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Many are convinced that paying the workers, the lobbyists, shareholders, board of directors, and contract overhead is cheaper than just paying the workers direc

Many are convinced that paying the workers, the lobbyists, shareholders, board of directors, and contract overhead is cheaper than just paying the workers directly. I've been investigating why people think this for years. I've read a number of books, listened to lectures, went to proseminars in economics at UC schools, took some classes ... Recently, I've become increasingly convinced it's actually just a giant hustle. It's an elaborate ploy that makes people money. Things like Demand Theory or the Efficient Market Hypothesis are modern astrology psuedo-sciences with real world evidence that's incidental or statistically insignificant at best. This is especially true for the second-order implications like privatization. There's no persuasive material evidence of the purported theory that privatization is more efficient. The most favorable evidence from the supporters (for instance, Megaprojects and Risk: An Anatomy of Ambition by Bent Flyvbjerg he has 3 more on the topic) say that private and public projects are about the same. They go over budget about the same and fail about the same. Other more critical quantitative studies show dramatically better outcomes for publicly controlled systems - look at Oxfam studies for instance. There's also a lot of evidence that the private systems however mint millionaires who make an absolute killing off the taxpayer. Just like 500 years ago how religious people controlled the narrative and set up the rules of society and "laws of nature" to basically be giant money trees for them, there's a new class of people who have done the same thing. Recently I've been studying where this economic school originated from (essentially Chicago Boys style) and what was driving it. I haven't found any serious scholarly work on it beyond things written by journalists. The journalists track it to various organizations that formed after the new deal (each author has a different boogeyman) but the narrative is essentially the same: create think tanks, pack the colleges with favorable people, witch hunt the critics through red/left/whatever baiting, silence alternative views, create a media through movies, news, and television that support this view and so on. Not because it's accurate, right, or correct - but because it makes them a lot of cash. The narrative actually changes. Groups like the Heritage foundation or the American Enterprise Institute move their goalposts constantly over the years and defend it on supposedly principled economic grounds. The problem is that you can often find, such as in healthcare, documents where they make multiple fundamentally contradictory arguments because the underlying market mechanics they defend are pliable devices of convenience to push the agenda of making private capital and that's literally it. There's nothing deeper, nothing more fundamental. It's a giant hustle.

dsr_ 8y ago
This is largely correct. Simple case: the local school district here in a suburb of Boston provides a school bus service. So did the one I attended in New York. The one in NY owned a fleet of diesel buses, a central depot to put them in, a repair facility next to the depot, and paid administrators, mechanics and drivers. Every so often a wave of buses were replaced. The one in MA pays a bus company that does all the same work. The bus company makes a profit. Interestingly, they aren't scaled -- this bus company serves this school district, period. In theory, the MA school district could look for another vendor if the price got too high. In practice, every bus company is already at their capacity and could not expand to cover another district without a major capital infusion to fund another depot, repair shop, and more buses. In any situation where one could reasonably argue that a private company could scale, one would have to also accept the argument that the government could scale at an advantage because they don't need to make a profit: depots and buses need to be fairly local, and while they can be consolidated to some extent, one might as well handle it as a multi-district service - a county or even state-wide. Arguments based on a private company being more efficient because of competitive pressures don't work. There's no competitive pressure. Arguments based on private companies being less corrupt don't work. Mismanagement happens everywhere. When it comes to public services, privatization always means a handout to the owners.
- tialaramex 8y ago
  You can also see this very easily in the UK. One city in the entire country has essentially all its transport infrastructure owned by the government (some of it is operated by private companies under license). In every other city they're a mess of private companies. Result: In that one city (it's London) the transport infrastructure works as an integrated whole and everywhere else it's just a bunch of assemble-it-yourself components. Private bus companies actually operate the buses in every city, but in London those companies have to work for the government, their contract says all the buses must look alike (they're painted red, if you've visited or thought of visiting London you can probably visualise one) and work alike (taking contactless cards) and so on, they're all part of a single system. In London you don't care which private company operates the bus you got on and pays the driver, it says "35" on the front, it's a 35 bus, sorted. In my city they're just three (or maybe four?) different private companies, different livery, their timetables aren't co-ordinated, they have different overlapping number schemes, and different fare schemes - if I have my City card but I'm on a Blue bus that's no good, I'll have to pay by credit card. Why? Because as in the US one of our political parties dogmatically believes that privatisation is better, and confronted with the fact that it doesn't work their answer is more privatisation. Nationally many people keep voting for them anyway. In London not so much.

dsr_ 8y ago

This is largely correct. Simple case: the local school district here in a suburb of Boston provides a school bus service. So did the one I attended in New York. The one in NY owned a fleet of diesel buses, a central depot to put them in, a repair facility next to the depot, and paid administrators, mechanics and drivers. Every so often a wave of buses were replaced. The one in MA pays a bus company that does all the same work. The bus company makes a profit. Interestingly, they aren't scaled -- this bus company serves this school district, period. In theory, the MA school district could look for another vendor if the price got too high. In practice, every bus company is already at their capacity and could not expand to cover another district without a major capital infusion to fund another depot, repair shop, and more buses. In any situation where one could reasonably argue that a private company could scale, one would have to also accept the argument that the government could scale at an advantage because they don't need to make a profit: depots and buses need to be fairly local, and while they can be consolidated to some extent, one might as well handle it as a multi-district service - a county or even state-wide. Arguments based on a private company being more efficient because of competitive pressures don't work. There's no competitive pressure. Arguments based on private companies being less corrupt don't work. Mismanagement happens everywhere. When it comes to public services, privatization always means a handout to the owners.

tialaramex 8y ago
You can also see this very easily in the UK. One city in the entire country has essentially all its transport infrastructure owned by the government (some of it is operated by private companies under license). In every other city they're a mess of private companies. Result: In that one city (it's London) the transport infrastructure works as an integrated whole and everywhere else it's just a bunch of assemble-it-yourself components. Private bus companies actually operate the buses in every city, but in London those companies have to work for the government, their contract says all the buses must look alike (they're painted red, if you've visited or thought of visiting London you can probably visualise one) and work alike (taking contactless cards) and so on, they're all part of a single system. In London you don't care which private company operates the bus you got on and pays the driver, it says "35" on the front, it's a 35 bus, sorted. In my city they're just three (or maybe four?) different private companies, different livery, their timetables aren't co-ordinated, they have different overlapping number schemes, and different fare schemes - if I have my City card but I'm on a Blue bus that's no good, I'll have to pay by credit card. Why? Because as in the US one of our political parties dogmatically believes that privatisation is better, and confronted with the fact that it doesn't work their answer is more privatisation. Nationally many people keep voting for them anyway. In London not so much.