Hey private enterprise enthusiasts.

[mrundkvist@archaeo.social]

Hey private enterprise enthusiasts. You believe that the public sector can save money by handing over utilities to companies, which are inherently more efficient.

Here's why this doesn't work.

You have to pay someone to monitor the private companies. Because they have no incentive to deliver what they promised. They always cut corners in the name of profit. And that monitoring eats the savings you hoped for. While you have no control over your utilities.

#capitalism

[mrundkvist@archaeo.social]

If you think I'm exaggerating, think about it.

What is the incentive for a private company to fulfil every detail of the contract?

Only your monitoring. If nobody can tell whether they have done what you paid them to do, then it is economically rational not to do it. Avoiding that expense goes straight to the company's annual profit.

#capitalism

[theriac@plasmatrap.com]

@mrundkvist@archaeo.social
the companies then use the profits they make to buy the politicians overseeing the watch dogs and regulations ... aaaand you end up with English water or Fukushima.

[bitanath@mastodon.social]

@mrundkvist but surely competition is good! <say the PE firms as they buy a controlling stake in every possible market entity>

[hanscees@ieji.de]

@mrundkvist theres more. When the utilities have to change, government has lost its knowledge to see whats needed, leading to having to hire consultants. And government knowledge loss leads to the big con, and a lack of long term planning in utilities
#neoliberalism #capitalism

[sunflowerinrain@mastodon.online]

@mrundkvist
Another reason not to outsource.
Years ago I worked in a big software research and development group; enthusiastic nerds built some wonderful things. Senior managers from head office were impressed, then archived the projects and bought in inferior products from outside. "Why?" I wailed to the R&D boss.
"Liability."
Being able to sue for failures was the policy.

Customers lost out. At least two of those in-house products were better than what's available even now.

[tribactam@social.vivaldi.net]

@mrundkvist

you are probably well aware of the debate in the UK about the totally abysmal performance of the water and the train companies. Thames Water may well be renationalised soon.

Considering that these people were being paid for polluting and robbing citizens, I think they should be made to pay the cost of renationalisation.
Shareholders? Fuck'em. It's an investment and investments contain an element of risk. Or did you not read the prospectus.

[gary_alderson@infosec.exchange]

@mrundkvist it is the same thing but just go offgrid - public utilities commission sad but it is ok

[peachfront@toot.community]

@mrundkvist

they don't really believe that, no person with spark of intelligence can really believe there is a positive purpose to emptying public resources into the pockets of the few

we need to start mocking them more & respecting their "arguments" less, rational argument doesn't work with those who don't operate based from logic

[bob_zim@infosec.exchange]

@mrundkvist Profit-based companies inherently *can’t be* more efficient. They need to extract some profit, after all, and that money has to come from somewhere! Either price goes up, output goes down, or both. There is no fourth option.

[mrundkvist@archaeo.social]

@bob_zim
But you do know how their argument goes? Innovation?

[bob_zim@infosec.exchange]

@mrundkvist Sure, I know the arguments, but they have never made the least bit of sense. Profit is surplus value. That’s literally the first lesson of market economics. We teach it to children in school. If you don’t extract that value, price goes down or output goes up. Holding output constant, extracting profit, and saving money is transparently impossible.

[mrundkvist@archaeo.social]

@bob_zim
I don't believe much in the cost-reducing power of innovation. But Conservatives and Free Market Liberals do. So that's their argument. It's not illogical. Just empirically disproven in the field of municipal utilities.

#econ

[tribactam@social.vivaldi.net]

@sean @mrundkvist

Exactly, an investment is like going to the horses. You may pick a good one, and some are a relatively safe bet. However, it is still a bet.

I would argue "for the sake of the economy" implies "for the greater good". I don't agree; these guys are buying into a monopoly and expecting constant returns while the horse is getting older and is running a one-horse race. The incentive here is that it is a monopoly - people can't decide to get their water from another supplier.

The reason why the Farages and the Tories of this world do everything to maintain the status quo is that they are the main investors.

I'm not an economist, but this is clearly not a market.

Public good generating private profit - then collectivize the debt when the horse dies.

So, I'd say that they should bear the costs and put the loss down to the risk that being greedy sometimes comes back to bite you.

[tribactam@social.vivaldi.net]

@sean @mrundkvist
oh yes!

[bob_zim@infosec.exchange]

@mrundkvist Empirically disproven by basic mathematics. And this isn’t like “Male/female is basic biology!” which is expanded later. Profit doesn’t get more subtle than “surplus value”. There are things to be learned from private industry, but efficiency definitely isn’t one of them.

People who believe privatizing government services can improve the service are economically illiterate. And sure, tons of people are economically illiterate.

Reminds me of how many businesses went “Moving to AWS will save us so much money!”, then they were shocked their ongoing bills were 20x as high. Like they thought *Amazon*—one of the biggest storefronts in history—is a charity.

[rachel@transitory.social]

@mrundkvist@archaeo.social by the same token most "work requirement" programs for assistance and other beaucratic mazes setup to push people deemed unworthy end up costing more than not having, because operating the programs cost so much more

[tokensane@mastodon.me.uk]

@Theriac @mrundkvist OTOH if it's publicly owned then there is no regulator, just a government department marking its own homework and probably declaring its failings a state secret.

You can't win.

[theriac@plasmatrap.com]

@tokensane@mastodon.me.uk @mrundkvist@archaeo.social
Look into how well privitisation of services went in the UK from Thatcher onwards. Leaving aside the fact publicly owned assests were converted into private at discount prices - the moment you turn a service into an entity seeking profit the service deteriorates. In Japan for example they privatised their telecom in 1985 and it is pretty typical. It intentionally stifled the spread of the internet in the 1990s because it made more money selling phone time units than infrastructure access. Even now despite being a private company it reacts to technological changes at a glacial pace, because it was handed a monopoly at inception and has no reason to innovate.

Thatcher made the play book for conning people into accepting privatisation - claim the entity is bloated and inefficient, declare cuts are necessary then starve it of funding and then point at how badly it performs when the cracks starts showing. Rinse and repeat until people get fed up with the dotty service.

At the time of writing - most countries have had longer experience of freidmanite mantras regarding public ownership, than they had of publicly owned companies and manufacturing - for the UK 25 or so years approx for nationalised companies vs nearly 50 years of friedmanite "government should not supply services".

[tuban_muzuru@beige.party]

@mrundkvist @rachel

I usually shut up the excuse makers saying it costs twice as much to incarcerate s/o than to support that person and send him to school for two years to actually ... get a job