Comment by bunderbunder | Hacker News Reader

Comment by bunderbunder | Hacker News Reader

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I keep thinking of that time Wisconsin's state government privatized a bunch of IT stuff in the interest of "government efficiency", and the cost taxpayers paid for those specific functions increased by several hundred percent while quality of service went down.

At that same time, though, I worked for a contractor that I do believe saved states money compared to doing things in-house. The work we did really required specialists. But no one state had enough of the work to keep one busy all year. So sharing a pool of people to do the work among many states meant there was room for both saving the states money and allowing some profit for the company.

The idea that you can just blanket assume that private industry is inherently more efficient than public works really needs to die. There doesn't seem to be any more evidence to support it than there is to support the idea that it's inherently less efficient. Life just isn't that simple. It's all case by case.

For every example of privatization going wrong, there's least one example (if not two) of it going right.

But serious question -- what is the difference these days anyways? Our entire government is effectively privatized anyways from the local level up to the federal. We rely on contractors for almost everything that matters. We just maintain this facade that they are not privatized.

I’ve never seen one that worked long term. The basic premise is “what was done for $X dollars with no profit motive can be done for <$X dollars with profit motive doesn’t hold up - you make something private, it wants to make more profit.

Just for the most ready to hand example for me, PG&E in SF vs public electricity utilities on the peninsula - the privatized electricity costs twice as much per kWh - and of course it does because the PG&E CEO needs to make $17M from somewhere, the share price needs to go up etc. the rich need to skim from the top, that makes the cost higher.

If you have an essential industry the cynical play is to privatize to save cost, then do a bad job and then effectively make your losses public through bail-outs while still making profit.

>The basic premise is “what was done for $X dollars with no profit motive can be done for <$X dollars with profit motive doesn’t hold up - you make something private, it wants to make more profit.

No, the basic premise of privatization is that, assuming the product or service has multiple potential customers, private industry can operate at scale which, alongside competition from other companies, drives down the price and the government can purchase it "off the shelf" at the prevailing commercial rate. Those assumptions don't always hold, utilities being a great example of this, but it's not inherently blind or naive to consider privatizing some components of government function. We don't expect the government to operate its own vehicle assembly lines even if the government needs cars; they just go buy one from Ford or GM.

I'd add that that, for this calculus to work out in a straightforward way, a competitive market is necessary but not sufficient. You also need other factors that help drive economies of scale, such as the thing in question being a manufactured good that can be sold to many people, or the production requiring expensive and specialized equipment that can be used for more than just that one thing.

I'm no expert, but I'd guess that these factors are more likely to line up in manufacturing and construction, or even R&D, than they are for things like maintenance of specialized IT systems or administration of services.

> The basic premise is “what was done for $X dollars with no profit motive can be done for <$X dollars with profit motive" doesn’t hold up - you make something private, it wants to make more profit.

The government often acts like it has infinite money. Sure, they'll make a lot of noise about the national debt, but it's all just about getting votes.

I expect privatization to be a way for a politician to stuff their pockets. They'll either buy their stock before the large government contract is announced, or the corporation will kick some money back in the form of campaign contributions, or find some way to just give cash directly.

Nobody ever gets charged with insider trading because everyone that would be involved in that is in on it as well.

Or maybe I'm just cynical.

Answer for your serious question: hiring contractors isn’t “privatized” - that’s outsourcing. The thing you’re saving on is the ongoing cost of having permanent staff.

The difference is the government and public entities like mayoral offices or parliaments get to decide how the entity (doing the contracting) is run and approve costs, and the entity is under no obligation to return a profit.

Would love to see a list on both sides. It is easy to win an argument when you get to gesture at evidence without being specific.

For your question, the difference is if a government spend succeeds, it should lead to more things that the people can do. If a private company succeeds, it largely funds just the company.

And, ideally, it should be fine that both the government/nation gets benefits while rewarding successful contractors. Nothing wrong with that.

This is hilariously viewable with Musk. People love to point out how he risked so much on Tesla. Ignoring all of the capital that the government risked in the same venture.

I am not here to argue for a "side", to win an argument, nor provide a thesis defense with citation and references -- this is an answer you can easily get from ChatGPT. There's quite literally hundreds.

To add a wrench to both "sides" some of the most effective have been state/federal-owned /state/federal controlled corporations -- or generally, arrangements where you still maintain capitalistic economic incentives and drivers, but have government oversight and (effective) regulation. I think everyone would that is good, but sometimes it takes different forms.

Then let me restate, this is an area where you can easily wade along with largely inaccurate information quite easily. I also wasn't necessarily trying to bait you to give a list, though it would be interesting to know which ones you have in mind, specifically. Far too many of us don't have any evidence, we have been duped by trusting that others do.

I took your specific claim to be privatization of government functions having many success stories. I'm still curious which ones you have in mind, but would more largely be interested in studies on this. Nothing wrong with knowing the wrenches in there.

Beside that, though, I was trying to engage your question. The difference is if growth is privatized into a few, or if it is more broadly available. With a large agreement from me that a mixture of both -- your wrench, effectively -- is fine. Good even.

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