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Privatization

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Captain Vancouver View Drop Down
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    Posted: 21 Feb 2014 at 11:54
Maybe I should have posted this in the mead hall, as all I really want to do is vent, and spend a few blissful moments foaming at the mouth.

I get so sick of hearing, usually from the intensely self-interested, or else from the intensely uninformed, what a paradise we would have, if we could just allow the business community to run things. Ah yes, those paragons of intellect and industrial efficeincy. Is the post office too bureaucratic? Then send in that dude that used to manage the 7-11 store, he's from the private sector, and so he will no doubt get things whipped into shape. No doubt.

This is all about self-interest folks, plain and simple. The concept that there is a rigid dividing line between the private and public realms doesn't bear out in history. Yes, there are some forms of endevor that tend to work better in the private sphere, and some that tend to work better in the public area. But the reality is complex, and also, management skills do  not wax or wane depending on the sector of the economy in which they are employed.

In fact today we are seeing an orgy of self-interest, in which those near the top of the socio-economic food chain promote, and then sit back in satisfied (and perhaps somewhat surprised) enjoyment as the less voracious, less informed, and less worldly eco their needs in the media, and other places.

The link below is about local issues here, but the principles are, I think, global.

There, I'm finished. Just hold still a moment while I wipe the spittle off the inside of your computer monitor. There........I think I've got it all...........sorry about that..

http://www.vancouversun.com/business/Stephen+Hume+Ferries+bloated+inefficient+recessionary+drag+province/9520800/story.html
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toyomotor View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote toyomotor Quote  Post ReplyReply Direct Link To This Post Posted: 21 Feb 2014 at 16:14
And how many big businesses go to the wall as a result of incompetence or corruption? (A Ponzi Scheme anyone?P

When these so-called intellectual giants take over our government departments, how much will they pay themselves-you guessed it, a salary equal to their egos.

And when a government department does go tits up, who gets to bail it out?

You guessed it!

Edited by toyomotor - 21 Feb 2014 at 16:15
“The biggest surprise in a man’s life is old age.”
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Post Options Post Options   Thanks (0) Thanks(0)   Quote ALLAN Quote  Post ReplyReply Direct Link To This Post Posted: 21 Feb 2014 at 19:59
As nations we always deserve the outcome of elections. It's a puzzle pay structures in government departments. I guess the same applies here too. Not sure I would believe a person who would say they would turn the money down in such a precarious position. Best thing all round would be politicos publishing wages structures for departments before elections and sticking to them when elected.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote caldrail Quote  Post ReplyReply Direct Link To This Post Posted: 21 Feb 2014 at 23:04
The truth of the matter is that privatisation and public ownership are equally likely to produce the same corporate lethargy and incompetence, bearing in mind the behaviour of human beings within a structured bureaucracy. What matters more is how well run the business is, and that's the difficulty, with 'fat-cat' corporate lifestyles on offer as financial and political rewards.

Not too many years ago my local council proudly proclaimed they had hired a team of experts who were talented and able to put Swindon on the map. As it turned out, they weren't. One in fact was p[aid £90,000 a year to decide which pencils to procure. I remember a warehouse where I used to work. A manager from a major London store had gotten the job of running the warehouse and boy was he happy at what he thought was a step up the corporate ladder. It didn't take him long to fall by the wayside, partly because he wasn't best suited to running such a business, but also because the warehouse weren't well disposed toward him.
http://www.unrv.com/forum/blog/31-caldrails-blog/
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Post Options Post Options   Thanks (0) Thanks(0)   Quote toyomotor Quote  Post ReplyReply Direct Link To This Post Posted: 22 Feb 2014 at 09:50
Originally posted by caldrail caldrail wrote:

The truth of the matter is that privatisation and public ownership are equally likely to produce the same corporate lethargy and incompetence, bearing in mind the behaviour of human beings within a structured bureaucracy. What matters more is how well run the business is, and that's the difficulty, with 'fat-cat' corporate lifestyles on offer as financial and political rewards.

Not too many years ago my local council proudly proclaimed they had hired a team of experts who were talented and able to put Swindon on the map. As it turned out, they weren't. One in fact was p[aid £90,000 a year to decide which pencils to procure. I remember a warehouse where I used to work. A manager from a major London store had gotten the job of running the warehouse and boy was he happy at what he thought was a step up the corporate ladder. It didn't take him long to fall by the wayside, partly because he wasn't best suited to running such a business, but also because the warehouse weren't well disposed toward him.



You're quite right.

But in Australia, the sackings don't seem to happen all that often-they seem to be moved into a "new" job elsewhere.

One very Public Servant in Tasmania, whose job was abolished, was on full pay with no work for a year or more. It happens!
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Post Options Post Options   Thanks (0) Thanks(0)   Quote toyomotor Quote  Post ReplyReply Direct Link To This Post Posted: 22 Feb 2014 at 15:39
BUT...on the other hand, if big business took control of government, things would actually happen.

No more endless committees to waste time and money and still not produce results.

No "pork barrelling".

No more "Jobs for the Boys".

Common sense, profit based policies instead of endless unaffordable spending.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Captain Vancouver Quote  Post ReplyReply Direct Link To This Post Posted: 23 Feb 2014 at 05:45
Originally posted by toyomotor toyomotor wrote:

BUT...on the other hand, if big business took control of government, things would actually happen.

No more endless committees to waste time and money and still not produce results.

No "pork barrelling".

No more "Jobs for the Boys".

Common sense, profit based policies instead of endless unaffordable spending.


Indeed they would happen. And we don't have to look very far to see the trends in society where the far right/pro-business community is ascendent: ever greater polarization of wealth, diminishment of worker rights, disregard of environmental protections, rampant growth of the financial sector while industry and other services migrate to the  most desperate areas of the globe, taking middle class wages with them, and wild distortions in national economies that, for example, produce million dollar shacks in places like Vancouver.

It is easy to think, when we see examples of foolish waste in government, that the alternative must be so much closer to Nirvana. So far history, especially recent history, has dashed those hopes. One of the greatist episodes of "waste" has occurred during our time- the 2008 global meltdown. Trillions were lost, savings atrophied, spending put off, retirements delayed, tax money and social programs limited, all because......well, the supposed invisible guiding hand of John Adams turned out to be not much of a guide, unless we desire a seedy tour of human greed and callousness.

Common sense is, IMO, an overworked term. What people usually mean when they say this is that another's opinions are in alignment with one's own. It is not a term that really applies to the business community. The goal there is to make money, for one's self, clients, shareholders, etc. There is no law of economics that insists this goal follows a parallel track with that leading to the common good. What may be "common sense" for the community may be completely at odds with the desires of business. Indeed, a large segment of history is devoted to documenting the tensions between these two interests.

My idea of common sense is that government should control health care, through a single payer system. This is not considered common sense in Washington, or in large parts of the US. My idea of commons sense is that CEOs that run a modest utility, such as a coastal ferry company (and come with limited credentials) are not worth $1m a year salary, and $300k a year pension. Many were I live disagree. My idea of common sense is that Australia should take in more refugees. Is this an idea that is obvious to all (ie: common sense), or do you think the issue is more complex, and not one all might agree on? How are we doing on common sense so far?

Many of the great issues that affect us today are social and political issues, ones for which there are no business solutions. These solutions can only be achieved through education and some sort of social consensus (voting).
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Post Options Post Options   Thanks (0) Thanks(0)   Quote toyomotor Quote  Post ReplyReply Direct Link To This Post Posted: 23 Feb 2014 at 11:32
Captain

I don't disagree with what you're saying at all. I was simply providing an alternative view.

But there's a problem that lays at the root of our socio/economic problems here in Australia, and it's circular in motion.

Unions fight for better wages and conditions, such as shorter working hours; productivity falls and the employer must increase the cost of the goods produced; the market won't absorb the price increases and the business starts to fail; in order to try to survive, the employer reduces his work size by sacking people; those people become a drain on the public purse; because productivity needs to increase in order for the business to stay afloat, the employees demand higher wages etc.

And so it goes on, round and round.

In Australia recently, our car manufacturing industry was shattered by announcements that Ford, Holden (our automotive icon) and Toyota will all cease production within three years. One of the reasons given was the high cost of output, which resulted in higher unit cost, and falling markets.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Captain Vancouver Quote  Post ReplyReply Direct Link To This Post Posted: 23 Feb 2014 at 15:41
Originally posted by toyomotor toyomotor wrote:

Captain

I don't disagree with what you're saying at all. I was simply providing an alternative view.

But there's a problem that lays at the root of our socio/economic problems here in Australia, and it's circular in motion.

Unions fight for better wages and conditions, such as shorter working hours; productivity falls and the employer must increase the cost of the goods produced; the market won't absorb the price increases and the business starts to fail; in order to try to survive, the employer reduces his work size by sacking people; those people become a drain on the public purse; because productivity needs to increase in order for the business to stay afloat, the employees demand higher wages etc.

And so it goes on, round and round.

In Australia recently, our car manufacturing industry was shattered by announcements that Ford, Holden (our automotive icon) and Toyota will all cease production within three years. One of the reasons given was the high cost of output, which resulted in higher unit cost, and falling markets.


Yes there is the classic wage/price spiral, evident in many other parts of the world also. But, I'd put it to you, the trends today suggest that there is not a linear relationship between wages and prices. There is a downward pressure on both wages and prices in many parts of the developed world due to the export of labour and manufacturing. There is also an intense upward pressure on wages for those very few that find themselves in favoured  positions. If you know how to program the computers that tint the windows for the new Boeing 787, well then heck yes, your skills are in demand.....for the moment.

That's what has taken us to where we are today- doing a rerun of the Glided Age. We are seeing not only a vast polarization of wealth, but also a greater tenuousness of wealth, in that there is less assurance of one keeping what one has today, in relation to what was assumed in the past. We could say that this is ok, to an extent, in that historically many have had to scramble, and find new occupations that replace the old. But there are fundamental differences today, if we are to believe the prognostications of a number of prominent economists. Yes, higher value products are being created. Yes, new employment categories are emerging. But overall, employment is dropping. The stats bear this out.

Today we are looking at an employment participation rate of about 60-65% (and dropping) in western countries. This is an historic low, and we would have to go back to the early '70s to see the same numbers. What makes this even more dramatic is the fact that labour demographics have changed massively since that time. Don't know how old you are  Toyomotor, but your captain can remember when most women did not participate in the workforce. Even taking into account that wholesale change- 50% of the population now engaging in paid work, where they did not before- we still have a drop in employment participation rates.

The fact is, our productivity has increased enormously in recent years, due in large part to automation and the digital revolution. A bank clerk today is worth, in terms of productivety, probably a thousand times  more than when your captain was a young lad, waiting in line with his allowance money. Are they paid a thousand times more? Nope. They just aren't there. But, and this is a key point, the wealth is. Our society is still better off for having this increase in effeciency, but the only thing is, it hasn't been distributed evenly. The middle class has fallen away, through no fault of their own, and the "one percent" have gained beyond their wildest dreams. Nerdy kids from Seattle now control more wealth than many sovereign countries, simply because they were in the right place, at the right time. So of course this begs the question, what to do about it?

When unions ask for more, it is not simply a question of more for them, less for society, and so a collapse is on the horizon, due to greed. It is more, in a global sense, of assigning return to where it is due. This is of course subjective, but in a world where wealth is multiplying, and technology is increasing efficiency beyond what was imaginable a few years ago, it is fair to ask how much labour should take of this. If one does the work, maybe one should take the reward. That is unless you subscribe to the current right wing spin that insists only a few top CEOs have the brains or ingenuity to run things, and lesser mortals should be thankful for whatever trickles down to them.

OK, I've rambled on enough here. I'll leave you with one parting shot. The problem of wages and unemployment could be ended within a matter of months, in all advanced economies. Would you like to speculate how?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Omar al Hashim Quote  Post ReplyReply Direct Link To This Post Posted: 23 Feb 2014 at 20:35
The Captain is right toyomotor, whether the public or private sector can do better at a particular job is almost entirely dependent on who is doing and for what motives they work.

If, the private sector is attracting better talent, and an effective market can be established that means profiteering is in the general interest, then the private sector can do a better job. However, if that is not true, for example imagine the regulation required to establish an effective market, then the public sector can do a better job.

I believe that natural monopolies are generally better off government controlled, but natural markets private controlled.
The failure of Ford and Holden are excellent examples of private failures. Foreign owned companies that had no interest in developing Australia beyond the money they could extract. Ultimately they were just an arm of American companies who had no real interest in Australia. If Holden had been state owned, there's odds on bet it would have been better managed.

Public sector inefficiencies in my experience come from two key areas:
1) Being subject to politicians. The public service cannot do anything without consulting everyone. That takes years as every community and business interest responds to discussion papers, lobbies the minister, sues if they don't get their way. Public servants often know exactly what is necessary and how to do it, but are slowed down by the political need not to scare people.

2) Being unable to fire people. Firing someone in the public service is hard. Not impossible, but very hard. Therefore only the most straight-forward bosses will do it, with the majority settling for shifting lazy people from section to section. This causes two problems, first you are paying a useless person, and second it means that the people who are capable are overworked. Tight budgets mean that the overworked people have to do the work of the lazy people and themselves, which slows everything down.

Both of those problems apply primarily to government agencies rather than to state owned corporations. There is no reason why state owned companies cannot do better than private ones, in fact, I generally believe they do because they are more likely to serve the country than the shareholder.


Edited by Omar al Hashim - 23 Feb 2014 at 20:39
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Post Options Post Options   Thanks (0) Thanks(0)   Quote toyomotor Quote  Post ReplyReply Direct Link To This Post Posted: 23 Feb 2014 at 23:40
Captain & Omar

Again I agree with your posts.

As for, "I'll leave you with one parting shot. The problem of wages and unemployment could be ended within a matter of months, in all advanced economies. Would you like to speculate how?"

I'm not an economist but I suppose the implementation of a prices/wage freeze could work for a while, but that would depend on the overseas purchasing power of our currency.

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Post Options Post Options   Thanks (0) Thanks(0)   Quote Captain Vancouver Quote  Post ReplyReply Direct Link To This Post Posted: 24 Feb 2014 at 17:12
What we can often loose sight of is that the economic arrangements we have today are quite subjective, and have evolved over time, either funneled here and there by interested parties, or simply chugged along under their own momentum. Nothing is carved in stone.

The value we place in productive employment has much more to do with social constructs than it does to any formulas found in economic texts. Per capita GDP has increased quite substantially in most of the world during the last few decades. A lot of this has to do with the benefits of digitization and automation, and their effects on productivity. Overall wealth has actually increased, even as wealth disparity has grown, and the middle class has suffered. So when we talk about supplying people with what they need, in a basic sense, this is not a problem. We have more than we ever had, it is just distributed in a different way than it was in the past. Did you vote for the current distribution of wealth as it stands today? I didn't. I don't think anyone did, but probably those with the most to gain egged it on where they could, and many of those with the most to loose perhaps where not paying the attention they should.

In today's society it is ludicrous to demand all work, when there are not enough jobs to go around. In Canada, the government information gathering agency Stats Canada, and also its counterpart in the US, the bureau of labour, have suggested that the real unemployment rate in both countries is in the range of about 15-17%. This includes "discouraged workers", and those on the very margins who are counted due to the most modest employment, like weekends in the 7-11 store, but are in fact grossly underemployed. In the US, minimum wage workers sleep in their cars out back of restaraunts and shopping malls, in Canada they supplment their wages with food bank donations. A healthy society needs middle class wages that will be spent in the community, and not billions going to Seattle wiz kids who beat others to internet ideas, or on the other hand to welfare payouts that go directly to slum landlords and the local bar.

How to equalize things? First, recognize, as the old Soviet Union had to in the end, that giving everyone a broom didn't mean you actually had a productive economy, much less a healthy society. There aren't jobs for everyone. And that will be even more the case in the future. Social programs and employment goals will have to accommodate this fact. Second, if we want the kind of egalitarian, just, democratic society we have come to expect in recent years, everyone is going to have to accept less. Not a whole lot less, but some. Job sharing will allow those that want meaningful work, and most everyone does, to have it. There will be cuts in income, but as you yourself have observed, there is a relationship between wages and prices. Some of the largest items in a consumers budget are in fact very much tied to wages, real estate being a prime example. Smaller wage packet- smaller mortgage or rent.

When Moses descended Mt Sinai, there was nothing inscribed on his tablets that said hedge fund managers must be paid $30M a year. Maybe that was on the back of the tablet, but my guess is that it was not. There is nothing inscribed anywhere that says what we are worth. It is all subjective, and therefore open to change. The problem is, many will obscure this, as the feel they have obvious things to gain, and many will go along with them, as they do not read, or consider to any great degree, and are therefore vulnerable to the influence of others.

We can change society to the way we want it. Will it happen? My guess is no, it won't. A charismatic president elected in the US a few years ago, swept along on a tidal wave of support, still could not go up against established economic interests. In the US, citizens vote against medical care for their families, and for giant insurance profits. In Canada, people make election decisions based on 20 second sound bites on their tablet computer. The challenge is great.
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