And The Winner Is....The Public Sector

[marmar]

from OnTheCommons.org:




And The Winner Is....The Public Sector
In health, education and defense, government programs are more efficient than privatized ones

By David Morris


Unlike the public sector, the private sector is bred for efficiency. Left to its own devices, it will always find the means to provide services faster, cheaper, and more effectively than will governments.
-- James Jay Carafano, Private Sector, Public Wars


I suspect the vast majority of Americans would agree with Mr. Carafano. They probably consider the statement self-evident. The facts, however, lead to the opposite conclusion. When not handicapped by regulations designed to subsidize the private sector, the public sector often provides services faster, cheaper and more effectively.

Consider the results of recent privatization initiatives in three key sectors: health, education and national defense.

Health

Alone among all industrialized nations, the US relies on private for profit insurance companies to manage its health care system. The result? The US has by far the most expensive health care system in the world both in total cost and as a percentage of GDP.

But we don’t have to look abroad to evaluate the comparative costs of private and public health systems. Consider Medicare. ................(more)

The complete piece is at: http://onthecommons.org/and-winner-isthe-public-sector

[Buns_of_Fire]

1. That's the key phrase: "for profit"

Governments aren't expected to make a profit on providing a service. Private institutions, on the other hand, must make a profit to remain viable.

[rbnyc]

2. for-profit vs. not-for-profit

This is kind of a tangential comment, but your reply calls attention to a common misunderstanding about not-for-profit.

Not-for-profit doesn't mean that the organization isn't expected to make a profit. It means that profits are re-invested in community programs or otherwise benefit stakeholders as opposed to shareholders.

[Buns_of_Fire]

3. Point taken. I was thinking in terms of "profits" like what gets distributed to GE stockholders.

(If there's anything left after the executives get their cut, of course.)

[fascisthunter]

4. It's what Rebuilt this country after the Great Depression and helped...

create a middleclass... the American Dream! But the poisonous malcontents who judge average Americans, would like to destroy what was one of the proudest moments in our country's history.

Hey republicans: you will NEVER be honored when history looks back on your actions. In fact, only a small sized minority(like the neo-nazis) will hail your efforts.

[unblock]

5. for-profit companies are most efficient at extracting profit.

the policy question is, is efficient resource allocation a BY-PRODUCT of that efficient profit extraction?

it can be, but that requires several ingredients, not the least of which is genuine competition, a rarity in most industries these days.

one classic example of what the private sector can't do well is make things that last. there's profit in planned obsolescence, and it's hard to get people to pay up front for something that will last forever. so the private sector will take various actions, ranging from neglecting research to outright sabotage, to ensure that their products only last "long enough" -- to keep customers coming back for more.

why sell one shirt that lasts 10 years when you can sell 5 that last 2 years each? but is this the most efficient use of resources? hardly. the drawback of the shirt that lasts 10 years is purely a weakness in its profit-extracting potential.

government regulation could save the day in this sort of scenario, but that's taboo in modern america.

[exboyfil]

8. Do you really think government regulations help better

than market forces in the above described situation? We have a host of methods for assessing the quality of products derived from the free market system. Consumer Reports for example. Your own experience in dealing with particular companies is another example. Is planned obselesence in designs - possibly to some degree, but I have never come across it in making a cost benefit decision as a primary motivator (I am an engineer in the mobile equipment industry). Cars last a whole lot longer today than they did before. I paid about the same price for my Cavalier in 2002 as I did in 1985, and my 2002 Cavalier has been far more trouble free than my 1985 Cavalier.

Companies that are in it for the long haul recognize the importance of repeat customers. You may design a shirt that can last 10 years (actually I have shirts that have pushed that time frame that I got for $10-$15 from JC Penney), but other factors enter into the situation. Styles change for example. Also shirts are subject to stains and damage during use unrelated to their durability.

Looking for government regulation to fix something like that is like placing your trust in Central Planning for the economy. It has never worked, and it will never work.

Regulations as regards to information is a role for the government. Also determining the safety of products is also a role for the government. Regulating how long a shirt should last???? How about the cheap tourist shirts you buy and vacation and wear while painting within a year?

I do believe, that once you start with the premise of unfettered access to emergency care, medical care for the poor paid for by the state, and the state taking over medical care for the elderly, that you can have a more efficient care system that is single payer than a comparable free market system. Don't kid yourself thinking that this solution will be better for the broad middle class or for many health care providers. I happen to think a German style system is probably the best solution for our country, but I recognize that sacrifices will be made to achieve such a system.

[eridani]

9. How stupid do you have to be to think that three competing fire departments

--cost a city less than one public fire department?

Markets are good for only one thing--providing more of things you want more of, like computer memory or restaurant cuisine selections. They suck at dealing with things you want less of, like house fires and sickness. If a town with one cardiac specialty care group has another competing group set up shop, are you silly enough to think that people are going to suddenly start having twice as many heart attacks?

Please stop with the idiocy of confusing consumer goods with public goods. In order to have iPads, you need roads and schools, but roads ans schools exist perfectly well without iPads.

[Wounded Bear]

6. Remember Walter Reed Hospital?

Once they traced the problem back to where the work was sub-contracted to the private sector, the story died.

:shrug:

[Mr. Jefferson]

7. LOL...