the SSA or RMV get ther paycheck, benefits and penisons from the state or federal treasury.

We don't incurr taxes to pay employees of ConEdison or the other electric service providers. They get paid through the charges we pay based on our individual usage.

Gotcha. Brings up a key point, I think, actually. Electricity and telecom are pay-to-play enterprises. The opportunity for the consumer to free-ride is not really there. For a true public enterprise -- roads, for instance -- free-riding is, in most instances, possible. (Course, we could install EZ-pass on every single public road...)