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Comment by missedthecue | Hacker News Reader

I think business is actually better at long term planning than most people give it credit for. There is a lot of discussion about "next quarter" thinking but in my experience working in bizdev, I haven't really seen that. There are always long term directional strategies in play.

But politics, (at least democracy) has the double edged sword of election cycles. This heavily incentivizes short term thinking.

Ex. Should the mayor pour millions into sewer system maintenance or millions in flashy projects and waste?

If the sewer maintainance is done right, none of the electorate notices. But the electorate will see the flashy spending and vapid superficial projects. And who cares if we defer sewer maintainance, that will only cause issues 20 years from now.

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The unpopular answer to this is bureaucratic organizations. The sewer management office at your local government should be staffed with people capable and incentivized to care about issues in the future.

But we’ve spent 45 years hollowing out those organizations in the US.

My local sewage district is the best run municipal agency in the entire county.

It is run by commissioners chosen by the mayors of the cities they serve and a few are chosen by the county.

They all have graduate degrees in engineering. The employees are similarly qualified.

I suspect the reason they do such a good job is that theyre insulated from the rest of government.

Bureaucracies don't restore order or put innovations in place.

Bureaucracies make change happen slowly. They preserve the status quo.

And yes, we've been busy gutting the gov't status quo for decades.

One of the reasons I appreciate for business long-term planning success is that businesses are allowed to die. When a (typical) business fails badly enough for long enough, it dies, its pieces are sold for scrap, and other businesses come in to take its place. Successful long-term planning happens organically, as successful businesses grow and prosper while weak businesses fail and shrink.

bureaucracies that are not allowed to die do not face this evolutionary mechanism of creative destruction- this includes governments but also a lot of business edge cases like PG&E for example.

Business’ “long term” is still shorter than an election cycle, isn’t it? Long-term is 2 years, perhaps. 8 quarters!

By pretty much any measure you can find, businesses are great at long term planning.

Look at price/earnings ratios. They have crept up from the 80s which means investors are willing to pay more for each dollar of future earnings. Look at individual companies like Amazon that was extremely valuable while losing money for years and even now its very thin. Look at all the VC companies throwing money at companies with just an idea. How about private industry, like billions of trees being planted every year by private businesses just so they can harvest them in a few decades.

> Look at price/earnings ratios. They have crept up from the 80s which means investors are willing to pay more for each dollar of future earnings

This doesn’t come anywhere near passing the sniff test.

There are plenty of companies with very bad business models that still have a decent stock price (Spotify, Uber, Lyft).

Yes I know that you can’t have a P/e without a profit.

And some of the most valuable companies are in the oil industry extracting non renewable resources.

Chicago has a highly successful multi-billion dollar sewer megaproject that has been going on since the 70s, which would seem to be a powerful argument against your post.

https://en.wikipedia.org/wiki/Tunnel_and_Reservoir_Plan

Other cities like Jackson, Mississippi have sludge coming out of the faucets, and I don't even need to bring up Flint, Michigan.

My point wasn't that all governments fail at sewer maintenance but that governments aren't automatically superior at long term planning, and in many ways have structural problems that can inhibit long term planning, whereas a private sector company may not have those same mal-incentives.

Furthermore, private companies can fail, be sold for scrap and parts to competitors, and go nonexistent whereas governments don't. If pets.com loses too much money, they can go get a little more and extend the runway, but eventually they go out of business and other companies get their market share. If my government loses too much money, greater amounts are borrowed, taxes are raised, and the money furnace continues to be fed.

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