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You're right, privatization doesn't automatically have to lead to an improvement. Incentives are what lead to the outcome being good or bad. The trouble is tha
by injb 5y ago
You're right, privatization doesn't automatically have to lead to an improvement.
Incentives are what lead to the outcome being good or bad. The trouble is that it's virtually impossible for governments and unions to have the kind of incentive structure we want. With the private sector, it's possible, due to competition. Remove the competition, and private business will instantly get as bad or worse.
In fairness to unions, I'd say most of the services the OP listed are bad mainly because they're the government, and not mainly because they're unionized. Obviously government cannot have any competition (when they do, that's called "war"). Therefore they have the most perverse incentive structures of any organization. Unions tend to oppose competition, but not with anything like the same effectiveness as governments.
- throwaway894345 5y agoI've also heard that Europeans really like their unions, while Americans tend not to. I'm of the impression that European unions are structured differently and they tend not to have the same sorts of problems. That said, European companies also don't strike me as particularly productive relative to American companies; though I'm sure that's not down to unions alone, productivity isn't everything, etc.
- bumby 5y agoI agree with you on the incentives part and that's also why I'm apprehensive about public unions. I'm uncomfortable with the idea of a civil "servant" being able to strike and remove services, particularly those the government has a monopoly over. I'd like to think a democracy has better mechanism to manage civil servant disputes. But I disagree that it's "virtually impossible" for unions to have the right incentives in the private sector. I previously worked in the automotive sector and the unions were incentivized to come to the table and adjust their previously agreed upon contract for the feasibility of the business back during the financial crisis. They knew if they took too hard of a line, it meant the company would not survive and that contract was worthless. Public unions, it seems, are a different animal though.
- injb 5y ago> But I disagree that it's "virtually impossible" for unions to have the right incentives in the private sector Yeah, I might have gone too far with that statement.