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For profit companies have an incentive for making profits. That incentive might accidentally be aligned with providing a quality service, but more often it is n

For profit companies have an incentive for making profits. That incentive might accidentally be aligned with providing a quality service, but more often it is not. A public entity is not restricted by the need to maximize profits and can fully concentrate on providing the best possible service within the budget. Both public and private organizations can have efficiency challenges, which for the most part correlate with their size. A private company that is granted a monopoly will tend to exhibit the worst of both worlds, maximizing private profits while providing minimal service and putting all risks onto the public sector.

tomohawk 7y ago
Interesting theory. In the USSR, there were no private entities. It must have been a utopia, no? Obviously, it was not, and there was widespread devastation of the environment, unreliable service, etc. Whether a company is for or non profit is almost beside the point. What made utilities work was that the private corp ran the business and the government board provided oversight. This eventually broke down as people are people whether they work at a for profit or non profit organization. If the board becomes filled with people with a different agenda than providing cheap, safe, reliable power, then they will take actions that, over the long term, will make it impossible for the utility to do those things. The signs of this are not allowing new transmission lines or power plants, and directing that the company use specific technologies that are not part of the (cheaper/safer/more reliable) core values.
metacritic12 7y ago
A public entity has an incentive to maintain appearances to the public. That incentive might accidentally be aligned with providing a quality service, but more often it is not.
- throw0101a 7y ago
  > A public entity has an incentive to maintain appearances to the public. A public entity may have more mechanisms for transparency, whereas a private entity can keep also maintain appearances of good customer service, and as long as they're making profits the shareholders may not care about what's happening under the hood. Until things get so bad that the private entity implodes, but by that time it's too late.

tomohawk 7y ago

Interesting theory. In the USSR, there were no private entities. It must have been a utopia, no? Obviously, it was not, and there was widespread devastation of the environment, unreliable service, etc. Whether a company is for or non profit is almost beside the point. What made utilities work was that the private corp ran the business and the government board provided oversight. This eventually broke down as people are people whether they work at a for profit or non profit organization. If the board becomes filled with people with a different agenda than providing cheap, safe, reliable power, then they will take actions that, over the long term, will make it impossible for the utility to do those things. The signs of this are not allowing new transmission lines or power plants, and directing that the company use specific technologies that are not part of the (cheaper/safer/more reliable) core values.

metacritic12 7y ago

A public entity has an incentive to maintain appearances to the public. That incentive might accidentally be aligned with providing a quality service, but more often it is not.

throw0101a 7y ago
> A public entity has an incentive to maintain appearances to the public. A public entity may have more mechanisms for transparency, whereas a private entity can keep also maintain appearances of good customer service, and as long as they're making profits the shareholders may not care about what's happening under the hood. Until things get so bad that the private entity implodes, but by that time it's too late.