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Comment by tjic | Hacker News Reader

> I hope you don't really view the world in a black & white narrative pitting the evil bloated government against sprightly nimble innovative companies.

You read a WHOLE lot in there.

Look at the point that I actually made, and JUST that point:

In Government, headcount is a (political, organization, etc.) benefit.

In industry it is a cost.

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>In Government, headcount is a (political, organization, etc.) benefit.

Can be said for the private sector as well. Unless you think the private sector is growth averse.

>In industry it is a cost.

Governmental employees are not free.

You also made other points as well such as the #1 goal of the Space Shuttle program was to keep bureaucrats employed & that the private sector is more efficient regarding the value it creates per employee.

I've never seen a corporation with "full employment" as an actual, stated, strategic goal.

http://www.dwp.gov.uk/policy/welfare-reform/legislation-and-...

"Building Britain’s Recovery: Achieving Full Employment", published on 15 December 2009, restates the Government’s response to the recession and signals the start of the programme to return to full employment.

A company is an OPEN system (they can cut jobs and make more money), but a country is a (mostly) CLOSED system (someones spending is somebody else's income). Even the most ineffectual government employee is more valuable than another mother or father on the dole when unemployment is already high.

I'm not supporting government waste, but the way. Efficiency should be the goal, but you obviously have NO idea what you are talking about.

"Even the most ineffectual government employee is more valuable than another mother or father on the dole when unemployment is already high."

That would suggest that the solution for unemployment is to simply give all unemployed people public sector jobs - which doesn't sound like a very good idea to me.

It's a plausible (temporary) solution, known as the "employer of last resort". It worked okay in the 1930s; even today, a lot of the national-parks infrastructure is stuff that was built in that era, because instead of just handing out welfare payments, the government hired people on short-term contracts instead. Same stimulus/welfare effect (people who can't find other work are paid for a few months), but the national parks got some useful work out of the deal too.

And it is good for people. Being unemployed is very unhealthy for your mind for a lot of people.

The UK govt tried this recently; those given work placements immediately began crying that working for the dole violated their "human rights".

- They were forced (or tricked, or coerced) into working for private companies. We're talking about jobs in supermarkets and (the UK equivalent of) dollar stores.

- The taxpayer paid the wage (the same as jobseeker's allowance, I think). The private companies didn't pay anything.

- Companies could just sack their workers and enjoy the benefits of free labour.

So much for the minimum wage! How can minimum-wage workers compete with free labour? (Free from the company's perspective, that is.) And this was supposed to reduce unemployment?!

And anyway, if people are working, why aren't they getting minimum wage?

"It worked okay in the 1930s; even today"

It's a mixed bag. Some economists claimed it helped others claim it lengthened and made the recession deeper.

> Even the most ineffectual government employee is more valuable than another mother or father on the dole when unemployment is already high.

Yeah, it worked very well in Russia and East Germany. So well people were risking their lives to go somewhere else for better opportunities. And if North-Koreans could get out of their country, I'm sure they would be happy witnesses of a full-employment state policy.

You obviously have NO idea what you are talking about.

Could it be that they risked their lives because they lived under a totalitarian regime? People didn't leave because they didn't make enough money.

If you think matters of economics were the only, or primary, reason why people attempted to escape from those countries, you are seriously delusional.

It all goes together, my friend. WHen you destroy the economy, you have to replace it by a state-fueled economy and therefore the totalitarian package goes with it. We have yet to see totalitarian states with free economy. It does not exist because it goes against its own logic. That's not hard to understand.

The most successful economies are not free and feature heavy governmental influence. One of the most successful, China, could be considered a totalitarian regime.

What is your point? I am not seeing the problem with a government having a national employment goal & I am not shocked to find that private industry has no interest in making a national employment goal.

But you see businesses aiming for improved productivity all the time. A desire for full employment is just the national version of that. It's not like a country can easily or ethically fire or cut adrift swathes of its citizenry at once.

Not really. Let me give you an example. In the 1980s, it was costing £70/ton to mine coal worth £40/ton. Labour party policy was that jobs for their supporters were more important than creating wealth for the whole country. In the end, raw economics forced a resolution - the country couldn't afford to double everyone's energy bill just to score some ideological points.

Thatcher's anti-union stance & unwillingness to negotiate with the coal union when on strike eventually lead to the industry's demise. If your view was that domestic UK coal production was a waste of money, then you can thank the Thatcher run government for shutting it down. Government can do good & bad depending on where you stand.

If Scargill had said "give us the means of production and we will demonstrate the superiority of collective ownership" then that would be one thing. The mines were costing twice as much to run as they were worth; the unions could have "bought" them for one pound! But that's not what happened. He said "just give us money". It's impossible to negotiate like that.

Incidentally, I never understood why Thatcher was evil for not subsidizing the loss-making mines, and modern politicians are evil for subsidizing loss-making banks (i.e. RBS).

I do not think there could have been any way to make the industry profitable on the open market. Subsidies from surrounding governments were much higher for their domestic coal than the UK was willing to pay for theirs. Cheaper easily mined coal imports from Australia, Russia, South Africa along with North Sea oil & gas flooded alternatives on to the market. The fact that the assets were privatized and sold off later, yet the UK coal industry remained mainly dead along with the "green movement" probably shows that the industry could not have survived on it's own without the subsidies.

Some view Thatcher destroyed the industry not only because it was unprofitable but also as an attack against the unions, supposedly going so far as to shutdown even profitable mines or those that had potential. Putting 180,000+ out of work is going to cause some outrage from those you are putting out of work & the surrounding communities that relied on those wages. Also some may view domestic energy production as a valuable asset to retain even if it is not market viable just due to energy security/independence concerns.

As far as the bank comparison, I think some people have a kinder view towards the plight of a coal miner working in dangerous conditions for not a lot of pay vs the plight of an executive banker raking in massive bonuses while tanking the economy.

It wasn't raw economics, it was politics. Thatcher saw that the miners helped bring down the Heath government, saw an opportunity to break the unions and consolidate her power. (Creating the insane social and economical inequalities in the UK today)

Sure, but you could find similar examples of companies extracting economic rents to benefit their shareholders until they were disrupted by a more agile competitor. My underlying point is that citizens are more like shareholders than employees, you can't just fire them because you don't like their demands. Governments are instituted to secure the interests of theri citizens, who then compete among themselves for control of institutions.

Now we rely on buying gas from Russia while spending £25Bn on Trident to protect us from Russia.

That's because a corporation does not have to commit to a certain level of production. On the other hand, the government does so all the time at the request of the people. And when you guarantee output X for whatever good/service, the notion of full employment makes sense. As a representative example, it takes about 5,000 police officers to keep the peace for 1,000,000 people in an urban environment (rough estimate, just an example).

Of course, what goods/services should be guaranteed and what the value of X should be for each one is and will remain an open problem.

> >In Government, headcount is a (political, organization, etc.) benefit.

>> Can be said for the private sector as well. Unless you think the private sector is growth averse.

Huh? Employees aren't growth. Employees may be necessary to accomplish/support growth, but that's very different. The difference is that a biz will happily take growth with no employees and will try to avoid employees with no growth.

Employees are often a sign of growth, though not always. A large employee count often means the company has experienced significant growth and is relatively stable. Even a small company, hiring your first employee means you're probably experiencing growth or see the opportunity for it.

Of course judging a company based only on it's headcount is silly, just like judging that the government must be wasteful and inefficient because of it's headcount.

Headcounts are a common metric of importance in business, though not the only one. Especially for managers, the phrase "grew the organization from [x] to [y]" is often denominated in units of employees (take a look at google hits for "grew the organization from"). So managers typically have an incentive to increase headcount.

> Headcounts are a common metric of importance in business

Unless you're claiming that everything import is growth....

> In Government, headcount is a (political, organization, etc.) benefit.

I don't understand this claim. You state it like it's well-known fact. In what (evidenced) ways is headcount advantageous in government and not in business? Using headcount as a proxy for importance/value when rewarding middle managers is common in many organizations.

In government your budget is based on last years budget. If you don't spend it all then you get cut next year because, presumably, you don't need that much money. Agencies spend a ton of money at the end of the year just to spend the money so that they won't get cut next year. This is also one reason why they have little reason to fire people and lots of reasons to beef up the size of the workforce. Yes, there is always the risk that you will get cut, even though you spend all of your money. But that's a safer bet for an agency president than voluntarily cutting your budget by not spending every penny.

> In government your budget is based on last years budget.

And it's the same in private industry.

>In industry it is a cost.

It's a cost to the shareholder. To every layer of management from the shopfloor foreman to the board it's a benefit.

More employees are not necessarily a good thing. You need more management to frame them and so on. It's a cost for everyone. That's why you don't see many companies with more than 100 000 employees: after a certain level it becomes difficult to sustain, and they usually cut back on headcount to remain relatively efficient.

At the macro level, yes, the size of the company's payroll is a cost. But very few members of large companies have any incentive to bear that cost. The CEO, the Board, and that's about it. Almost nobody below the C-level has any direct incentive to keep payroll costs manageable.

At the management level, the manager -- who bears no personal cost for managing N+1 workers instead of just N workers, will almost always choose N+1 if given the option. He doesn't pay their salaries, after all, and to him, the increased headcount is a status symbol. It's also something he will convince himself he actually needs. (You never hear middle managers complaining that their divisons are overstaffed, but the opposite complaint is almost universal).

This is what's known as an "agency problem." Many (most?) of the agents of the greater whole (the company) have personal incentives that work at odds with the company's greater incentives. This clash of incentives leads to waste, bloat, inefficiency, and so forth, because almost nobody is personally on the hook for the company's total health in the long run. (Sure, they're indirectly on the hook. If the company starts doing poorly, they could risk losing their jobs. But people tend to externalize failure, and don't hold themselves personally responsible).

> At the management level, the manager -- who bears no personal cost for managing N+1 workers instead of just N workers, will almost always choose N+1 if given the option.

I do not know if you are familiar with how big companies work, but usually when you reach a large enough size, such companies start to track "productivity indexes" between their departments and against competition, when comparison is available. SUch an index would look like = sales of the department / headcount of that department, which basically gives you an "average value" of an employee in that department. Then in order to prove that you need additional headcounts, you need to have a high productivity index in the first place to justify it. So that's why big companies don't just keep growing forever: they start to become more efficiency-sensitive, and consider carefully the cost of an employee versus the actual benefit to have more.

That is how it should work in theory, but often that's not how it really works. Obtaining the actual value of a department or a single employee can be extremely hard to quantify. It can also be hard to figure out when a project needs the plug pulled.

Personal anecdote. A company I worked for fired the more costly tech support staff right before an important partner product launch which left a bunch of undertrained customer service reps supporting the new product which gave a bad experience to customers. It also irritated the partner because the training the reps received essentially told them that almost any problem needed to be referred to the partner, swamping them with customers wanting them to fix a problem that wasn't theirs. They then had to scramble & rehire a tech support staff.

Take Intel's Itanium project which has struggled on for 16 years, yet Intel still has resources devoted to it. Sometimes you cannot just kill a very unsuccessful project & it can take many many years to wind it down.

You could also look at any need for layoffs as being a miscalculation by the company. When Yahoo announces 2000 layoffs, does that mean they're being efficient by cutting staff or does it mean that they've had 2000 employees on staff that shouldn't have been there in the first place & for how long? Why didn't the indexes and metrics in place tell them to not hire these people?

Also the government is not immune to layoffs. They have actually been one of the top organizations laying people off over the last few years.

http://en.wikipedia.org/wiki/List_of_companies_by_revenue

There are actually a lot of companies with more than 100.000 employees... I think it's just natural that there aren't more... you need a very big market for them

Are you talking in absolute terms or in % ? In % of total companies worlwide, companies with more than 100 000 are clear, small minority. Of course you can probably find a hundred of them or more worldwide, it still does not make them "common" versus the hundred of millions of small-sized companies around.

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