4 ms·

Isn't that the whole point of privatisation? By introducing a profit maximisation goal you (supposedly) create a more efficient operation. I've worked in both

• jraph 3y ago
  I've also seen many public places where people are efficient, and also stressed because of the amount of work to do. I feel like your experience is not very applicable to all situations. What's more, a private company which has monopoly does not really have special incentive to respect deadlines and everything: it is the only choice, so customers won't deal with any competitor and are stuck with this private company.
  • Kiro 3y ago
    Absolutely. My experience is completely anecdotal, and even if it's true that you get less bang for the buck in the public sector I still think it's ideologically sound and worth it. My country has a huge public sector but I think it's good. What's normally the driving motivator in public companies to be efficient?
    • Yoric 3y ago
      Professional pride?
      • jraph 3y ago
        I'd also add a sense of wanting to be useful, and not letting people (you serve) down (which can be emotionally draining).
    • robertlagrant 3y ago
      My experience with the public sector is the same. People must spend all their budget or it will be cut next year, so they do. Processes calcify and no one is incentivised to improve them. It's hard to fire people or make them redundant, so people get shuffled around between departments, costing far more than they contribute. Pensions are often very expensive. Strike action is more likely, as it's a big mass of people who can shut things down. Fundamentally, it's the principle-agent problem. The customer isn't the one paying the bills. The customer is a politician or two who can heap money on the department or not, and they get praised for heaping money rather than saving money. The people paying the bills, taxpaying individuals and businesses, must do so or they go to jail. So why be efficient when your customers cannot legally avoid buying your service?
• sitharus 3y ago
  It's only cheaper for the consumer when there is a forcing function for price. In a competitive marketplace - lets say breakfast cereal - if you're inefficient another manufacturer can undercut you while maintaining profit margins. There are ways around this of course through product differentiation, but something basic like cornflakes all hover around the same price point. All manufacturers are trying to improve efficiency because they know if they don't their competition will. Now pick something that's a natural monopoly, like water supply. Consumers can't choose water suppliers - deploying pipes is prohibitively expensive - so there's no incentive to lower prices. Instead the efficiency goes to paying shareholders and management. Additionally these companies often have set leases on the infrastructure. If you have a 20 year contract and you know the pipes will start to fail in 25 years if you don't do maintenance... why do maintenance? Government departments might not be the most efficient, but we can demand they're open and report what they spend money on.
  • deleted 3y ago
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  • phatskat 3y ago
    I recently learned about electrical utilities in the US - the only way they really make profit is through building new infrastructure (power prices are set by a control board). There’s zero motivation for them to do maintenance, which is how we wound up with some of the devastating California wildfires a year or two ago. When something is of public importance, like a utility, it really seems that running it as a public service instead of a private company seems like the right call
• danparsonson 3y ago
  > Isn't that the whole point of privatisation? By introducing a profit maximisation goal you (supposedly) create a more efficient operation. Right, but efficient at what? The answer is almost invariably 'efficient at making money' - that's the whole point; competition normally forces alignment of incentives, wherein 'better' service (for some value of 'better') results in higher income. Thus a business that provides better service is more efficient at making money - the free market hypothesis. When there is a captive audience, as in the case of public utilities, there is no incentive to provide a better service, but the company goal is the same - make the most money - and they are freed up to do it in the easiest way possible, usually by cutting costs across the board and paring down the services to a bare minimum. This is still efficient in the sense that they maximise income for minimum outlay, but it's not in any way desirable for the customers who are forced to use the now crappy service.
  • carlosjobim 3y ago
    > Right, but efficient at what? The answer is almost invariably 'efficient at making money' They don't make any money unless they give the customers what they want, that's the whole point. It's so basic even animals have an instinct for it. That's why government and private business shouldn't be mixed.
    • drsnow 3y ago
      Animals have the instinct to shit in front of you and not feel the slightest discomfort doing so too. Should we all start shitting in front of each other to more closely align our behavior to animal instincts?
      • carlosjobim 3y ago
        Who am I to tell you what to do?
        • red-iron-pine 3y ago
          You heard the man, let's shit where we please. I nominate his doorstep, since who is he to tell us where to poop?
• mmkos 3y ago
  Seems to me like an incentive issue. I can't see why it'd be impossible to recreate a good incentive structure for employees in the public sector so that they'd perform similarly.
• FrustratedMonky 3y ago
  NO > " create a more efficient operation." This doesn't happen. When the government is the customer, and the private company is maximizing profit, the company's effort goes towards figuring out how to 'raise' rates. This might sound like free market, I'm just trying to increase prices while reducing my overhead (efficiency). But in practice you end up paying a lot for a little. So instead of government workers slacking off, you have even less well payed people slacking off, with managers making a lot of money. If you ever had to go to a 'privatized' DMV you can see it. Just awful everything, because of cutting corners. Yet the company gets paid a lot. The money goes to the company leadership, it doesn't 'trickle' down to operations to do a better job.
• katbyte 3y ago
  Public infrastructure doesn’t need to make a profit, that should never be the goal. It should be to deliver good reliable service/results at a consistent price. That is often at odds with “making profit” either from over hiring so there’s always fallback people on call to overbuilding so in 50 years your still under capacity. The goals are entirely different and so should the incentives
• ClumsyPilot 3y ago
  > By introducing a profit maximisation goal you You never invest in infrastructure - in 30 years since privatisation, water companies in Britain haven’t built a single reservoir, lose 30% of water to leaks and dump raw sewage on the beach where children swim
• bandrami 3y ago
  It's funny how "efficiency" isn't actually defined in economics, but people keep using it.
• Yoric 3y ago
  Anecdata: I used to work for public academia. I got out after a burnout due to massive overwork. I've worked in a couple of start-ups, among others, and found them all much more relaxing. Sure, there's lots of pressure, but, at least for someone with my profile, it's limited by the fact that it's easier to walk away.
• UncleMeat 3y ago
  Profit maximization does not inherently create efficiency for all consumers. A profit maximizing company may reasonably say "oh this population is super expensive to serve so we will let services there stagnate or even remove services for that population because it is more efficient for us to focus elsewhere." Or consider a subscription service that makes it considerably more difficult to unsubscribe. That increases profit while making the product actively worse. Profit incentive leads to efficiency of profit extraction, which is only loosely correlated to efficiency of services for consumers and occasionally runs in total opposition to efficiency of services for consumers.
• kingaillas 3y ago
  >By introducing a profit maximisation goal you (supposedly) create a more efficient operation. Yes but one way that happens is by ignoring unprofitable customers. That's great if you are a car dealership and sell higher end cars to wealthier people or run a botique grocery store with fancy all-organic produce, but terrible if you are (for example) trying to provide healthcare or education and decide that the profit margins aren't high enough for you to serve various segments of the population.
• raffraffraff 3y ago
  I think that the differences between your experiences at government vs private might be correlated with the size of the organisation. I've worked at very large publicly traded companies that operate kinda like government institutions: too big to fail, tons of bureaucracy, endless meetings, silos / walls / not-my-job.
• red-iron-pine 3y ago
  > I've worked in both the public and the private sector and can definitely understand the argument. In my government job it was way easier to slack off and no-one really cared about the results. There was no actual pressure from above to hit targets. You had your budget and it didn't really matter what you produced. Not hitting deadlines was no big deal. Cuz that never happens in the private sector, lol. Guess where I'm at now... There was a week while consulting pre-COVID I tried to see how many hours of Skyrim I could play on Switch, both in the office and remotely. I got to about 11.