These things happen in private sector organizations too; the assumption that the private sector somehow will do it better needs to be supported.
It's the private sector. It does better than the government practically by definition. Sometimes it even does a better job at killing, which is why private contractors exist for warfare, such as Blackwater/Academi.
If this wasn't true, then the government wouldn't contract the private sector for various tasks. But it does, all the time, because contracting is far more effective, and results matter.
It seems like your view of NASA is rather rose-tinted. Along with the impressive, courageous explorers, there are political opportunists and all of the other drama you'd expect of any large organization.
It will be interesting to find out whether the private sector or the public sector reaches Mars first.
That was a different time. In fact, it was an entirely different generation of people. But the important question is, in what ways has NASA changed since then?
EDIT 2: So, this is a troll comment, then? I'm becoming a little disenchanted with HN, actually. It's grown large enough that the voting system seems to be becoming less and less relevant. There's a certain effect that you see on Reddit where, if someone disagrees with your point, then they will downvote your comment and every subsequent comment you made, regardless of content. I've noticed the same thing happening here on HN, and it's a very recent phenomenon. I've also observed it happening to others, not just myself. I've restrained myself from talking about it, but I think I'll go ahead and speak up at this point.
I'm not sure what to do about this, actually. HN has always been a kind of second home to me, but now it's too large to have meaningful conversations. In order to even get into a position to have a conversation, you have to either be one of the top comments in the thread, or you have to reply to one of the top comments. This is less true than it is for Reddit, but it's definitely happening. The problem is this: Those who are quickest to a thread are usually the ones who will get those top spots, rather than the most reasoned or comprehensive comment. HN has some defenses against this; for example, all comments appear at the top of the thread for a limited time period, and ostensibly the voting system is supposed to keep the good ones there. But HN is growing so massive that those algorithms may need some tweaking, because the deluge of upvotes is making it difficult to achieve those spots.
But the distressing thing, for me, is that replies are becoming less and less logical and reasoned. For example, the question wasn't whether it's a good thing for governments to be contracting with the private sector, or what the negative consequences might be. The question was, is the private sector more effective than the government, in general? Yet the reply was "[privatization advocates] are the ones who get the lucrative contracts and the politicians who support 'privatization' get the lucrative donations. Also, as government diminishes, the wealthy and powerful grow even more powerful," which is totally unrelated to the question at hand.
Anyway. What I just did is against the rules, so I'll stop now. Sorry. I'm just becoming concerned with the timbre of the site, and feel like there is no outlet to discuss this kind of thing.
> It's the private sector. It does better than the government practically by definition.
I know that's a commonly repeated idea, especially in this forum, but I don't share that assumption and don't see evidence for it. I believe they are two different tools, each better at different tasks, with some overlap.
> If this wasn't true, then the government wouldn't contract the private sector for various tasks.
Three thoughts: 1) Government doesn't contract out every task; the U.S. federal government has over 1 million employees and a $2 trillion budget, so it does quite a bit in-house. 2) Government does contract out many things; when they do it right, they are contracting where it's most cost-effective without undermining justice. There is much research showing that much privatization loses money but enriches the contractor. 3) Many of the contracting decisions are due to politics: Lobbying, and who has what donor or has which jobs in their district, for example.
Consider that many privatization advocates and those promoting the supremacy of the private sector are lining their pockets: They are the ones who get the lucrative contracts and the politicians who support 'privatization' get the lucrative donations. Also, as government diminishes, the wealthy and powerful grow even more powerful.
The main difference is that private enterprises may fail if they do not deliver their product or the service to customers at a cost acceptable to the latter; government projects and departments do not have this check. This is not a guarantee that the private sector will do a good or even mediocre job, as they can make mistakes, malinvestments, get bailed out, or have rich and stupid customers. The difference is that the government agency's source of revenue is not dependent on its performance, so government agencies and projects almost never get closed down or cancelled because they did a bad job, wasted money, or were plain incompetent.
It is really a question of how one views the voice vs exit question, and how good a check those are (relative to each other).[1]
"government agencies and projects almost never get closed down or cancelled because they did a bad job, wasted money, or were plain incompetent."
In which universe?
Government projects get stopped for incompetence or wasting money about as much as they do in the private sector.
And it turns out that the private sector is just as capable of firehosing money at bullshit as the government is, otherwise all those repackaged loans wouldn't have screwed the economy.
There is a different limit on money for governments, given they back the money, but to assume that some form of cost/benefit analysis isn't generally practiced in public enterprise is to be working from a purely faith-based model of economics.
> The difference is that the government agency's source of revenue is not dependent on its performance
I'm not sure even this claim is warranted, from either side. Each has mechanisms for attempting to ensure the link between funding/performance, but from my perspective it seems like those mechanisms fail as often as they work in both sectors.
The mechanism is the voice in the case of government, and the exit in the case of private corporations; opinions definitely differ on the effectiveness of either.
Where governments provide critical services, their funding should not be tied to success. That would only ensure more failure, and that's the last thing you want to do to a critical service.
> The difference is that the government agency's source of revenue is not dependent on its performance, so government agencies and projects almost never get closed down or cancelled because they did a bad job, wasted money, or were plain incompetent.
This cuts both ways - that's exactly why the government can and does shove money into things like infrastructure, basic research and, well, space exploration, while the private sector doesn't. There is no direct short-term profit motive for private sector in such endeavours. I emphasize "short-term", because the private sector is structured to care mostly about that. It takes a company to grow really big to invest in stuff like basic research - but at this point the internal structure of such company is more like that of a government than a free market.
I think you make the strongest case for government investment (which is) in expensive, capital-intensive, high-risk projects; this is probably the most defensible area of government spending. There are two strong counter-arguments I have heard against yours. The first is that the reason private organizations do not invest in these projects is that the government's tax structure makes such ventures unprofitable, and the government crowds-out private investment in these projects. The second argument is that the government is the only investor in these projects because they are investing large sums of money when it is unwise to do so, because the project is not yet worth doing, or it is too risky, and a private organization would have invested less initially, and followed-on as the project became more affordable.
The public sector is, by definition, more efficient than the private sector.
The main difference is the profit motive. When a government department does something more efficiently, it has to use that efficiency to either reduce cost or improve quality.
When a private company does something more efficiently, it can take the spare money and shove it in the pockets of its shareholders.
It's not a guarantee that a particular public sector project or department will be more efficient than an equivalent private sector one; the Peter Principle may well scupper any efficiency improvements.
I am sorry, but I think you live in a different world than I do. Where I live, many government offices get all-new furniture at the end of every fiscal year, because if they manage to come in under budget, their budget gets cut in the next year, so they make sure to come out over-budget. This is not the behavior of an organization trying to "reduce cost or improve quality".
In addition, corporations which are closely-held have a very strong incentive to be efficient, as the officers/owners are the residual claimants. In larger, public corporations, their checks are shareholders, and their competitors, who (if more efficient) can drive a corporation bankrupt by under-pricing, or out-competing. I cannot recall the last government department driven to bankruptcy by a competitor.
I have seen the exact same bahavior ("get all-new furniture at the end of every fiscal year, because if they manage to come in under budget, their budget gets cut in the next year, so they make sure to come out over-budget") occurring in large multinational corporate companies, where individual departments are very, very away from the top decisionmakers and spend a majority of their effort on budgets and infighting, and not on company results.
It's not a symptom of public vs private, it's a symptom of lack of oversight, agency problem, and 'too big to manage' problems.
the difference is, if a private company generates waste, its shareholders pay and competitors benefit. If government generates waste, everybody pays and nobody benefits
> Where I live, many government offices get all-new furniture at the end of every fiscal year
Government offices I've visited are no comparison to lush corporate settings; in fact they tend to be old buildings with old equipment and furniture. Consider what Silicon Valley corporations provide to their employees.
I've heard this story before and I believe it's a myth. I am aware of what goes on in many government offices, local and federal, and never heard of such a thing.
Throwing money around at the end of the year is a product of a dumb budgeting process, not a govt. vs. private issue. I've worked at businesses where some units were funded the using the same process who did the same thing - coming in under budget, and squandering cash on things to avoid losing funding the next year.
Private organizations have this wonderful ability to fail if someone else can do the same job better and cheaper. This does not prevent subsets of a private organization form being wasteful, but if the organization as a whole is significantly more wasteful than their competition, they will lose.
TARP? GM? AIG? It seems like private organizations under a certain size threshold have the ability to fail if someone else can do the same job better and cheaper. Beyond a certain size, they are indistinguishable from government.
You have a valid point (although your examples not failing was the results of public action, not the private market). I think there is a trade off between economies of scale and "too big to fail". There is some size that is still too small to hide colossal mistakes, but big enough to streamline its processes.
Yes, private orgs. can fail if someone can convince them to move to another party for their goods/services. Ideally - it happens occasionally, though not often.
Democratic societies can choose to elect better suited leaders for their governance to do the job better, and vote to improve their models of governance to be more effective and provide better services/efficiency. Ideally - it happens occasionally, though not often.
Voting with dollars works about as well as voting with ballots, though. People are driven by the exact same irrational drives and misinformation whether they're behaving as consumers or voters.
government offices get all-new furniture at the end of every fiscal year, because if they manage to come in under budget, their budget gets cut in the next year, so they make sure to come out over-budget. This is not the behavior of an organization trying to "reduce cost or improve quality".
The organisation includes the bit setting the budget, so if they are willing to cut it next year if this year's isn't spent, that looks a lot like the behaviour of an organisation seeking to reduce costs.
Besides, end of financial year budget spends in divisions of large multinationals also look like that.
What is the last large public corporation you can recall driven to bankruptcy primarily by private sector competition under-pricing or out-competing them? Let's say "large" is roughly as productive as, say, Luxembourg.
Well, large corporations that are failing usually (but not always) get purchased, and subsumed by more successful corporations, or bailed out before they go bankrupt. Some examples of this would be RCA, Lockheed, Delta Airlines, Chrysler (twice), Enron, General Motors.[1][2][3][4][5][6]
I even found this convenient little slideshow.[7]
Here is a challenge: find more equivalently-sized government departments shut down for their failures. Examples of such failures would be the two dozen financial market regulators (as well as Freddie Mac and Fannie Mae) who failed to anticipate or mitigate the housing problems of 2006-2007, the various police agencies which regularly shoot innocent civilians (such as the LAPD), the department of Veteran's Affairs which caused untold suffering, or the education departments which have greatly increased spending without any improvement in outcomes.
Apologies for not addressing the second sentence, I wrote this reply before you had added that.
This makes no sense. Say we shut down The LAPD or the VA. What would it be replaced with? The idea of a private sector police force is a little scary, and what private business would perform the function of Veteran's Affairs?
The point is that there are some things which only government can and should do. Shutting down vital services isn't practical nor popular. People wouldn't stand for it. If a the leaders of a city the size of LA decided to shut down the police force and replace it with something different, they would be immediately voted out of office. The government isn't some external actor forcing its will on the people. The government serves the majority, a majority that prefers that not to have basic services shut down because they aren't performing optimally.
I agree with all but your first sentence. Perhaps I am projecting my own beliefs on nickff, but nowhere did they say that government should not provide police or similar services. They correctly stated that the private sector has the substantial advantage of being able to fail if they do a bad job. The obvious conclusion is that Government should not do things unless there is a compelling reason not to leave it to the private sector. As you point out there is a reason for the government to provide police (and other services) that outweighs the private sector's fundamental advantage.
The issue is that if the public is unhappy with the police force there is no way for them to vote in a re-organization.
However in the private sector this happens all the time; either forcing one company to re-organize or a re-organization happens by a company going out of business and getting replaced with another one.
Voting for a politician (especially when you are stuck with two political parties) hardly constitutes voting for a re-organization.
Maybe there is a way to create competition in some way shape or form by having several different police forces (still government sponsored) that compete for your vote or maybe something else. But there definitely is a problem that there is almost no way to properly restructure a bloated government organization when it is underperforming, and somehow that should be addressed.
> The issue is that if the public is unhappy with the police force there is no way for them to vote in a re-organization. However in the private sector this happens all the time; either forcing one company to re-organize or a re-organization happens by a company going out of business and getting replaced with another one. ... But there definitely is a problem that there is almost no way to properly restructure a bloated government organization when it is underperforming, and somehow that should be addressed.
The public is unhappy with Thames Water, a private company, but no amount of private sector competition pixie dust is going to make another company start digging up London's streets to provide a re-organization.
It's not a problem with governments, it's a problem with natural monopolies and that's difficult to solve. Saying "government bad" is oversimplifying.
How so? The very fact that someone makes a profit means that the end consumer is paying more than cost price.
If I pay £10 for something that costs £5. The organisation that just pockets the difference is less efficient from my perspective than the one that either reduces my next bill by £5 or gives me an extra £5 worth of service.
The point is that even if a private sector company operates with perfect efficiency, there is a built-in inefficiency from the consumer's perspective because investors need to make money on the deal.
Efficiency is not part of the definition of public sector or private sector, so clearly your statement is false. It's inconsistent with the rest of your comment because you wrote "It's not a guarantee that a particular public sector project or department", which could not be case if it were true by definition. Your argument that public sectors, depending on circumstance, tend to be more efficient is quite different from your assertion that they are more efficient by definition.
What I mean is that all else being equal, public is more efficient than private. The same team doing the same task with the same information, constraints, and money will be able to provide better value to the consumer in the public eector than the private.
The caveat is there because a handful of strategically placed idiots or geniues could easily make more of a difference than the fact that all the money stays within the system.
But governments do slash budgets or cut programs altogether. And agencies typically continue on because their existence is mandated by law and (unlike the private sector) they can't choose to just ditch those customers that cost a lot to deal with. There are big variations in administrative competence to be sure, but the logical conclusion of your argument is that if you hate the President (or rather, the administration of the federal government by a given President) then the logical thing to do is get rid of the government.
I don't understand how " the logical conclusion of your argument is that if you hate the President... then the logical thing to do is get rid of the government." The voice vs exit paradigm has been employed in some arguments for anarchism, and many arguments for limiting the scope of government, but those arguments have nothing to do with the executive, and I didn't make any such argument.
I know you didn't, but where is the line between saying individual agencies are inefficient and should be shut down and the administration as a whole? There's certainly a contingent (not necessarily including you) that wants to scale the federal government back to the bare minimum sketched out in the Constitution and devolve everything except national defense and certain enumerated powers back to the States.
There is no line to draw, but there is a counter-argument. The (most effective) counter-argument is that the government agencies are capable of achieving objectives that the private organizations can or will not.
> The main difference is that private enterprises may fail if they do not deliver their product or the service to customers at a cost acceptable to the latter; government projects and departments do not have this check.
Every government executive's job (including appointees' jobs and to a degree every program), relies on a public vote every 2-6 years.
Democracy isn't nearly perfect, but as we've seen, neither are the markets.
If you read the link, you will see that it makes a point similar to what you are saying (but more nuanced, and well thought-out than an HN comment). No one is arguing that perfection is achievable (or even a goal), the question is what form of feedback is most effective in providing desirable outcomes.
... which would lead to the civilization being destroyed (EDIT: subsumed) by a more effective one, if the private sector wasn't actually effective. Therefore the private sector must be effective.
Over what timeframe? All the evidence is that failed states can stick around for quite a while before collapsing or being subjugated. As the US has been (re)discovering the hard way, there's a massive cost in taking over a failed state even where the intention is to rebuild it and leave - and countries like Afghanistan and Iran were obviously dysfunctional for decades. Even the Soviet Union persisted for a long time despite its fundamental economic contradictions. Even if we hypothesize some similarly fundamental dificiency in the private sector of the US of the sort that Marxists are fond of toying with, in an economy of this size it might take most of a century to play itself out. Look at Japan, whose economy has been stagnant for 20 years and whose territorial security basically derives from the US nuclear umbrella.
My claim isn't that the civilization will be wiped out. It's that it will no longer be in control of its own destiny.
If the private sector model of an economy is worse, then why has every first-world country begun to follow it? Because it's more effective.
You can argue that the private sector is a different tool for a different sort of job, but my point is that regardless of the job, small organizations almost always do it better. (Incidentally, that's the thesis of startup investing.)
The exception is with highly parallelizable tasks, like fighting a war. But space exploration isn't that sort of job.
I feel like I'm in an alternate universe. Strange day. It seems like it should be perfectly obvious that private sector control is more effective than public sector control in almost every area where people need to accomplish things. There is practically a mountain of evidence in support of this viewpoint, and it's hard to find examples that contradict it, unless it's also a highly parallelizable task like constructing a highway system. The most obvious counterexamples that come to mind are the justice system and monetary regulation. But those are two counterexamples in a sea of examples.
The Internet. The Apollo Project. D-Day. The Manhattan Project. Federal Highways. The National Park System.
How on earth could a small organization do any of these things?
I can understand why you feel like you're living a Strange Day in an alternate universe, because the reality of human social organization is completely opposed to your thesis. If small groups are superior to large organizations in every case and in every way, why in the hell have people been forming large organizations for so long? Are we all just stupid, incapable of seeing the basic truth that you see? Were the Romans, Mongols, British, Mayans and all the others just a bunch of idiots? People have been forming ever larger organizations for the same reason that NASA is a large organization: because it's the best way to to do big things. That's why Google moved out of the garage and hired several thousand people. If small organizations were always better, startups wouldn't require investment at all.
It seems like your reasoning is based on the Homer Simpson quote, "Because they're stupid, that's why. That's why everybody does everything." But I can assure you, we aren't all stupid. Organizations get big because big wins.
The exception is with highly parallelizable tasks, like fighting a war. But space exploration isn't that sort of job.
So, here's your list:
D-Day. Federal Highways. The National Park System.
Those are highly parallelizable tasks.
The internet and the Manhattan project are better examples, but it's debatable whether those things would be invented regardless of governments. They were a matter of time.
Now, about the Apollo project: Congratulations, we spent a Metric Boatload of money, and it got us what? A flag on the moon. Whoopie. The US also got to thumb their nose at Russia for a bit. That is not space exploration. That is the ability to convert a large quantity of money into a really expensive, one-time-use space car that was designed to stick a pole in the ground.
More upsettingly, the Apollo project undermined real space exploration for decades. There were some viable ideas about how this could be achieved. You may be as interested and as surprised as I was when I first realized this was true: http://www.spacedaily.com/news/nuclearspace-03h.html
Or you can dismiss this as readily as the rest of my comments. Either way, my new years resolution is going to be to swear off any kind of politics on any kind of online forum.
People get so hung up on one of them being fundamentally better than the other when in fact their fundamental differences and the tension that creates which is actually a decent compromise between a free market and a totalitarian state. "Free markets" are fully capable of leading to mass amounts of suffering. This "strife" we experience between different systems in friction is actually healthy I think.
I'd say that since the 90's there's been a general pulling back from the Washington consensus. So I take issue with your assertion about every first world country following the US. I say this as a citizen of a first world country where people are pretty concerned to ensure we do NOT follow the US in terms of political corruption and economic division.
Your point about startup investing is rather off the mark. Most startups fail - which is not something you can do if you're providing the water supply or sanitation services for a country (or county). Governments might be less lean but redundancy also means resilience.
Your comment about an alternative universe resonates with me. As a non American, it's how I often feel when I read comments from people like you who assert that "It's just true by definition" that the private sector is more effective at everything.
I didn't mean to assert the private sector was better at everything. Sorry for the confusion. I only meant to say that it's better at most things.
Is that really mistaken? Since I'm getting so much pushback, I should probably think about changing my view. But I don't understand how this could be true: "The public sector is better than the private sector at most jobs." It seems like the vast majority of the time, it's the other way around.
I'm not arguing that the private sector is no good, but that you're making a rather circular argument in its favor. What about examples of private sector failure like the financial crisis? Equally, what about the fact that government services are typically mandated to serve everyone who comes, whereas private enterprise is free to set its own prices?
Don't get me wrong, there are numerous flaws in the public sector that I would like to see changed, but its also saddled with constraints that are at least as burdensome as regulatory overhead the private sector deals with, if not more so.
The UK was a model of privatisation of public enterprise.
Only it turns out that a hell of a lot of the companies that bought stuff like the utilities and railways are actually the public enterprises of other countries.
So 20 of the UK rail lines are still publicly owned and run, just by another countries public sector, while our own is banned by law from bidding.
Presumably, while in public hands though profitable, it has not been paying dividends.
I wouldn't be at all surprised if some of our services eventually get renationalised through a legal challenge based on competition law opening up the bidding again, as the whole logic breaks down rather completely at the point at which you try and fix it by banning any foreign publicly owned industry from bidding, then realise that you have knocked out most of the best qualified bids.
I was being cynical. While profits are going to the government it is hard to line your own pockets through buying shares, or get appointed to the board after leaving office.
History is littered with civilizations that had an extended period of corruption and decay before their final collapse. Rome is one example - its "death" arguably occurred over most of a century.
Anyway, your argument is really weird. It implies that all existing regimes are optimally fit since they exist. But that's clearly not true.
So, when private sector organizations contract to other private sector organizations for certain tasks/projects that is somehow qualitatively different then when government does it?
You've only been on HN for 450 days (I've been here 2500+), I don't think you can claim HN has gone significantly downhill since you joined.
IMO, this is a troll comment. If you are making a grand point, I don't see it.
EDIT: I'm not replying to your point because I can't understand your point. Apparently it's obvious to you, but it is far from obvious to me what you are saying.
I've been on the site since day two of its public launch. About 2800 days.
Why did this devolve into a number comparison contest, rather than addressing my main points?
EDIT: Oh, here we go. Now I'm looked down on with so much scorn that you won't even reply to me. Really? Edit wars?
My point was this: The average comment is becoming shorter, meaner, and less logical. Additionally, the value of the voting system is becoming diluted over time, as more people participate. Mainly I'd like algorithmic protection from people who downvote all of your comments regardless of how well-reasoned your followup replies are. Limiting people to one downvote per person per thread seems reasonable.
My thesis in the main discussion is that if you hand a job to the public sector and to the private sector, the private sector will accomplish it with fewer resources and more quickly than the public sector. The exception is with highly parallelizable tasks, like fighting a war. The counterexamples are the justice system and financial regulation, yet those are only two counterexamples compared to a huge body of examples.
It's the private sector. It does better than the government practically by definition. Sometimes it even does a better job at killing, which is why private contractors exist for warfare, such as Blackwater/Academi.
If this wasn't true, then the government wouldn't contract the private sector for various tasks. But it does, all the time, because contracting is far more effective, and results matter.
It seems like your view of NASA is rather rose-tinted. Along with the impressive, courageous explorers, there are political opportunists and all of the other drama you'd expect of any large organization.
It will be interesting to find out whether the private sector or the public sector reaches Mars first.
EDIT: Regarding the political nature of NASA: http://science.ksc.nasa.gov/shuttle/missions/51-l/docs/roger...
That was a different time. In fact, it was an entirely different generation of people. But the important question is, in what ways has NASA changed since then?
EDIT 2: So, this is a troll comment, then? I'm becoming a little disenchanted with HN, actually. It's grown large enough that the voting system seems to be becoming less and less relevant. There's a certain effect that you see on Reddit where, if someone disagrees with your point, then they will downvote your comment and every subsequent comment you made, regardless of content. I've noticed the same thing happening here on HN, and it's a very recent phenomenon. I've also observed it happening to others, not just myself. I've restrained myself from talking about it, but I think I'll go ahead and speak up at this point.
I'm not sure what to do about this, actually. HN has always been a kind of second home to me, but now it's too large to have meaningful conversations. In order to even get into a position to have a conversation, you have to either be one of the top comments in the thread, or you have to reply to one of the top comments. This is less true than it is for Reddit, but it's definitely happening. The problem is this: Those who are quickest to a thread are usually the ones who will get those top spots, rather than the most reasoned or comprehensive comment. HN has some defenses against this; for example, all comments appear at the top of the thread for a limited time period, and ostensibly the voting system is supposed to keep the good ones there. But HN is growing so massive that those algorithms may need some tweaking, because the deluge of upvotes is making it difficult to achieve those spots.
But the distressing thing, for me, is that replies are becoming less and less logical and reasoned. For example, the question wasn't whether it's a good thing for governments to be contracting with the private sector, or what the negative consequences might be. The question was, is the private sector more effective than the government, in general? Yet the reply was "[privatization advocates] are the ones who get the lucrative contracts and the politicians who support 'privatization' get the lucrative donations. Also, as government diminishes, the wealthy and powerful grow even more powerful," which is totally unrelated to the question at hand.
Anyway. What I just did is against the rules, so I'll stop now. Sorry. I'm just becoming concerned with the timbre of the site, and feel like there is no outlet to discuss this kind of thing.