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Comment by sollewitt | Hacker News Reader

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.

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>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.

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