7 ms·

Hayek would agree. It's better to let resources be used efficiently than to create artificial demand via subsidies.

pgeorgi 8y ago
Having worked in the odd megacorp (and those tend to run the show), "efficient use of resources" isn't the first thing that comes to my mind when it comes to the private sector.
- AnimalMuppet 8y ago
  Maybe not. But giving money to those who are too inefficient to compete, even by the standards of the private sector, seems almost certain to be wasteful.
- briandear 8y ago
  Have you ever worked in government?
  - ACow_Adonis 8y ago
    I've worked in both. And i've got an economics education :P My experience tells me entity-scale is the main variable that determines efficient use of resources (all other things being equal), rather than private/public sector divide. Which makes sense if you think about it: once you get away from small groups and sole individuals being able to give all things their attention, a private company has to effectively re-implement a form of government to operate internally.
    - michaelt 8y ago
      The main variable that determines efficient use of resources all other things being equal, you say?
    - kodablah 8y ago
      > entity-scale is the main variable [...] Which makes sense if you think about it While it may arguably be the main variable, and definitely the main variable within a sector, it shouldn't be used to discount the importance of goals/motivations/incentives. Although there are plenty of examples to the contrary in either direction, I think most also with experience would agree there is more waste and less accountability on one side compared to the other.
      - ACow_Adonis 8y ago
        Incentives, culture, mechanics, motivations, personalities, beliefs, scope, competition: all of those things play additional parts. And there's good governance and strategy and bad governance and strategy that applies at all those institutions at all levels and size. I can't really agree with the "more waste and less accountability on one side compared to the other", but that's primarily because the terms/measurements are so poorly defined and they differ so much country to country, state to state and with subject matter, and as I said, I believe that as institutions grow/mature, private industry must implement government anyway. I guess what i'd rail against most is the idea that its the private/public idea itself that plays the significant part in efficiency and productivity: the idea that subsidising private industry, public-private partnerships, or privatising certain public roles or firms/industries somehow magically, by itself, makes things "more efficient". If i were to reflect back on my own career, of the three top efficient organizations, two were medium-sized government departments, and the third was a small team non-profit of about 5 on a small government funding arrangement. Worst three were all private industry: big corp, big consultancy, little firm (although, admittedly, funded by government). Private industry had a huge problem with people being motivated by profits, rather than doing the job: hence directly incentivizing a seeking of inefficiency if not in a fully competitive market (which in the real world, is most markets these days, and certainly most markets with players of any scale). There's a couple of throw-away populist lines I could give about the secret of efficiency I've observed, but i'll chose three: motivation/incentives, devolve responsibility down to the person best able to make the decision, and preference hands off and less work over more (which, to me, is almost the secret success of efficient free-market economies, the ability to just step back and use organic structures to just let things happen).
    - Gibbon1 8y ago
      I worked mostly tiny engineering companies and only for two large companies. Though my dad worked for defense contractors and government his whole career. The comment about size is spot on. Two things going on. Management at scale means trying to get 10,000 monkey's pointed mostly in the same direction[1]. There are huge governance issues with that. Private public does not matter[2]. Large organizations without these controls will eventually lose coherence and flame out. However that mass has a quality of it it's own is in play. 10,000 monkeys can manage extremely large 'streams' of effort and punch way above the weight of the sum of all monkeys. In spite of the lack of efficiency. [1] If you wonder why management isn't interested in your shiny new idea and wants you to to get back to work, that's why. [2] If anything your local government is more interested in your complaints than say the cable company.
  - dev_dull 8y ago
    Or simply walked into the DMV.
    - yongjik 8y ago
      1. Say "government is inefficient" and refuse to allocate resource to fix it. 2. Be angry that government is inefficient. 3. Goto step 1. Have you been to (the equivalent of) DMV in other countries?
      - BenderV 8y ago
        Have you been to France?
        BenderV 8y ago
        Government spending > 50% of GDP. Is it efficient?
        kerkeslager 8y ago
        That depends what benefits you get from it. Efficiency is a fraction: cost over benefit. You can't just whine about cost and use the word "efficiency". That's cost, not efficiency, and you're completely ignoring the entire point of money in the first place: to be spent to achieve benefit.
        icantdrive55 8y ago
        Don't forget free healthcare, education, work/privacy laws that put most countries to shame, decent homless shelters. They live longer. They are happier on every metric compare to Americans. I never berate France, once I realized just how terrible we do things here. (Up, or down vote me; I think I'm shadowbanned? And yes--to lazy to check myself.)
      - aetherson 8y ago
        This seems weird, if we're talking about the same definition of efficiency, which I would say is the resources, denominated in money, needed to produce a given result. So let's say that the government produces one driver's license per $100, and I'm angry that it costs that much. Your proposal is that I will be happy if I instead spend $120 per license?
- chiefalchemist 8y ago
  Let say you're correct, then it's all the more reason __not__ to over-subsidize something. It's one thing for a gov to toss some money at something to encourage R&D, the growth of a technology and/or market, etc. That makes at least some sense in some cases. The problem is these "temporary" gov programs never end. And then eventually they live long past their prime. Furthermore, as the become the new normal they tend to create unintended consequence. For example, farm subsidies for corn drove down the price of high fructose corn syrup. That made the sweetener ubiquitous. Similar can be said for home loans and student loans. Once these programs take on a life of their own, the market becomes distorted and eventually bad - unforeseen - things happen.
  - anonacct37 8y ago
    In my state (Utah). The government is attempting to roll back solar subsidies because "that industry should stand on it's own two feet". Conveniently neglecting to mention the massive tax breaks to fossil fuels. I wish everyone competed in a free market (for the most part), but the energy market is not that.
    - paulddraper 8y ago
      This comment is conveniently forgetting that Utah taxes gas. In fact, one of the ballot items was the increase this tax.
      - freehunter 8y ago
        Taxing the use of something is different from subsidizing the production of that thing and are meant to encourage far different behaviors.
        munk-a 8y ago
        No, the tax would end up eventually hurting their profit margins while the subsidies increase those margins. They encourage different short term effects but they're both contributing to the same effect. All that said, the subsidies in this case far outweighed the effect the tax would have had.
- narrator 8y ago
  A lot of that ptivate sector inefficiency is because big companies have the artificially cheap ability to fundraise thanks to access to the public markets.
  - munk-a 8y ago
    This is an amazingly carefully worded comment about the legal bribery allowed in the US.
jkingsbery 8y ago
While I think that's fair, the article hints at subsidies for other fuel sources which would also distort the market. Any idea what the energy market in Germany would have looked like absent subsidies entirely?
- chiefalchemist 8y ago
  I saw that as well. But I would think, that if you're going to pick a market to distort then renewables (i.e., the future) makes more sense than keeping coal alive. Also, as the article mentioned, there were political overtones to cutting out coal.
akie 8y ago
Better for who?
- AnimalMuppet 8y ago
  For the economy as a whole, which means for most people. For those employed by the inefficient business that will no longer be subsidized, well, it may not be better for them, at least not in the short run.
  - hannasanarion 8y ago
    Only if you define "better" as having the lowest price. Free mariets don't magically remove the disconnect between individual interests and collective interests (tragedy of the commons). The economic optimum is not guaranteed to coincide with social, moral, qnd political optimums
    - AnimalMuppet 8y ago
      Well, I don't define "better" as having the higher price. From the point of view of the economy as a whole, efficient is better than inefficient, because it can produce more outputs for the same inputs. This isn't just abstract - people can use those outputs. Tragedy of the commons is an issue, but subsidizing a coal mine doesn't seem much like a tragedy of the commons issue to me. It seems more like your last words: a "political optimum", that is, something that produced votes, because the mine owners and workers want the subsidies much more strongly than the taxpayers want to not have to pay. That may be politically optimum, but it's not morally, socially, or economically optimum.
  - programmarchy 8y ago
    So you disagree with solar energy subsidies, then? Nations have other motives than economic efficiency. The state should lead the market to meet national goals like clean energy infrastructure. Coal subsidies are a way to increase military strength, or at least they used to be. War needs steel needs coal. That may no longer be the case with more advanced ways of creating steel without coal.

Having worked in the odd megacorp (and those tend to run the show), "efficient use of resources" isn't the first thing that comes to my mind when it comes to the private sector.

AnimalMuppet 8y ago
Maybe not. But giving money to those who are too inefficient to compete, even by the standards of the private sector, seems almost certain to be wasteful.
briandear 8y ago
Have you ever worked in government?
- ACow_Adonis 8y ago
  I've worked in both. And i've got an economics education :P My experience tells me entity-scale is the main variable that determines efficient use of resources (all other things being equal), rather than private/public sector divide. Which makes sense if you think about it: once you get away from small groups and sole individuals being able to give all things their attention, a private company has to effectively re-implement a form of government to operate internally.
  - michaelt 8y ago
    The main variable that determines efficient use of resources all other things being equal, you say?
  - kodablah 8y ago
    > entity-scale is the main variable [...] Which makes sense if you think about it While it may arguably be the main variable, and definitely the main variable within a sector, it shouldn't be used to discount the importance of goals/motivations/incentives. Although there are plenty of examples to the contrary in either direction, I think most also with experience would agree there is more waste and less accountability on one side compared to the other.
    - ACow_Adonis 8y ago
      Incentives, culture, mechanics, motivations, personalities, beliefs, scope, competition: all of those things play additional parts. And there's good governance and strategy and bad governance and strategy that applies at all those institutions at all levels and size. I can't really agree with the "more waste and less accountability on one side compared to the other", but that's primarily because the terms/measurements are so poorly defined and they differ so much country to country, state to state and with subject matter, and as I said, I believe that as institutions grow/mature, private industry must implement government anyway. I guess what i'd rail against most is the idea that its the private/public idea itself that plays the significant part in efficiency and productivity: the idea that subsidising private industry, public-private partnerships, or privatising certain public roles or firms/industries somehow magically, by itself, makes things "more efficient". If i were to reflect back on my own career, of the three top efficient organizations, two were medium-sized government departments, and the third was a small team non-profit of about 5 on a small government funding arrangement. Worst three were all private industry: big corp, big consultancy, little firm (although, admittedly, funded by government). Private industry had a huge problem with people being motivated by profits, rather than doing the job: hence directly incentivizing a seeking of inefficiency if not in a fully competitive market (which in the real world, is most markets these days, and certainly most markets with players of any scale). There's a couple of throw-away populist lines I could give about the secret of efficiency I've observed, but i'll chose three: motivation/incentives, devolve responsibility down to the person best able to make the decision, and preference hands off and less work over more (which, to me, is almost the secret success of efficient free-market economies, the ability to just step back and use organic structures to just let things happen).
  - Gibbon1 8y ago
    I worked mostly tiny engineering companies and only for two large companies. Though my dad worked for defense contractors and government his whole career. The comment about size is spot on. Two things going on. Management at scale means trying to get 10,000 monkey's pointed mostly in the same direction[1]. There are huge governance issues with that. Private public does not matter[2]. Large organizations without these controls will eventually lose coherence and flame out. However that mass has a quality of it it's own is in play. 10,000 monkeys can manage extremely large 'streams' of effort and punch way above the weight of the sum of all monkeys. In spite of the lack of efficiency. [1] If you wonder why management isn't interested in your shiny new idea and wants you to to get back to work, that's why. [2] If anything your local government is more interested in your complaints than say the cable company.
- dev_dull 8y ago
  Or simply walked into the DMV.
  - yongjik 8y ago
    1. Say "government is inefficient" and refuse to allocate resource to fix it. 2. Be angry that government is inefficient. 3. Goto step 1. Have you been to (the equivalent of) DMV in other countries?
    - BenderV 8y ago
      Have you been to France?
      - BenderV 8y ago
        Government spending > 50% of GDP. Is it efficient?
        kerkeslager 8y ago
        That depends what benefits you get from it. Efficiency is a fraction: cost over benefit. You can't just whine about cost and use the word "efficiency". That's cost, not efficiency, and you're completely ignoring the entire point of money in the first place: to be spent to achieve benefit.
      - icantdrive55 8y ago
        Don't forget free healthcare, education, work/privacy laws that put most countries to shame, decent homless shelters. They live longer. They are happier on every metric compare to Americans. I never berate France, once I realized just how terrible we do things here. (Up, or down vote me; I think I'm shadowbanned? And yes--to lazy to check myself.)
    - aetherson 8y ago
      This seems weird, if we're talking about the same definition of efficiency, which I would say is the resources, denominated in money, needed to produce a given result. So let's say that the government produces one driver's license per $100, and I'm angry that it costs that much. Your proposal is that I will be happy if I instead spend $120 per license?
chiefalchemist 8y ago
Let say you're correct, then it's all the more reason __not__ to over-subsidize something. It's one thing for a gov to toss some money at something to encourage R&D, the growth of a technology and/or market, etc. That makes at least some sense in some cases. The problem is these "temporary" gov programs never end. And then eventually they live long past their prime. Furthermore, as the become the new normal they tend to create unintended consequence. For example, farm subsidies for corn drove down the price of high fructose corn syrup. That made the sweetener ubiquitous. Similar can be said for home loans and student loans. Once these programs take on a life of their own, the market becomes distorted and eventually bad - unforeseen - things happen.
- anonacct37 8y ago
  In my state (Utah). The government is attempting to roll back solar subsidies because "that industry should stand on it's own two feet". Conveniently neglecting to mention the massive tax breaks to fossil fuels. I wish everyone competed in a free market (for the most part), but the energy market is not that.
  - paulddraper 8y ago
    This comment is conveniently forgetting that Utah taxes gas. In fact, one of the ballot items was the increase this tax.
    - freehunter 8y ago
      Taxing the use of something is different from subsidizing the production of that thing and are meant to encourage far different behaviors.
      - munk-a 8y ago
        No, the tax would end up eventually hurting their profit margins while the subsidies increase those margins. They encourage different short term effects but they're both contributing to the same effect. All that said, the subsidies in this case far outweighed the effect the tax would have had.
narrator 8y ago
A lot of that ptivate sector inefficiency is because big companies have the artificially cheap ability to fundraise thanks to access to the public markets.
- munk-a 8y ago
  This is an amazingly carefully worded comment about the legal bribery allowed in the US.

jkingsbery 8y ago

While I think that's fair, the article hints at subsidies for other fuel sources which would also distort the market. Any idea what the energy market in Germany would have looked like absent subsidies entirely?

chiefalchemist 8y ago
I saw that as well. But I would think, that if you're going to pick a market to distort then renewables (i.e., the future) makes more sense than keeping coal alive. Also, as the article mentioned, there were political overtones to cutting out coal.

akie 8y ago

Better for who?

AnimalMuppet 8y ago
For the economy as a whole, which means for most people. For those employed by the inefficient business that will no longer be subsidized, well, it may not be better for them, at least not in the short run.
- hannasanarion 8y ago
  Only if you define "better" as having the lowest price. Free mariets don't magically remove the disconnect between individual interests and collective interests (tragedy of the commons). The economic optimum is not guaranteed to coincide with social, moral, qnd political optimums
  - AnimalMuppet 8y ago
    Well, I don't define "better" as having the higher price. From the point of view of the economy as a whole, efficient is better than inefficient, because it can produce more outputs for the same inputs. This isn't just abstract - people can use those outputs. Tragedy of the commons is an issue, but subsidizing a coal mine doesn't seem much like a tragedy of the commons issue to me. It seems more like your last words: a "political optimum", that is, something that produced votes, because the mine owners and workers want the subsidies much more strongly than the taxpayers want to not have to pay. That may be politically optimum, but it's not morally, socially, or economically optimum.
- programmarchy 8y ago
  So you disagree with solar energy subsidies, then? Nations have other motives than economic efficiency. The state should lead the market to meet national goals like clean energy infrastructure. Coal subsidies are a way to increase military strength, or at least they used to be. War needs steel needs coal. That may no longer be the case with more advanced ways of creating steel without coal.