Replies to This Discussion

Permalink Reply by Eli on September 5, 2008 at 4:02pm

Well, I guess the question is, why are you making the profit then giving it back? Why not just operate at a level of zero profit and let the consumers keep the difference? In a sense you're getting a 0% interest loan from the consumer which in turn you pay back come the end of the year/tax-time/whatever... as some of these services are merely required for an acceptable standard of living in industrialized nations (running water, garbage collection) you're almost mandating a loan by the consumers to the company.

In the long term I don't see much of a difference between the two ideas, the pay-back system would require even more overhead in the areas of oversight than current non-profits. The problem with profit in these entrprises it that it then becomes overhead, something tacked on to the price of the services.

Take a look at healthcare, a for-profit HMO providing the exact same services as a not-for-profit healthcare system must in essence charge more for said services in order to generate such profit. Now, there are several other factors to consider, of course, this is a gross oversimplification (competition, drive for for-profit centers to become more cost efficient, thus motivating R&D, more profitable treatments being suggested over less profitable ones, etc, etc, etc...)

Permalink Reply by Skylar on September 5, 2008 at 4:23pm

"Well, I guess the question is, why are you making the profit then giving it back? Why not just operate at a level of zero profit and let the consumers keep the difference?"

One of the major criticisms of public programs is the extreme wastefulness and inefficiency found it their management. I am trying to think of methods in which public projects could be funded sufficiently but encouraged to operate at the lowest possible cost and highest possible quality.

I think administrators would be more likely to spend their budgets carefully if they had a personal stake in the outcome.

Permalink Reply by Eli on September 5, 2008 at 4:30pm

So the personal stakes are only in their own (as well as consumer's) tax refund? Spread out that far it's liable to be pennies, once you take the profit motive out (by ftaking back the profit at the end of the year) you take away the motive for such profit and introduce the same problems of inefficiency found in existing non-profits. However the criticisms of many public programs wastefulness often ignore those that don't have such problems, or express the "wasefulness" in raw dollars instead of a more accurate assessment as a percentage of the cost of the program. Medicare has an operating cost of roughly 3%, Social Security, 2%.

Permalink Reply by Skylar on September 5, 2008 at 4:44pm

Some companies do profit sharing as an incentive for employees. They will either give employees cash at the end of the year or stock ownership, etc. These have proved to be very successful because it gives incentive for employees to ensure the success of the company.

Since the water company is owned by the government, it is in extension owned by the people. However, as the projects are funded right now, people don't see a return on their tax investment.

Permalink Reply by Parallax on September 13, 2008 at 10:07pm

First of all, if a government agency has money left over at the end of the year, the budget gets slashed for next year. So it is in their best interest to make sure that everyone spends as much as possible. It's really hard to get people to not be wasteful if they can't use all of their budget because the need has lessened...So I guess we should solve that sort of problem first I guess.

Permalink Reply by Skylar on September 14, 2008 at 9:56pm

Excellent point. Perhaps budgeting is the place to start. Any ideas anyone? I will have to give it some thought before crafting a more insightful reply.

Permalink Reply by Parallax on September 6, 2008 at 11:14am

I have a big problem with monopolies sanctioned by the government. The electric company and cable. I was once told that if the gov't didn't grant these companies monopolies, there would be wires everywhere with all of the companies wiring individual homes for service. But just as in the case of the cell phone services, they would likely collaborate for a common goal just like they do with the towers. They all pay a little for companies that do maintenance on those towers.

I don't have a problem paying taxes for services, I need those services. I do have a problem in that, in Oregon anyway, they like to create make work projects. They rip up perfectly fine parts of the road and reconstruct them so that people have work.

Permalink Reply by Skylar on September 13, 2008 at 7:27pm

I'm not sure what the case is here. I do remember about 10 years ago that the telephone company deregulated and at the time lots of little phone companies sprang up. After a while though, the same old phone company was and still is the sole option left for local service. I also have one cable company available, and one gas and electric company. The utilities seem to become monopolies whether there is government sponsorship or not.

Cell phones are different. There are plenty of choices, but they share network equipment where wire phone companies don't.

I do know that, in addition to the telephone network, there is a separate military network running here. They share switches, hubs and poles or pipes, but otherwise the lines are separated.

Permalink Reply by Ryan Toll on April 8, 2009 at 8:39pm

I'm not sure that a brief deregulation would be a good representative example. The original phone company had already had an infrastructure set up in advance. Not only that, but I'd be willing to bet a significant sum that they got government subsidies of some form to help them set up that network, whereas the new competitors didn't. I don't think that we can use an example of such lopsided competition to make conclusions as to what solution the free market would come up with.

Permalink Reply by Revyloution on March 23, 2009 at 12:04pm

Just a quickie on your question about garbage collection. Most garbage collection in the US is done by private contractors. Also, the sum of all the fees and fines are not enough to keep the garbage companies running! All garbage disposal in the US is subsidized. If you had to pay the actual costs of garbage disposal directly, you would be shocked at how much it costs.

The benefits to subsidized garbage delivery is clean streets. If the poor of the US can't afford to pay for garbage removal, then they will just start piling it up in the alleys. The garbage is bad enough in poor neighborhoods, if it was expensive it would be terrible.

The scary part of garbage, is that most cities have organized crime families running the garbage companies. I ran up against this after the California wildfires burned all those homes. A contractor I work with put together a cradle to grave plan for disposing of all of the toxic waste from the burned homes. Before he submitted to FEMA, he and the other partners all received phone calls saying that their families were worth more than the garbage contracts.

Good source books are:Giants of Garbage by Harold Crooks, American Alchemy H. Hickman.

I know this sounds like conspiracy stuff (which I loath) but its all quite well documented. Garbage is subsidized to keep our streets clean. Many garbage companies in the US have close ties to organized crime.

Permalink Reply by Parallax on May 5, 2009 at 11:07am

I have to pay to get my garbage collected, so does everyone else where I live. Do you mean that above the 70.00/mo I pay the gov't gives them more on top of that? hm...

Btw conspiracy stuff is fun sometimes, I like a good system of linking seemingly unconnected things and finding out in some way that we're all being screwed or groomed to be mindless obedient citizens *cough*government school*cough*. See? Blood pressure up, ready for the day!

Permalink Reply by Ryan Toll on July 23, 2009 at 2:19pm

I strongly suspect that the only reason why organized crime is so involved in garbage collection is because of the strong governmental involvement (subsidies, exclusive contracts, etc.). In a free market, there is no way that a criminal organization could compete in the same league as honest business. This makes sense because honest businesses don't have to pay for thugs or bribes to local officials to create an artificial monopoly. Additionally, competition in the realm of honest business, or even the possibility thereof, will tend to drive prices down and quality up.

Not only is it logical that criminal organizations can't compete with legitimate business, but history shows this to be the case as well. Think of drugs and alcohol. Before prohibition, organized crime was not involved in selling alcohol. It wasn't until government regulations forced legitimate businesses out of the market that it became profitable for the mob to move in. Once alcohol became legal again, legitimate business again took over and organized crime was quickly removed from the market. Drugs offer an identical story with the notable exception that we have yet to remove the restriction on them as we eventually did with alcohol.

As far as garbage collection being a profitable enterprise, either one of two cases will be true (in a free market). Either, the service can be provided for profit, in which case someone will find a way to do it and collect that profit, or it cannot be provided for a profit, in which case it isn't worth doing anyway.

If you (or others) are worried about clean streets, then you are perfectly welcome to invest whatever time or money that you feel appropriate to make that happen. You could go out and clean up some of that stuff yourself. You could donate to a private charity to help the poor afford garbage collection. You could even come up with your many of your own solutions.

My primary concern is that, whatever solutions we come up with for solving society's problems, we do so voluntarily. I stand by the inviolability of one's property rights. I don't believe that the good of society is ever at odds with the good of individuals, nor do I believe that good can come from the violation of the rights of individuals.

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