4 ms·
How is providing a service at lower price destroys value? Only if you narrowly define value as shareholder dividends.
by JetSpiegel 8y ago
How is providing a service at lower price destroys value? Only if you narrowly define value as shareholder dividends.
- simonh 8y agoI think the problem with comparing public to private service provision is that many public services are things nobody would ever rationally pay for privately, in the form the public sector is able to provide it. Take libraries for example, if all the public libraries were closed, nobody would open up a new privately funded and operated for-profit library service, except perhaps for very narrow specific geographic and topical markets. It could never make money in the form the public sector is able to provide it. The same goes for many other such services. The closest we get to private sector participation for such things is the public sector contracting out public services to private providers. The problem with that is there often isn't really a functioning efficient market for such services since there's only one buyer and very often only a few practical providers, so it can be very hit and miss if such arrangements turn out to be efficient. Clearly it sometimes is possible for the public sector to provide services competitively with private alternatives. Nobody in Europe is clamouring to copy the dumpster fire that is the US health insurance system. Conversely SpaceX is proving that something that was always assumed to be only within the capability of a state is actually quite tractable to private initiative and commercialisation. I think in these things it pays to be flexible and watch out for inflection points.