The problem with privatization is it often involves granting monopoly powers to a private company instead of opening up the market to private competition. This in some ways is even worse than leaving the entity under government control because there is an incentive to squeeze as much profit as possible out of the entity and no pressure from competition to keep the private entity honest. Privatization in itself is not a problem, and neither is inequality (in modest form, created by competition, not unfairly), but creating an environment where the quality of goods and services suffer for the consumer/citizen because those providing those goods and services don't have an incentive to do a good job.
This and there is another reason why privatization creates inequality. It is a proven method for the oligarchs to rob public assets. First they put their friends as key figures of a public company. These people let the company rot, so its price on the market goes down. Then the oligarchs buy it at a ridiculously low price.
They even made it with an entire country: Russia. And this is why they ( the western backed oligarchs ) are screaming against Putin ( and the oligarchs backed by him ) since then.
Put this way, the relationship where A squeezes B can still hold regardless of whether A is an single company, many companies or a whole industry. Examples abound.
Unleashing the market provides no magic bullet. This is especially true when there only 1 customer for the service and it's long term contract based.
Privatization can be a problem depending on how much competition there will be, and how efficient existing arrangements are. Prices can only be squeezed so much.
Some people act as if unlimited competition will drive prices to zero, but it won't - it will just drive it asymptotically closer to the marginal cost of production, which isn't necessarily all that far away from what you pay today.
And on the way towards that limit, unpleasant things can happen. The benefits of "cheating" of all sorts, from reading the tender specification like a malicious genie to tax fraud and worse, grow higher the closer you get to the marginal cost of production boundary.
At some level of competition, the cost of policing - keeping actors honest - eclipses the savings.
> The problem with privatization is it often involves granting monopoly powers to a private company instead of opening up the market to private competition.
Private competition almost always ends in monopoly or trust anyway.
Private competition isn't a stable state. When two companies are competing, both are trying their best to put the other out of business. It should be no surprise at all when that eventually happens.
Monopoly, on the other hand, is a stable state--it takes extraordinary circumstances, usually government intervention, to overturn a monopoly. Even if a small competitor manages to eat a chunk of a monopoly, the monopoly company can simply buy them out in most cases. Giant corporations can even become unassailable by government, as their wealth allows them to lobby for laws that favor them.
The alternative is for corporations to form a sort of truce, where they don't touch each other's slightly different markets, effectively granting each other a monopoly in each other's areas. The clearest example of this is cable companies not laying cable in each other's territory, but there are plenty of other examples--Coke/Pepsi, IBM/Intel. This is also a stable configuration which is more sophisticated than a monopoly. The benefit to corporations is that it reduces their risk--having to overturn competitors means taking the risk of overplaying your hand--but there's no real benefit to consumers.
So ultimately, I'm not sure it makes sense to say that monopolies are the problem and not privatization. Privatization ends in monopoly.
Absolutely agree. Markets are great when they meet the conditions for proper competition; and privatisations frequently occurs in sectors that don't meet those conditions; e.g railways.
1) As to user fees. Most public infrastructure in the US is dramatically underfunded. Public transport, road, and water systems are a major cause of the multi-trillion infrastructure spending backlog we have (according to the American Society of Civil Engineers). We pay far too little for services like water, which precludes municipal water utilities from upgrading infrastructure. Governments often privatize when that situation becomes untenable, because they don't want to be the one that raised water rates on grandma.
2) As to wages, I'm supportive of income equality. But unionized public sector jobs are a misallocation of resources. If we want to subsidize a particular kind of job at the public expense, why not start with the lowest income folks first, instead of relatively well off public sector workers?
Public services in the US are a disaster, and most of it is not privatized. It's not privatization that drove Chicago to the brink of bankruptcy. It's not privatization that left the DC Metro in shambles. It's not privatization that left Atlanta with ancient sewers that dump raw sewage into the Chattahoochee river. And ironically, it's the poor that suffer. Rich people can send their kids to private school - bypassing the failing inner city systems that often spend far more money than neighboring suburban ones. Rich people can take Ubers everyday and avoid subways that are delayed and shut down due to years of diverting money from maintenance to pensions and benefits.
Your argument boils down to "public service is awful". The article simply states that privatizing is simply making things worse.
Privatizing is not the solution. You said yourself: "We pay far too little for services like water". Well, yeah. Stop paying so damn little for your infrastructure then.
Your critique of public service is that it is unable to function with so little ressource. I don't see that as a failure from the public service itself, but from the society that should be making it work.
And I mean society, not government. It's too easy to fault the big bad government for being unable to do it. That's the taxpayers that are in the end voting for populists that will pledge to reduce spending and taxes to unrealistic levels, breaking public services, preparing the terrain for privatization and selling to their friends.
Do keep in mind that the ASCE isn't exactly a disinterested party. Infrastructure spending == hiring a bunch of ASCE members. Maybe we should ask SPEEA members if Boeing should retire the 737 and 747 designs and replace them with something better.
The battle between "new deal era problem solving" and "market based privatization" is a distraction from the actual reality that government comes up with all the plans, public or public/private, and corruption in both is widespread.
The only way we will improve upon the quality of solutions is to have a zero tolerance policy for corrupt officials, regardless of which "side" of this "battle" they claim to be passionate about.
Is it any surprise that in a country with significant government corruption such arrangements would also be corrupt? New Deal programs like Social Security have been raided by corrupt politicians, the PBGC is not actuarially sound, most of the military's budget is un-accounted for. This is corruption at the Trillion dollar scale and has nothing to do with the fake ideological war between public sector ideologues and free market ideologues.
There are several relevant layers, few of which are exposed to democratic or market pressure/discipline:
- Making the determination that a service is necessary
- Deciding on the characteristics of the service.
- Creating a playing field for private sector participants to compete
- Revising the requirements and playing field to keep quality and value high (democratic or market-based)
- Creating transparency requirements for firms and government agencies participating in public/private partnerships.
- Assessing the outcomes and reconsidering all of the above based on results.
In our system, each of these breaks down. I can't think of a single example that has succeeded in all of the above areas.
Notably, privatization has been used by officials to avoid transparency requirements in recent wars. Chances are this is a major objective of privatization schemes. Officials from both major political parties have set up privatized email servers recently to avoid transparency/accountability.
>Creating a playing field for private sector participants to compete
I know a guy whose job is to negotiate contracts for supplies used by the Fire Dept. in his municipality (or state, I can't remember). We were on a Skype call once, and he was telling me about a contract he was for a particular thing and how much they paid for it, and I thought: "That seems high". So I took 10 minutes to do a search on it and found another reputable company offering the same good for a little more than half the price. His response was: "Well they should have showed up and bid on the contract." Between his apathy, and the way the law works, there was no interest in going and getting a better deal, or even doing basic market research to use in negotiating the price. I wanted to strangle him.
And it's all to do with laws and incentive structure. I'd like to think that in most businesses if you came up with a way to cut in half the cost on an essential item (I think this was the coats and pants they wear when going into a burning building), you would at least get accolades and have a strong case to be made on your performance review. In the public sector, it's all the same.
I just want to point out nationalization/existing public services also increase inequality in quite similar ways.
1. Traffic fines are still public. Still regressive.
2. Social Security is still public and still has a cap on taxes for > 6 figure incomes.
3. Wage cuts (granted I think this gets worse when privatized) and benefits cuts are dealt to public employees all the time. Look at the many underfunded local pensions/city budgets and how they've chosen to respond.
4. Private interests into parks and charters schools etc. This also happens to be an opportunity to give extra attention to the needs of poor individuals and families, and people of color. There is a debate ongoing, but many charter schools in poor neighborhoods have better funding/facilities than a would-be public school there. This is not close to perfect or a panacea, but it has potential, attacking charter schools without nuanced research is imprudent.
This is a controversial topic. I am not taking sides. There are many complex/taboo issues and few working solutions so far. Glad it is being discussed.
2. Social Security has a cap on tax because there is a cap on the payout.
Edit: that said, this does increase inequality because the money put into Social Security does very poorly compared to private sector investing. The six figure salary person can instead invest in something better than social security.
There are plenty of markets that are mostly private. All have some regulation, but some markets are mostly left alone.
Let's pick one. How about pickles?
If my local government wanted each of it's citizens to have a jar of pickles, what would be the best way to do that?
I'd argue that a gift card to Amazon for pickles handed out is probably the easiest way. They don't get into the produce business, they don't get into the warehousing or distribution business, they just hand out gift cards. Somebody else -- who is really good at that other stuff, by the way, handles the rest.
This is what every enterprise learns: stick to what you do best. Let everybody else to do the same.
So obviously strict product movement and provisioning, such as municipal water and electric services, are solved problems. There is no value added here based on who is doing what.
Social services, on the other hand, is a mess of nuance and policy. It's not a solved, commoditized problem, so it doesn't make sense to have somebody else do it. If your local government does their social services well, it's something they've been tweaking for quite some time.
We don't need to continue the thought experiment any further. "privitization increases inequality" is far too broad of a statement, since easy examples are found both supporting it and opposing it. Some further narrowing of terms is required for this to have enough meaning to discuss.
> I'd argue that a gift card to Amazon for pickles handed out is probably the easiest way. They don't get into the produce business, they don't get into the warehousing or distribution business, they just hand out gift cards. Somebody else -- who is really good at that other stuff, by the way, handles the rest.
I'd argue that if you did that, one hedge fund would buy up all of the pickle producers, fund a bunch of research saying that children needed at least 3 pickles a day, buy a bunch of lobbyists to insist that the government provide at least 20 pickles a week for each poor child (to allow them to compete fairly with their pickle-rich brethren), and then raise the price of pickles to $20 a piece.
Government cheese is the counterexample.
edit: explicitly; Government wants all people to have cheese. Government decides what qualities it wants that cheese to have, government goes to cheesemakers and asks for that cheese while figuring out how much it would cost to go into the cheesemaking itself. If any number of cheesemakers can provide cheese to the standard for less than the government can produce cheese, they are all given contracts to produce cheese. If they do not, the government produces cheese. The government gives cheese to people. Depending on how well cheese can be warehoused, government uses the timing of cheese purchases to support private cheesemaker production capacity when cheese market is weak.
vouchers don't work over the long haul. look at education prices have skyrockets. health care skyrockets. I think you need "normalized pricing" were the government pays X% based on income. So, that hospitals cost 3 times as much as doctors visits but if your really poor maybe its $9 instead of $3 or something.
But you have one fundamental flaw in your otherwise compelling idea.
> If my local government wanted each of it's citizens to have a jar of pickles, what would be the best way to do that?
The government want's everyone to have a jar of pickles. For what reason ever. They might increase inteligence on the long run? Contrived, but let's go on.
If you provide gift cards, some will buy a jar of pickles. Some will buy a game for a gaming console. Some will buy dog food.
You see the problem? The idea is or was that everybody should get a jar of pickles but now everybody get's what he wants. For most of the time getting what you wan't is good but be frank: You seldom get what you want because for the bigger part of it you do not know what you want. It's advertisment and clever selling strategies which make you think you need something.
So the government policy was to get a jar of pickles, planted by local farmers. Instead you buy a game produced in !?!?. Target missed.
Or everyone's equally as rich, or well served. The purpose of a public transportation service should be to serve the whole city, not to run just the profitable courses.
There is scant evidence backing up that "usually". You obviously need some incentives for people to take risks or work hard, but no Zuckerberg or Gates or Kamprad or Ek would have been discouraged if his marginal tax rate had been 10% higher.
Indeed a social safety net such as the one you could fund with such a tax increase may make it easier for people to start businesses, because they know failure wouldn't mean starvation.
It's also pretty clear, that success requires more than motivation. You also need education, and access to (infrastructure/decision makers/capital/potable water ). Inequality, in the sense that the American right glorifies, stands opposite such access. The Ayn Rand crowd seems to really enjoy their phantasies of inflicting harm not only on the poor, but also descendants three generations down the road.
And so you get some people to argue about "wealth creation" in a country that has created the greatest wealth ever amassed by humankind but also has major cities whose drinking water is unfit for human consumption.
Why are all these think tanks named with such patriotic and nation building like names. It makes you look at it even more suspiciously, whatever they say.
Pando had an interesting piece a while back on the origins of privatization [1]. I guess that anyone buying into that would be unsurprised by the conclusions of the present article.
Equality does not exist. It is an abstract concept.
What the best political philosophy gave us is the another concept - the equality of rights and liberties. Equality before the law. This means than no person could be discriminated, based on gender, racial, cultural or religious context.
There is no such thing as social or economic equality. This bullshit has been oversold to us by political demagogues and populists (as opposed to political philosophers).
Society means inequality. It means hierarchy. It is based on inequality, it is driven by inequality no matter what disconnected from reality pseudo-intellectuals would tell us.
Biology has precedence over physiology, psychology and sociology. Social inequality comes from genetic and economic inequality. Without the first there will be no human species, because there will be no evolution. Without the second there will be no human civilization, which is based upon trade and capital - resource allocation.
Competition for everything, not just survival and reproduction, but also social status is a part of reality of any complex ecosystem, including human societies. Capitalism is a "natural" system of resource allocation, based on partial rationality, greed and so-called human nature (which in turn is based on biological markers, psychological traits and social heuristics) that promotes competition (and also restricting monopolies and regulating markers) which is based on inequality, has inequality as its driving force.
Not a single attempt to go against physics, biology, against the laws of ecosystems (sociology) and so-called human nature would ever succeed, no matter what utopia naive human mind will produce and promote. Every single utopia that violates any single environmental constraint will fail. It happened with communism, it will happen with socialism. Economics is very real - as real as one of the main forces of natural selection (species has to balance their energy spending according to the constraints of the environment - this is what economy is).
Inequality is here and always will be, like beauty and ugliness, intelligence and stupidity, success and failure.
There will always be people who are poorer than others, but there’s nothing prohibiting poor people from working their way up the ladder beside government regulations.
Poor people are hurt most by government programs like welfare, and laws like minimum wage. Private enterprise allows people to make a living for themselves by providing services to people who need them. By working harder than others they can break out of poverty, instead of relying on the government to keep everybody down for the sake of "equality”. This used to be a norm.
"When governments directly provide a service, they often provide living wages and decent benefits to workers. When private companies take control, they often slash wages and benefits in an attempt to cut labor costs, replacing stable, middle class jobs with poverty-level jobs.”
This is so incredibly disingenuous. All this is saying is that it’s beneficial to the society that the government creates artificial jobs that can’t sustain themselves and gives immunity from market fluctuation to people who perform these jobs at the cost of regular taxpayers who aren’t immune, and have to train themselves in new fields, and change jobs. The government can’t just provide these benefits without negatively affecting the rest of the society.
I feel like a lot of people here don't understand this because they've never been poor in America. I would never want to deny help to someone who needs it, but as most of these social programs are structured, they're a trap. I was poor for most of my life. It was making the conscious decision to not be poor, making a plan and working my ass off that let me get out of poverty. Nothing got in my way other than my own ability to succeed. Nobody tried to stop me (well some friends and family were less than encouraging, but I'm used to that).
So people read your comment, and it sounds like a fiction to them, hence the downvotes.
N.B.: Yes I took education loans made available by the government. But most of it wasn't subsidized since it was my 2nd bachelor's degree, and the rates on that stuff is usury currently. I don't really want to get into a debate about that stuff, but just mention it as I figure somebody might ask. In a world without readily available loans, I would like to think I would have just made a different plan.
I'm amazed that this comment got downvoted. How is that so many people reject the notion that is the productive sector who pays for the public sector to have _all_ the public money?
It depends on where the inequality is coming from. If I own more than you because I worked harder, it is ok. But if I own more than you because I stole from you, it is not.
Inequality is bad. Other things may be good. If your action achieves something good at the expense of more inequality, then it may still be worth doing.
If inequality itself is good, then does that mean we should apply punitive taxes to poor people and subsidize the rich?
You're conflating the market as a whole and an individual participant in the market.
Derivatives aren't intended to prevent volatility in the market as a whole (arguably they can have the opposite effect). What they allow is for a participant to reduce the volatility, to them, of a market price [0].
The advantage to the individual is that they can reduce their exposure to factors beyond their control, that they have no expertise in and/or that they do not wish to actively manage. The advantage to the market is that it encourages more participants.
In this context, one can look at derivatives as acting a lot like insurance. It doesn't prevent bad things happening (it doesn't prevent market volatility) but it can cushion their effect on you the participant.
The corollary of making such useful tools for hedging risk is that they can also be used for speculation too i.e. gambling. But then again, not all of us registered neo-liberals think the system is perfect.
[0] I'm using the terminology in the post I'm replying to. I'm aware that there are derivatives on underlyers other than prices and derivatives that control for factors other than price volatility but I didn't consider that hedging my language (excuse the pun) added any clarity.
I'm sorry to tell you don't really understand how derivatives work, even price fixing for that matter.
Prices of derivatives such as forward contracts and options are freely floating and are widely traded. "price-fixing" is defined as a coordinated effort to corner the market, a good example would be when siegel tried to corner onion futures, which lead to creation of "onion futures act". Historically, only few have succeeded in cornering the market.
[+] [-] bsbechtel|9 years ago|reply
[+] [-] pabloski|9 years ago|reply
They even made it with an entire country: Russia. And this is why they ( the western backed oligarchs ) are screaming against Putin ( and the oligarchs backed by him ) since then.
[+] [-] usgroup|9 years ago|reply
Unleashing the market provides no magic bullet. This is especially true when there only 1 customer for the service and it's long term contract based.
[+] [-] vintermann|9 years ago|reply
Some people act as if unlimited competition will drive prices to zero, but it won't - it will just drive it asymptotically closer to the marginal cost of production, which isn't necessarily all that far away from what you pay today.
And on the way towards that limit, unpleasant things can happen. The benefits of "cheating" of all sorts, from reading the tender specification like a malicious genie to tax fraud and worse, grow higher the closer you get to the marginal cost of production boundary.
At some level of competition, the cost of policing - keeping actors honest - eclipses the savings.
[+] [-] imagist|9 years ago|reply
Private competition almost always ends in monopoly or trust anyway.
Private competition isn't a stable state. When two companies are competing, both are trying their best to put the other out of business. It should be no surprise at all when that eventually happens.
Monopoly, on the other hand, is a stable state--it takes extraordinary circumstances, usually government intervention, to overturn a monopoly. Even if a small competitor manages to eat a chunk of a monopoly, the monopoly company can simply buy them out in most cases. Giant corporations can even become unassailable by government, as their wealth allows them to lobby for laws that favor them.
The alternative is for corporations to form a sort of truce, where they don't touch each other's slightly different markets, effectively granting each other a monopoly in each other's areas. The clearest example of this is cable companies not laying cable in each other's territory, but there are plenty of other examples--Coke/Pepsi, IBM/Intel. This is also a stable configuration which is more sophisticated than a monopoly. The benefit to corporations is that it reduces their risk--having to overturn competitors means taking the risk of overplaying your hand--but there's no real benefit to consumers.
So ultimately, I'm not sure it makes sense to say that monopolies are the problem and not privatization. Privatization ends in monopoly.
[+] [-] richmarr|9 years ago|reply
[+] [-] jhoechtl|9 years ago|reply
For me it's more like
because those providing those goods and services don't have the sufficient time and resources to do a good job.
It's someone behind me telling me that worse is better, good enough is fine and acquire instead of finish.
[+] [-] dreta|9 years ago|reply
Quality of goods and services suffer when there’s government protection placed on companies.
These are problems the government creates, not private enterprise.
[+] [-] rayiner|9 years ago|reply
1) As to user fees. Most public infrastructure in the US is dramatically underfunded. Public transport, road, and water systems are a major cause of the multi-trillion infrastructure spending backlog we have (according to the American Society of Civil Engineers). We pay far too little for services like water, which precludes municipal water utilities from upgrading infrastructure. Governments often privatize when that situation becomes untenable, because they don't want to be the one that raised water rates on grandma.
2) As to wages, I'm supportive of income equality. But unionized public sector jobs are a misallocation of resources. If we want to subsidize a particular kind of job at the public expense, why not start with the lowest income folks first, instead of relatively well off public sector workers?
Public services in the US are a disaster, and most of it is not privatized. It's not privatization that drove Chicago to the brink of bankruptcy. It's not privatization that left the DC Metro in shambles. It's not privatization that left Atlanta with ancient sewers that dump raw sewage into the Chattahoochee river. And ironically, it's the poor that suffer. Rich people can send their kids to private school - bypassing the failing inner city systems that often spend far more money than neighboring suburban ones. Rich people can take Ubers everyday and avoid subways that are delayed and shut down due to years of diverting money from maintenance to pensions and benefits.
[+] [-] grive|9 years ago|reply
Privatizing is not the solution. You said yourself: "We pay far too little for services like water". Well, yeah. Stop paying so damn little for your infrastructure then.
Your critique of public service is that it is unable to function with so little ressource. I don't see that as a failure from the public service itself, but from the society that should be making it work.
And I mean society, not government. It's too easy to fault the big bad government for being unable to do it. That's the taxpayers that are in the end voting for populists that will pledge to reduce spending and taxes to unrealistic levels, breaking public services, preparing the terrain for privatization and selling to their friends.
Anyway.
[+] [-] coredog64|9 years ago|reply
[+] [-] sheeshkebab|9 years ago|reply
[+] [-] dreta|9 years ago|reply
[+] [-] grandalf|9 years ago|reply
The only way we will improve upon the quality of solutions is to have a zero tolerance policy for corrupt officials, regardless of which "side" of this "battle" they claim to be passionate about.
Is it any surprise that in a country with significant government corruption such arrangements would also be corrupt? New Deal programs like Social Security have been raided by corrupt politicians, the PBGC is not actuarially sound, most of the military's budget is un-accounted for. This is corruption at the Trillion dollar scale and has nothing to do with the fake ideological war between public sector ideologues and free market ideologues.
There are several relevant layers, few of which are exposed to democratic or market pressure/discipline:
- Making the determination that a service is necessary
- Deciding on the characteristics of the service.
- Creating a playing field for private sector participants to compete
- Revising the requirements and playing field to keep quality and value high (democratic or market-based)
- Creating transparency requirements for firms and government agencies participating in public/private partnerships.
- Assessing the outcomes and reconsidering all of the above based on results.
In our system, each of these breaks down. I can't think of a single example that has succeeded in all of the above areas.
Notably, privatization has been used by officials to avoid transparency requirements in recent wars. Chances are this is a major objective of privatization schemes. Officials from both major political parties have set up privatized email servers recently to avoid transparency/accountability.
[+] [-] r_smart|9 years ago|reply
I know a guy whose job is to negotiate contracts for supplies used by the Fire Dept. in his municipality (or state, I can't remember). We were on a Skype call once, and he was telling me about a contract he was for a particular thing and how much they paid for it, and I thought: "That seems high". So I took 10 minutes to do a search on it and found another reputable company offering the same good for a little more than half the price. His response was: "Well they should have showed up and bid on the contract." Between his apathy, and the way the law works, there was no interest in going and getting a better deal, or even doing basic market research to use in negotiating the price. I wanted to strangle him.
And it's all to do with laws and incentive structure. I'd like to think that in most businesses if you came up with a way to cut in half the cost on an essential item (I think this was the coats and pants they wear when going into a burning building), you would at least get accolades and have a strong case to be made on your performance review. In the public sector, it's all the same.
[+] [-] qwrusz|9 years ago|reply
1. Traffic fines are still public. Still regressive.
2. Social Security is still public and still has a cap on taxes for > 6 figure incomes.
3. Wage cuts (granted I think this gets worse when privatized) and benefits cuts are dealt to public employees all the time. Look at the many underfunded local pensions/city budgets and how they've chosen to respond.
4. Private interests into parks and charters schools etc. This also happens to be an opportunity to give extra attention to the needs of poor individuals and families, and people of color. There is a debate ongoing, but many charter schools in poor neighborhoods have better funding/facilities than a would-be public school there. This is not close to perfect or a panacea, but it has potential, attacking charter schools without nuanced research is imprudent.
This is a controversial topic. I am not taking sides. There are many complex/taboo issues and few working solutions so far. Glad it is being discussed.
[+] [-] tomp|9 years ago|reply
[+] [-] zip1234|9 years ago|reply
[+] [-] DanielBMarkham|9 years ago|reply
There are plenty of markets that are mostly private. All have some regulation, but some markets are mostly left alone.
Let's pick one. How about pickles?
If my local government wanted each of it's citizens to have a jar of pickles, what would be the best way to do that?
I'd argue that a gift card to Amazon for pickles handed out is probably the easiest way. They don't get into the produce business, they don't get into the warehousing or distribution business, they just hand out gift cards. Somebody else -- who is really good at that other stuff, by the way, handles the rest.
This is what every enterprise learns: stick to what you do best. Let everybody else to do the same.
So obviously strict product movement and provisioning, such as municipal water and electric services, are solved problems. There is no value added here based on who is doing what.
Social services, on the other hand, is a mess of nuance and policy. It's not a solved, commoditized problem, so it doesn't make sense to have somebody else do it. If your local government does their social services well, it's something they've been tweaking for quite some time.
We don't need to continue the thought experiment any further. "privitization increases inequality" is far too broad of a statement, since easy examples are found both supporting it and opposing it. Some further narrowing of terms is required for this to have enough meaning to discuss.
[+] [-] pessimizer|9 years ago|reply
I'd argue that if you did that, one hedge fund would buy up all of the pickle producers, fund a bunch of research saying that children needed at least 3 pickles a day, buy a bunch of lobbyists to insist that the government provide at least 20 pickles a week for each poor child (to allow them to compete fairly with their pickle-rich brethren), and then raise the price of pickles to $20 a piece.
Government cheese is the counterexample.
edit: explicitly; Government wants all people to have cheese. Government decides what qualities it wants that cheese to have, government goes to cheesemakers and asks for that cheese while figuring out how much it would cost to go into the cheesemaking itself. If any number of cheesemakers can provide cheese to the standard for less than the government can produce cheese, they are all given contracts to produce cheese. If they do not, the government produces cheese. The government gives cheese to people. Depending on how well cheese can be warehoused, government uses the timing of cheese purchases to support private cheesemaker production capacity when cheese market is weak.
[+] [-] sharemywin|9 years ago|reply
[+] [-] jhoechtl|9 years ago|reply
> If my local government wanted each of it's citizens to have a jar of pickles, what would be the best way to do that?
The government want's everyone to have a jar of pickles. For what reason ever. They might increase inteligence on the long run? Contrived, but let's go on.
If you provide gift cards, some will buy a jar of pickles. Some will buy a game for a gaming console. Some will buy dog food.
You see the problem? The idea is or was that everybody should get a jar of pickles but now everybody get's what he wants. For most of the time getting what you wan't is good but be frank: You seldom get what you want because for the bigger part of it you do not know what you want. It's advertisment and clever selling strategies which make you think you need something.
So the government policy was to get a jar of pickles, planted by local farmers. Instead you buy a game produced in !?!?. Target missed.
[+] [-] jkot|9 years ago|reply
I think progressive black activists are supporting racial segregation. One university even offers segregated housing.
[+] [-] sharemywin|9 years ago|reply
[+] [-] tdkl|9 years ago|reply
[+] [-] qntty|9 years ago|reply
[+] [-] vegancap|9 years ago|reply
[+] [-] merraksh|9 years ago|reply
[+] [-] matt4077|9 years ago|reply
Indeed a social safety net such as the one you could fund with such a tax increase may make it easier for people to start businesses, because they know failure wouldn't mean starvation.
It's also pretty clear, that success requires more than motivation. You also need education, and access to (infrastructure/decision makers/capital/potable water ). Inequality, in the sense that the American right glorifies, stands opposite such access. The Ayn Rand crowd seems to really enjoy their phantasies of inflicting harm not only on the poor, but also descendants three generations down the road.
And so you get some people to argue about "wealth creation" in a country that has created the greatest wealth ever amassed by humankind but also has major cities whose drinking water is unfit for human consumption.
[+] [-] richmarr|9 years ago|reply
Generalisations aside, this report doesn't seem to be about wealth being created unevenly.
This report claims 5 specific ways that privatisation of services has caused life to become worse for low income and/or minority citizens.
[+] [-] sharemywin|9 years ago|reply
[+] [-] crdoconnor|9 years ago|reply
Greatest period of equality: 1950s
Greatest period of growth: 1950s
Greatest periods of inequality: 2010s/1930s
Guess what?
[+] [-] akhatri_aus|9 years ago|reply
[+] [-] ttctciyf|9 years ago|reply
[+] [-] dschiptsov|9 years ago|reply
What the best political philosophy gave us is the another concept - the equality of rights and liberties. Equality before the law. This means than no person could be discriminated, based on gender, racial, cultural or religious context.
There is no such thing as social or economic equality. This bullshit has been oversold to us by political demagogues and populists (as opposed to political philosophers).
Society means inequality. It means hierarchy. It is based on inequality, it is driven by inequality no matter what disconnected from reality pseudo-intellectuals would tell us.
Biology has precedence over physiology, psychology and sociology. Social inequality comes from genetic and economic inequality. Without the first there will be no human species, because there will be no evolution. Without the second there will be no human civilization, which is based upon trade and capital - resource allocation.
Competition for everything, not just survival and reproduction, but also social status is a part of reality of any complex ecosystem, including human societies. Capitalism is a "natural" system of resource allocation, based on partial rationality, greed and so-called human nature (which in turn is based on biological markers, psychological traits and social heuristics) that promotes competition (and also restricting monopolies and regulating markers) which is based on inequality, has inequality as its driving force.
Not a single attempt to go against physics, biology, against the laws of ecosystems (sociology) and so-called human nature would ever succeed, no matter what utopia naive human mind will produce and promote. Every single utopia that violates any single environmental constraint will fail. It happened with communism, it will happen with socialism. Economics is very real - as real as one of the main forces of natural selection (species has to balance their energy spending according to the constraints of the environment - this is what economy is).
Inequality is here and always will be, like beauty and ugliness, intelligence and stupidity, success and failure.
[+] [-] jdimov9|9 years ago|reply
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[+] [-] sctb|9 years ago|reply
[+] [-] dreta|9 years ago|reply
Poor people are hurt most by government programs like welfare, and laws like minimum wage. Private enterprise allows people to make a living for themselves by providing services to people who need them. By working harder than others they can break out of poverty, instead of relying on the government to keep everybody down for the sake of "equality”. This used to be a norm.
"When governments directly provide a service, they often provide living wages and decent benefits to workers. When private companies take control, they often slash wages and benefits in an attempt to cut labor costs, replacing stable, middle class jobs with poverty-level jobs.”
This is so incredibly disingenuous. All this is saying is that it’s beneficial to the society that the government creates artificial jobs that can’t sustain themselves and gives immunity from market fluctuation to people who perform these jobs at the cost of regular taxpayers who aren’t immune, and have to train themselves in new fields, and change jobs. The government can’t just provide these benefits without negatively affecting the rest of the society.
[+] [-] r_smart|9 years ago|reply
So people read your comment, and it sounds like a fiction to them, hence the downvotes.
N.B.: Yes I took education loans made available by the government. But most of it wasn't subsidized since it was my 2nd bachelor's degree, and the rates on that stuff is usury currently. I don't really want to get into a debate about that stuff, but just mention it as I figure somebody might ask. In a world without readily available loans, I would like to think I would have just made a different plan.
[+] [-] sebastianconcpt|9 years ago|reply
[+] [-] tjic|9 years ago|reply
Freeing 100 people from jail will increase their inequality; should we therefore oppose it?
[+] [-] Hermel|9 years ago|reply
[+] [-] jhoechtl|9 years ago|reply
[+] [-] mikeash|9 years ago|reply
If inequality itself is good, then does that mean we should apply punitive taxes to poor people and subsidize the rich?
[+] [-] unknown|9 years ago|reply
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[+] [-] darfs|9 years ago|reply
What things have prisoners/jail common with privatization?
Please explain.
[+] [-] te_chris|9 years ago|reply
[+] [-] wrong_variable|9 years ago|reply
It was interesting - the whole point of derivatives was to prevent the fact that markets are volatile. So its a way to "Price Fix".
That is the entire point of markets ! to allow free floating of price.
I found the whole thing funny, that a market solution lead to the creation of something that was against the entire point of market.
What the modern neo-liberals and capitalists will learn - is that there is no perfect system.
[+] [-] lucozade|9 years ago|reply
Derivatives aren't intended to prevent volatility in the market as a whole (arguably they can have the opposite effect). What they allow is for a participant to reduce the volatility, to them, of a market price [0].
The advantage to the individual is that they can reduce their exposure to factors beyond their control, that they have no expertise in and/or that they do not wish to actively manage. The advantage to the market is that it encourages more participants.
In this context, one can look at derivatives as acting a lot like insurance. It doesn't prevent bad things happening (it doesn't prevent market volatility) but it can cushion their effect on you the participant.
The corollary of making such useful tools for hedging risk is that they can also be used for speculation too i.e. gambling. But then again, not all of us registered neo-liberals think the system is perfect.
[0] I'm using the terminology in the post I'm replying to. I'm aware that there are derivatives on underlyers other than prices and derivatives that control for factors other than price volatility but I didn't consider that hedging my language (excuse the pun) added any clarity.
[+] [-] 666_howitzer|9 years ago|reply
Prices of derivatives such as forward contracts and options are freely floating and are widely traded. "price-fixing" is defined as a coordinated effort to corner the market, a good example would be when siegel tried to corner onion futures, which lead to creation of "onion futures act". Historically, only few have succeeded in cornering the market.
https://en.wikipedia.org/wiki/Onion_Futures_Act