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Comment by heurist | Hacker News Reader

The US seems to get less of everything for its money than its peers. Geographic spread is a major macro factor, but you'd still think that a supposedly efficient capitalistic market would at least handle local services better.

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For market based goods, the US does deliver pretty phenomenal, innovative and minimally priced outputs. Groceries, energy, technology, etc.

"Local services" are almost always driven by non-market based considerations. Politics, not economics, determines contract awards for public works. It's as far from the market as you can get. And our society receives commensurate "value."

Note, too, that the New York City Subway was almost entirely privately funded and built.

How was that possible and why does it not seem to happen today? What changed? Is it still privately owned?

Even back in the "dual system" days when two companies operated the majority of the subway, most of the lines / tunnels were built or financed by the city: https://www.nycsubway.org/wiki/Chapter_1:_Dual_System_of_Rap...

Later on, the city built its own third competitor to the two private operators, and eventually ended up purchasing them both. These days the entire system is owned by the state of New York (which took over when the city was out of money during the decline of the 1960/70s).

(There is a lot more nuance here... but the highlight is that the city/state often directly or indirectly financed capital construction regardless of whether they were the operator of the system at the time)

Thanks. This doesn’t sound much different from how most public transit is built.

The BRT was formed from the remains of the privately-financed Long Island Traction Company [1][2]. It went bankrupt and was merged into the more public-private bits. The lines it laid as a private enterprise remain today.

The IRT looked more like the British rail system, with the public lending to the company, which was under public-private management.

By mileage, the BRT built the most. By transit volume, the public-private Dual Contractors outperformed the IND, though that was in part due to the latter's late start. It remains that the bulk of the New York City subway system was, by any metric, built under private management and, by mileage, financed with private capital.

All that said, I have no illusions about whether private ownership would be possible today. (It is debatable whether it was possible then, given they went bankrupt.)

[1] https://en.wikipedia.org/wiki/Long_Island_Traction_Company

[2] https://en.wikipedia.org/wiki/History_of_the_New_York_City_S...

I don't think GP is correct in saying that the NYC subway was privately funded and built - the funding was largely public, with the resulting infrastructure leased to private companies to operate.

The initial IRT subway was funded by the city with bond issuance, which then contracted the construction and operation of the railway to private bodies.

Later expansions were funded by a mix of public and private funds - but again, with the city retaining ownership of the property and leasing to private hands for operation.

The NYC subway was never a private enterprise in the usual understanding of the word. It's frustrating when achievements like the NYC subway are attributed to free-market triumphalism when there's nothing in its history that justifies this conclusion.

Thanks a lot for that clarification. I have heard the claim that the NYC subway was built privately many times but this explanation makes a lot more sense. Do you have any preferred sources on the history of the subway?

Heh. True in some ways, not in some others. Groceries for example - yes, I can buy chicken at Walmart for much cheaper than I would in the EU, for instance. But the chicken I’d buy in the EU would be of much higher quality. If I want a comparable chicken (not cage raised, not full of hormones, etc), I’ll end up going to Whole Foods or similar upscale store and end up paying roughly the same as I would in the EU.

Yes, there are different regulations, famously chicken in the EU can't be washed in chlorine as it can in the US. But your average EU supermarket selection is a flavourless, watered up battery chicken. It's not "much higher quality" by any stretch of the imagination.

At least watered up chicken has to be labeled in the EU. Battery cages have been banned since 2012.

Sorry, fair point, it’s not battery chicken then. Not sure what the correct term is, but it’s certainly nor free range organic animals we’re dealing with here.

You can avoid the steroids et al. at most any Walmart at this point. Tyson is completely removing such from their chicken products. You're primarily going to struggle to find free range inexpensively in the US.

>Groceries

Are you serious? Groceries in the US are surprisingly expensive compared to Europe.

... I have seen countless posts shocked by our price of eggs and beef. Eggs 50c a dozen, ground beef about $2.30-$3 depending on location.

It is one of those things that are hard to research effectively, but when I stayed in France for a few months groceries were definitely more expensive.

According to NationMaster[1], we're the 43rd most expensive. Notables that are more expensive than the U.S. include Switzerland, Norway, New Zealand, Denmark, France, Finland, Sweden, Ireland, Japan, Belgium, the UK, Canada, Austria, Italy.

Notables with cheaper groceries are Germany, Netherlands, Greece, Spain, Poland, Ukraine.

[1] - http://www.nationmaster.com/country-info/stats/Cost-of-livin...

And Germany is about to work some of its grocery magic on the US, likely pushing prices down even further, as Lidl invades. Amazon will also likely have a positive effect.

What? I've shopped in the U.K., Spain, Greece, Switzerland and Sweden. The U.K. Was pretty much on par with the US for basic staples. The others were the same or more.

Unless your comparing to some boutique grocery in the US.

The US is WAY cheaper than Canada.

I often read frugal tips and tricks on reddit, and it's phenomenal what you can get in the states for little money. That's not possible in a lot of places in Europe.

> a supposedly efficient capitalistic market

The 'new commanding heights'[1] of the modern U.S. economy are all the least capitalistic markets: education, healthcare, and housing.

Nor would I expect "local services" to be much more 'capitalistic' if you're referring to services provided by municipal governments.

[1]: [The New Commanding Heights | National Affairs](http://www.nationalaffairs.com/publications/detail/the-new-c...)

  'new commanding heights'[1]

That source is from 2011, in the depths of the recession.

> supposedly efficient capitalistic market

Unfortunately that's not what we have when dealing with regulations, red tape, unions, and somewhat unaccountable government agencies running the show.

I don't think it's fair to call out unions/government without calling out large capital investors as well. We wouldn't have suburbs or massive shopping malls without huge real estate investors pumping money into major developments that exist to drain money out of a market. Large developments are a net drain on local economies and produce far less efficient markets than small incremental developments based on organic demand. There's a point where regulation and large capital investments are interlinked to prevent these markets from correcting, but the capital does plenty of damage on its own.

IOW, if competition ensures efficient markets, i.e. low profit margins, then money spent on reducing competition is money well spent.

Since there is broad societal consensus* that capital should not be permitted to intensify urban environments, it had better build suburbs, or we’ll all be homeless.

*with a little bit of scrappy opposition emerging in the last few years.

I forgot that Europe is known for its lack of regulations, red tape, unions, and somewhat unaccountable government agencies running the show.

My point was that it's not a "supposedly efficient capitalistic market" that we're dealing with in the U.S.

I didn't even mention Europe.

but the article does and compares the US to it, hence the peers part of the title.

The whole point of the limited article was a comparison to other developed nations. You can't be surprised when you jump in to "explain" the reason behind the difference to have people point out that it's disproven by the very article we are discussing!

Ironically, when things were MORE political, they cost less.

Adding all the oversight in order to "prevent" political cronyism just made things worse by increasing the barrier to the small guy being able to compete.

(Normally, I'm a big believer in oversight to avoid corruption and graft. However, I have a friend who tried to bring broadband to his little town. Between the open meeting laws, requirements for bid, big telecoms swinging in at the last minute when they couldn't care less until it looked like something might go through, etc.--he'd have received less grief if he just murdered everybody involved and went to prison ...)

>> supposedly efficient capitalistic market

> Unfortunately that's not what we have

We're stuck because "invisible hand" zealots keep doubling down on deregulation when faced with the phenomenon of market failure, as if they stay willfully ignorant of "market failure" the market will magically start behaving.

This is a very important and valid point you are making. "Invisible hands" zealots are at the heart of the problem. Unregulated markets can and do screw up. This fact has been demonstrated and accepted by most economists now [1]. Yet, US policy makers (and apparently tax payers) seem stuck on a deregulation rampage [2]. The consequences of this have been predicted by Adam Smith. Some necessary maintenance tasks will not get done, because without regulations, they will have no immediate return on individual wealth

[1] http://www.thefiscaltimes.com/Columns/2013/06/18/7-Important...

[2] https://www.whitehouse.gov/briefings-statements/president-do...

Too much of a generalization I think.

There is clearly something out of whack on public infrastructure projects, which have very little to do with "efficient capitalistic markets".

I'm not sure how you get from there to your statement about "local services" not being addressed by the market. It isn't clear what other things you think are broken. Mainly just suggesting that more specificity would clarify your point.

"The US seems to get less of everything for its money than its peers."

Exactly my sentiment. However, my take away is there are too many middlemen dealing with middlemen dealing with ... Everyone's gotta get greased with before each blow by the the worker carrying out the physical labor.

I'm not buying or selling here, but you need to draw the distinction between a system designed to optimize extremes, and one that optimizes the median. If you don't, then you're basically comparing minimum wage to average housing prices, i.e. incomparables. It's up to you to argue which is the better one to optimize, but if you just assume that everyone is on board with median maximization, you're going to be talking past a lot of people.

> Geographic spread is a major macro factor

There's already an amazing nationwide public-private transit network: they're called airplanes. But on the local level it's politicians kowtowing to the people who scream bloody murder when anything but heavily subsidized private transportation is incentivized.

But not petrol.

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