4 ms·

I think this is just the end-stage failures of social democracies. Fund the things now, even if it means selling anything that can generate slight profits in lo

by Ekaros 2y ago

I think this is just the end-stage failures of social democracies. Fund the things now, even if it means selling anything that can generate slight profits in long term. Or provide basic services at reasonable rates. Eventually everything is sold and out sourced, money has been wasted on buying votes and the debt is maxed out. Then the system will fail...

treyd 2y ago
It's the end state of neoliberal policies. That's the ideological tendency that actually has the obsession with markets and strangling government capacity to do anything other than be a spigot for tax dollars. Scandinavian social democracies aren't perfect but they don't suffer from these entirely predictable problems to nearly the same degree.
- jopsen 2y ago
  Sure, they do we're just not as far along the curve! That said, who is to say the trend isn't reversible some day. Also let's not forget the selling to private operators does provide benefits, not always, it's not the magic fix we pretend it is.
- SoftTalker 2y ago
  They’ve really only existed since the end of WWII and were rescued from that war by the U S so not really enough time to judge.
- animal_spirits 2y ago
  I think one problem is that most people confuse private ownership with "the market". Just because a utility company is owned and operated by a private entity does not mean it is influenced by market forces. Utilities fall under a natural or technological monopoly. Due to space constraints it is not desirable or efficient to have multiple companies run pipes, cables, or other infrastructure alongside each other to compete. There are no competitive forces; there is no market. Publicly run institutions or privately run+ publicly regulated institutions better serve the needs of the people in these conditions.
  - forgetfreeman 2y ago
    I think a related thing that many people get confused by is the idea that market forces even exist. It's very rare these days to find industry segments where participants actively compete on quality or price. The whole idea is a holdover from how business was done 40 years ago.
    - _DeadFred_ 2y ago
      And with today's investors just buying funds/picking some 'group' on the 401k website, they aren't investing in a company, counting on receiving dividends from the company for the rest of their lives, and therefore forcing the company to be healthy. Instead they are counting on the stock going up short term, something totally different than buying and holding for dividends. And they just keep putting money into the generic pools of XYZ stock fund, again not a specific stock that they then hold accountable for anything. In fact they can't even punish a specific company by selling it's stock, only an entire ETF or 401 fund that the company is buried in. And then there's dark pools. Trading isn't even done on the market anymore.
      - maest 2y ago
        > And then there's dark pools. This is such a non-sequitor, it undermines your entire post.
    - dgoldstein0 2y ago
      market forces do exist. But it varies highly from industry to industry and product category to category. Food: - restaurants definitely compete with each other, mostly in each local area - and within that, different slices of the restaurant business more directly compete, e.g. fast food is more competing with each other than fine dining. - BUT: we have a huge problem with a lack of competition in the supply chain driving prices up for everyone, at least in the US. - Groceries are similarly impacted by supply chain monopolies Smartphones: high end smartphones are a oligopoly: - Apple vs Samsung vs HTC and several other tech companies producing phones; Apple definitely commands quite a bit of a premium, as do some of the nicer Android phones. But on the whole, the companies really are fighting to one-up each other with better features, battery life, etc. - quality is improving, even if the price is over-charging vs the ideal competitive market. Low end phones are even more fiercely competitive Other electronic categories seem to show decent market dynamics; headphones, earbuds, usb peripherals, keyboards, etc. all seem very commoditized; there certainly are brands that try to command a bit of a premium based on reputation / marketing, but the cheap options are often good enough and definitely have a very competitive market. Big electronics like GPUs and gaming consoles though I think it's easier to start considering market distortions due to more monopoly power. Of course there are no shortage of monopolistic practices out there, e.g. for utilities, collusion on rent, online retail (Amazon), textbook prices, medical care & pharmaceuticals, and even more mundane things like frozen potatoes and chicken. --- The thing that bothers me most with the simplistic view that "the market will do it better" is that the whole premise of market forces giving the most efficient price assumes that (a) a commodity is being traded by (b) a large number of buyers and sellers, none of whom have any significant share of the market. Many markets either (a) aren't trading a commodity (e.g. iPhones and Android phones aren't interchangeable so Apple can command a premium price) or (b) have consolidated buying or selling to the point that they don't have the large number of independent buyers or sellers necessary to have the price be set by market dynamics rather than the monopolist or monopsonist. And the people promoting "let the market fix it" either are too dumb to realize that, or more likely are letting their rich friends make a quick buck or want to score political points by promoting smaller government.
- wisty 2y ago
  Neoliberalism fails because of what economists call "the theory of the second best". Neoliberalism fundamentally assumes that the best practical system is as close as possible to an ideal free market, but it's not, due to local minima (often ones we've already found!) often being better. The best system is a free market, if possible. But the second best system may not be close to the best system, it may be a local minima that is very different. A classic example is that small companies and no unions is theoretically best, but monopoly unions vs monopoly companies is the second best (since there's no single monopoly, so they negotiate something close to the theoretical ideal). Free markets are best, but if the government is going to heavily subsidise and regulate the power companies (as they are natural monoplolies, so they either get regulated or they abuse their position) then maybe it's best to just cut out the middle man.
  - mindslight 2y ago
    You're still assuming that free markets will find the global optimum, which is equivalent to asserting P=NP and shrouding it in no true Scotsman.
    - Arrath 2y ago
      Isn't part of the problem assuming that there is a single global optimum? It seems there are at least two, such as in the case of utilities: best services or best profits for the shareholders. Again in the case of utilities we see time and again that these are mutually exclusive optimums as a privatized utility makes cuts to investment, build out, maintenance, customer service, or other aspects of the business in the goals of increasing profits, to the detriment of the quality of their service.
      - hgomersall 2y ago
        It's hard to argue that as a society we should construct systems that have any goal that isn't optimising (in this example) services. If that aligns with maximising profits for shareholders, then great, if not then the system is not working as it needs to. IMO it's never really about free markets per se, but about competition. If the market is not delivering effective competition, then it should be made to do so. Competition is what aligns shareholder interest with customer interest.
- wesselbindt 2y ago
  I can't speak for the parent post of course, but what I think they might mean is this: social democracy eventually devolves into neoliberalism (or worse), which, as you rightly point out, is geared towards making life much, much worse for the many to the benefit of a shrinking few. To see some examples of this, look at the arguably social democratic Keynesian US from the fifties, and where they're at now. Similarly for the United Kingdom. Labour used to fight for social democratic policies, and since the advent of "New Labour" (Thatcher's greatest victory), they're essentially a right wing party. For a much more harrowing example, look at Allende in Chile and the US sponsored coup by Pinochet. In general what you see is that the social democratic status of a state is an unstable one. Roughly speaking, the people who would benefit from neoliberal policies happen to have a lot of money with which they can and do influence politics. There's campaign funds, lobbying, but much more importantly owning the media[1]. Propaganda is incredibly powerful (we are not immune), and it has been used successfully time and again to get people to vote against their own interests, such as abolishing social democratic practices. [1] In the case of Chile, and for example Indonesia, the mechanism is much more violent, but the principle the same. Capital is spent to successfully influence politics in favor of capital.
dartos 2y ago
Selling almost any state function to a private entity is almost the opposite of what social democrats want to do… I think you mean neoliberal democracies.

by Ekaros 2y ago

treyd 2y ago

It's the end state of neoliberal policies. That's the ideological tendency that actually has the obsession with markets and strangling government capacity to do anything other than be a spigot for tax dollars. Scandinavian social democracies aren't perfect but they don't suffer from these entirely predictable problems to nearly the same degree.

jopsen 2y ago
Sure, they do we're just not as far along the curve! That said, who is to say the trend isn't reversible some day. Also let's not forget the selling to private operators does provide benefits, not always, it's not the magic fix we pretend it is.
SoftTalker 2y ago
They’ve really only existed since the end of WWII and were rescued from that war by the U S so not really enough time to judge.
animal_spirits 2y ago
I think one problem is that most people confuse private ownership with "the market". Just because a utility company is owned and operated by a private entity does not mean it is influenced by market forces. Utilities fall under a natural or technological monopoly. Due to space constraints it is not desirable or efficient to have multiple companies run pipes, cables, or other infrastructure alongside each other to compete. There are no competitive forces; there is no market. Publicly run institutions or privately run+ publicly regulated institutions better serve the needs of the people in these conditions.
- forgetfreeman 2y ago
  I think a related thing that many people get confused by is the idea that market forces even exist. It's very rare these days to find industry segments where participants actively compete on quality or price. The whole idea is a holdover from how business was done 40 years ago.
  - _DeadFred_ 2y ago
    And with today's investors just buying funds/picking some 'group' on the 401k website, they aren't investing in a company, counting on receiving dividends from the company for the rest of their lives, and therefore forcing the company to be healthy. Instead they are counting on the stock going up short term, something totally different than buying and holding for dividends. And they just keep putting money into the generic pools of XYZ stock fund, again not a specific stock that they then hold accountable for anything. In fact they can't even punish a specific company by selling it's stock, only an entire ETF or 401 fund that the company is buried in. And then there's dark pools. Trading isn't even done on the market anymore.
    - maest 2y ago
      > And then there's dark pools. This is such a non-sequitor, it undermines your entire post.
  - dgoldstein0 2y ago
    market forces do exist. But it varies highly from industry to industry and product category to category. Food: - restaurants definitely compete with each other, mostly in each local area - and within that, different slices of the restaurant business more directly compete, e.g. fast food is more competing with each other than fine dining. - BUT: we have a huge problem with a lack of competition in the supply chain driving prices up for everyone, at least in the US. - Groceries are similarly impacted by supply chain monopolies Smartphones: high end smartphones are a oligopoly: - Apple vs Samsung vs HTC and several other tech companies producing phones; Apple definitely commands quite a bit of a premium, as do some of the nicer Android phones. But on the whole, the companies really are fighting to one-up each other with better features, battery life, etc. - quality is improving, even if the price is over-charging vs the ideal competitive market. Low end phones are even more fiercely competitive Other electronic categories seem to show decent market dynamics; headphones, earbuds, usb peripherals, keyboards, etc. all seem very commoditized; there certainly are brands that try to command a bit of a premium based on reputation / marketing, but the cheap options are often good enough and definitely have a very competitive market. Big electronics like GPUs and gaming consoles though I think it's easier to start considering market distortions due to more monopoly power. Of course there are no shortage of monopolistic practices out there, e.g. for utilities, collusion on rent, online retail (Amazon), textbook prices, medical care & pharmaceuticals, and even more mundane things like frozen potatoes and chicken. --- The thing that bothers me most with the simplistic view that "the market will do it better" is that the whole premise of market forces giving the most efficient price assumes that (a) a commodity is being traded by (b) a large number of buyers and sellers, none of whom have any significant share of the market. Many markets either (a) aren't trading a commodity (e.g. iPhones and Android phones aren't interchangeable so Apple can command a premium price) or (b) have consolidated buying or selling to the point that they don't have the large number of independent buyers or sellers necessary to have the price be set by market dynamics rather than the monopolist or monopsonist. And the people promoting "let the market fix it" either are too dumb to realize that, or more likely are letting their rich friends make a quick buck or want to score political points by promoting smaller government.
wisty 2y ago
Neoliberalism fails because of what economists call "the theory of the second best". Neoliberalism fundamentally assumes that the best practical system is as close as possible to an ideal free market, but it's not, due to local minima (often ones we've already found!) often being better. The best system is a free market, if possible. But the second best system may not be close to the best system, it may be a local minima that is very different. A classic example is that small companies and no unions is theoretically best, but monopoly unions vs monopoly companies is the second best (since there's no single monopoly, so they negotiate something close to the theoretical ideal). Free markets are best, but if the government is going to heavily subsidise and regulate the power companies (as they are natural monoplolies, so they either get regulated or they abuse their position) then maybe it's best to just cut out the middle man.
- mindslight 2y ago
  You're still assuming that free markets will find the global optimum, which is equivalent to asserting P=NP and shrouding it in no true Scotsman.
  - Arrath 2y ago
    Isn't part of the problem assuming that there is a single global optimum? It seems there are at least two, such as in the case of utilities: best services or best profits for the shareholders. Again in the case of utilities we see time and again that these are mutually exclusive optimums as a privatized utility makes cuts to investment, build out, maintenance, customer service, or other aspects of the business in the goals of increasing profits, to the detriment of the quality of their service.
    - hgomersall 2y ago
      It's hard to argue that as a society we should construct systems that have any goal that isn't optimising (in this example) services. If that aligns with maximising profits for shareholders, then great, if not then the system is not working as it needs to. IMO it's never really about free markets per se, but about competition. If the market is not delivering effective competition, then it should be made to do so. Competition is what aligns shareholder interest with customer interest.
wesselbindt 2y ago
I can't speak for the parent post of course, but what I think they might mean is this: social democracy eventually devolves into neoliberalism (or worse), which, as you rightly point out, is geared towards making life much, much worse for the many to the benefit of a shrinking few. To see some examples of this, look at the arguably social democratic Keynesian US from the fifties, and where they're at now. Similarly for the United Kingdom. Labour used to fight for social democratic policies, and since the advent of "New Labour" (Thatcher's greatest victory), they're essentially a right wing party. For a much more harrowing example, look at Allende in Chile and the US sponsored coup by Pinochet. In general what you see is that the social democratic status of a state is an unstable one. Roughly speaking, the people who would benefit from neoliberal policies happen to have a lot of money with which they can and do influence politics. There's campaign funds, lobbying, but much more importantly owning the media[1]. Propaganda is incredibly powerful (we are not immune), and it has been used successfully time and again to get people to vote against their own interests, such as abolishing social democratic practices. [1] In the case of Chile, and for example Indonesia, the mechanism is much more violent, but the principle the same. Capital is spent to successfully influence politics in favor of capital.

dartos 2y ago

Selling almost any state function to a private entity is almost the opposite of what social democrats want to do… I think you mean neoliberal democracies.