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

fishin muttered

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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.

I don't understand this either.

But let's look at your last sentence. That you posit a need for governmental overview at all implicitly acknowledges that the profit motive can be expected to function in opposition to the community's best interest, at least often enough that this factor ought not to be ignored. And, of course, we know from experience that folks will act irresponsibly and selfishly, so we have building codes and quality standards for medicines, etc., and government regulators checking. Here in the Vancouver area, over the last two decades, we've had an enormous problem with buildings that leak, then rot. The majority of these cases involves residences (townhomes, condominiums) and a lot of families and individuals have been bankrupted or have seen their savings disappear. In part, this was a consequence of poor architectural design (going for the 'california' look) but also of a completely insufficient regulatory staff. In Ontario, several years ago, as a consequence of reduced regulatory staff for municipal water supply (under a business-minded government) a bunch of folks ended up dead.

Arguments for deregulation and privatization originate almost exclusively out of the business community for the obvious reason that a business will prefer not to be impeded or constrained, or because it sees an opportunity for profit ("look at all that money in the school system and in social welfare programs...let's get some of it").

Now, I understand we are talking about privatization here, but it seems to me that the criteria for establishing what ought or ought not to be privatized should hinge less on the claims to increased efficiency (which will predictably be the forwarded rationale) but rather on what areas of activity are too important to the whole community to leave in the hands of a profit-driven motivation.

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Blatham wrote:

And, of course, we know from experience that folks will act irresponsibly and selfishly, so we have building codes and quality standards for medicines, etc., and government regulators checking.

This is point I hear quite often, but I can never seem to grasp its logic. The government is one bunch of folks, the governed are another bunch of folks. So if the problem is that folks will act irresponsibly, how does it solve the problem to have one bunch of folks regulate the other bunch?

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thomas

That's a pretty simple one. Why a person is doing a task is going to be relevant to the outcome of the task. Ought the nuclear industry to be responsible for overview of its own safety procedures? Or we might point to the example of GM's boardroom decision to not bother fixing the problem where one of it's models could be expected to explode in x percent of rear end collisions, therebye toasting the family inside, because the projected cost of litigation was less than the projected cost of recall. To say 'one bunch of folks' vs 'another bunch of folks' kind of skips some important elements here.

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blatham wrote:

Now, I understand we are talking about privatization here, but it seems to me that the criteria for establishing what ought or ought not to be privatized should hinge less on the claims to increased efficiency (which will predictably be the forwarded rationale) but rather on what areas of activity are too important to the whole community to leave in the hands of a profit-driven motivation.

For some reason you seem to only want to equate "efficiency" with "profit" and IMO, that is a significant mistake and a part of the "all or nothing" thinking that I mentioned early in this thread.

Efficiency can only be measured accurately after all of the requirements of the function are laid out. Once that is done planners can look for areas where the potential for cost savings may exist. As long as all of the requirements are met and there is cost savings to the taxpayer why should anyone be concerned if the private entity is making a nominal profit or not?

Most people, methinks, would be quick to say that the police should be an entirely government function. But is it necassary that everyone related to police functions be government employees? What about the people that maintain their telephone and radio systems? School crossing guards? Construction site traffic control? Animal Control? Do you believe that every function that typically falls under "the police" HAS to be done by a city/state employee only?

blatham wrote:

Here in the Vancouver area, over the last two decades, we've had an enormous problem with buildings that leak, then rot. The majority of these cases involves residences (townhomes, condominiums) and a lot of families and individuals have been bankrupted or have seen their savings disappear. In part, this was a consequence of poor architectural design (going for the 'california' look) but also of a completely insufficient regulatory staff. In Ontario, several years ago, as a consequence of reduced regulatory staff for municipal water supply (under a business-minded government) a bunch of folks ended up dead.

Was the lack of regulatory staff failures of privatization or a failure of planners to determine what the real requirements were???

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Checks and balances, that be called. But it's not really an argument against privatization per se, but an argument against complete deregulation.

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blatham wrote:

thomas That's a pretty simple one. Why a person is doing a task is going to be relevant to the outcome of the task.

I agree. But why should I believe a government regulator is doing the task for the reasons he is supposed to be doing it? To take some random American examples, pollution in forests are now overseen by a paid lobbyist of the timber industry. Pollution of the oil industry is currently monitored by a paid lobbyist of the oil industry. I think the regulation of financial markets is done by similar people though I'm not quite sure. Examples like these makes me very skeptical that the stated goals of government regulators are their actual goals. I don't think you have refuted my point about 'one bunch vs. another bunch'.

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But why should I believe a government regulator is doing the task for the reasons he is supposed to be doing them?

Regulators are fallible, to be sure. But American financial institutions have improved since 1929 and American pollution has improved since the establishment of the EPA. That these protections are eroding under the current government is due to the fact that the current government is propped up by private industry. (Please note: this is not meant to say that previous governments were not propped up by their own groups of folks. I would hate for this to turn into a polical squabble over something I said.)

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dog

Yes, it is an argument for regulating. None of us want to be under a roof that collapses, or have our daughters locked inside a factory so that they don't take unscheduled smoke breaks. We regulate not to give work to the otherwise unemployed, but because we have learned that self-interest is precisely that. But there is a relationship between those lessons and privatization.

fishin

I too think all sorts of tasks surrounding the police function might be privatized with no ill consequence for the community. But the reasons why we are hesitant to turn over policing to Dow seem to me to speak directly to why privatization ought to be very carefully thought out.

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patiodog wrote:

Regulators are fallible, to be sure. But American financial institutions have improved since 1929 and American pollution has improved since the establishment of the EPA.

I agree on both counts. But have they improved because of, in spite of or independent of the establishment of government regulation? I don't think we have evidence from countries who kept their financial regulation private after 1929 because there aren't any. As for pollution, my understanding is that it got better before the establishment of the EPA and continued to get better after the establishment of the EPA. This suggests, without proving, that the two phenomena are independent. Are you saying that my understanding is wrong?

patiodog wrote:

That these protections are eroding under the current government is due to the fact that the current government is propped up by private industry.

This is one way of looking at it. Another way of looking at it is that governments in advanced countries have become so large that corporations find it increasingly more profitable to coopt governments than to deliver good products and services. That's why I conclude that our governments ought to be downsized considerably so they have nothing to sell to corporations anymore.

Obviously, nobody is obliged to follow my conclusions.

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I agree. But why should I believe a government regulator is doing the task for the reasons he is supposed to be doing it? To take some random American examples, pollution in forests are now overseen by a paid lobbyist of the timber industry. Pollution of the oil industry is currently monitored by a paid lobbyist of the oil industry. I think the regulation of financial markets is done by similar people though I'm not quite sure. Examples like these makes me very skeptical that the stated goals of government regulators are their actual goals. I don't think you have refuted my point about 'one bunch vs. another bunch'.

thomas

I actually considered mentioning one of those examples myself. Interesting that we take the same example to make our point.

But I'd argue that when government regulation falls under the control (by design) of the same fellows who are doing the activity to be regulated, you have a government in name only. One group is now quite completely missing.

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As for pollution, my understanding is that it got better before the establishment of the EPA and continued to get better after the establishment of the EPA.

Of course technological improvements are a big part of this. But limiting certain practices, like dumping methyl mercury in the water or widespread use of DDT, simply aren't going to be halted -- at least not in a timely fashion -- by market forces.

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blatham wrote:

I actually considered mentioning one of those examples myself. Interesting that we take the same example to make our point.

I agree.

blatham wrote:

But I'd argue that when government regulation falls under the control (by design) of the same fellows who are doing the activity to be regulated, you have a government in name only. One group is now quite completely missing.

That's an interesting point -- and one that can be applied the other way round too. A couple of posts ago, patiodog suggested that what you really want is checks and balances. I would argue that magazines reviewing products, credit rating agencies, and Amnesty International are highly successful private institutions for providing checks and balance.

With these examples in mind, would you concede that they, too, are "private in name only", and can do much of the checking and balancing that you want government to do?

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...Amnesty International are highly successful private institutions for providing checks and balance.

With these examples in mind, would you concede that they, too, are "private in name only", and can do much of the checking and balancing that you want government to do?

No, I wouldn't argue that. I think NGO's can attempt to monitor, and can attempt to alert, but they are commonly powerless to do either 'properly' (meaning effectively) and they are certainly powerless to enforce anything.

I do agree that governance has largely been co-opted by business interests, but I do not think smaller government is the solution at all. I'm a big fan of representative democracy, and not a fan of unrepresentative plutocracy.

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patiodog wrote:

But limiting certain practices, like dumping methyl mercury in the water or widespread use of DDT, simply aren't going to be halted -- at least not in a timely fashion -- by market forces.

I'm not well enough informed about dumping methyl mercury to comment on it. As for DDT, my understanding is that it isn't clear at all that it was worth halting. It was halted because scientists had good reasons to suspect it was dangerous to humans and the ecosystem. But when the suspicions were checked up on, the evidence turned out not to confirm them.

This goes to illustrate another point I wanted to make. It's true that government prevents a lot of harmful stuff. But it also prevents a lot of viable stuff. The difference is, when harmful stuff is not prevented, we hear about it. When viable stuff is prevented, chances are we don't.

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Of course technological improvements are a big part of this. But limiting certain practices, like dumping methyl mercury in the water or widespread use of DDT, simply aren't going to be halted -- at least not in a timely fashion -- by market forces.

dog

No, they certainly aren't.

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But when the suspicions were checked up on, the evidence turned out not to confirm them.

It interferes with calcium deposition in the shell gland of predatory birds, where the toxin is highly concentrated. That's my understanding, anyway. I hate to resort to common sense, but do you really think the profit motive works to limit the generation of externalities? I don't think that the cigarette industry should be legally liable for the actions of its consumers, but I'll bring it up as an example of a case where profits are clearly more important to industry than information and product safety.

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This goes to illustrate another point I wanted to make. It's true that government prevents a lot of harmful stuff. But it also prevents a lot of viable stuff. The difference is, when harmful stuff is not prevented, we hear about it. When viable stuff is prevented, chances are we don't.

thomas

Unavoidable, no? When raising our kids, for example, we will err on the side of caution. Those kids will complain "God! Do you think I am a CHILD?", and often, they'll actually be correct, our limitations on them would have proved needless. But in those cases where we were right, we haven't had to get that visit from the policeman telling us our kid is mashed beneath an Oldsmobile.

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blatham wrote:

I do agree that governance has largely been co-opted by business interests, but I do not think smaller government is the solution at all. I'm a big fan of representative democracy, and not a fan of unrepresentative plutocracy.

Fair enough. As for myself, I think representative democracy has severe weaknesses, and that markets are good at correcting them. I also think that representative democracy and unrepresentative plutocracy are the only choices, which you seem to imply.

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I also think that representative democracy and unrepresentative plutocracy are the only choices, which you seem to imply.

No, I don't think they are the only possibilities at all. I do think, however, that the business community will inevitably push towards the second and away from the first. It's what I meant earlier when I spoke to fishin about a 'dynmamic'.

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blatham wrote:

Unavoidable, no? When raising our kids, for example, we will err on the side of caution.

How about "everybody errs on the side he wants to err on?" For example, I have no problem with the FDA labelling some products as "unsafe". I have a big problem with them telling AIDS patients that they can't get the medication they want until the medical studies are in, which will take another 5 years. If a given AIDS patient decides he prefers the risks of the unproven drug over the risks of not taking it, he takes it. If not, he doesn't.

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

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