Sunday, October 30, 2011


It's considered a truism on the right and among libertarians that government services are (or rapidly become) more expensive than private services.  The left will typically rebut that it doesn't have to be so.  After all, they say, couldn't The Right Sort Of People™ run government services efficiently?


The problem is ideology.  Privately provided services have to deliver value for the customer's dollar.  While there are many possible "nice to have" enhancements to the core service, customers ultimately are purchasing the core service.  As long as there's competition, the core service is run efficiently - or the company goes out of business, is bough up by a more efficient competitor, or its assets are liquidated.

So what happens when the government runs services?  Particular groups lobby the government for their favorite "nice to have" enhancements, based on their ideological preferences.  If there is a critical mass of political power brought to bear on the government, those "nice to have" become "must haves".  Costs go up.

And at this point, it's worth pointing out that many of the "nice to have" enhancements are arguably nice to have.  But they're not doing anything to provide the ostensible core services; on the contrary, core services often get cut to fund the "nice to haves".  Case in point:
Facing a $12 million to $17 million budget shortfall next year, Portland’s TriMet transit agency is cutting bus service for lack of funds. But it has enough funds to spend $250,000 on a giant sculpture of a deer with a baby face.

The agency has already cut bus service by 13 percent and light-rail service by 10 percent in the last two years. Yet it is spending at least $3 million on “art” as part of its $200-million-per-mile light-rail line to Milwaukie, one of the most wasteful rail projects ever. As a matter of policy, TriMet spends 1.5 percent of its capital expenditures on art, even though it is not required to do so.
Ideology (driven by organized political lobbying) has captured the transit authority.  Actual transit is being cut to ensure the continued delivery of Correct ideologically-driven "nice to haves".  It's Rich People's Leftism.

For all the noise we hear form the Usual Suspects that we're a bunch of Baby-Eating Capitalists who don't have any compassion, you'd think they'd have some actual, you know, compassion for poor people who rely on mass transit.

But then they'd have to sacrifice their SWPL "art" for benefits aimed at poor people.  Got to have your (ideological) priorities, right?


Divemedic said...

I see that where I work, and it is one of the reasons why I am leaving in 6 weeks. They have cut pay and hours of firefighters over the last three years, even shutting down fire trucks for the day to save money, yet they built a new $1 million marina and recreation area on the lake, and still offer free babysitting and karate classes to the public.

Parks are nice, but isn't providing for the common defense a core reason for why we have governments?

Old NFO said...

Excellent points, and bottom line, the private sector HAS to make a profit, the government doesn't care...

wolfwalker said...

While I agree entirely with the basic point of your post, Borepatch, something about this statement:

Privately provided services have to deliver value for the customer's dollar.

bothered me. After a few minutes, I figured out why. Privately-provided services don't necessarily have to deliver value for the customer's money. They can also say "pay us what we want, or else." Microsoft did this for a number of years. Cable TV providers did it until the rise of satellite TV. Unions are champs at it -- that's how unions survived the early 20th century in spite of massive government and business opposition. The early unions, such as the United Mine Workers, got what they wanted by making it too expensive for mining companies to do anything else.

So I think the key factor is not the influence of government, but rather who decides what is value for money. If the customer makes that decision, well and good. If the provider makes the decision, well, that's trouble.

I'm not sure if that changes your basic argument much, but it was bothering me. FWIW.

lelnet said...

"couldn't The Right Sort Of People™ run government services efficiently?"

No, because history has completely and totally proven that bad people want to be in charge more intensely than good people do, and so will end up in charge disproportionately often, because they're willing to work harder to get there.

Ergo, any system which cannot function properly when bad people are in charge of it is per se defective.

This remains true even if you assume that pro-government "progressives" are themselves mostly Good People...a proposition which I consider to be highly dubious, but which needn't be disproven in order to refute their bleating about The Right People being put in charge.

Unlike socialism, capitalism continues to produce demonstrably good outcomes even when bad people are in charge of its institutions. Because the only way to stay in charge of an institution of capitalism is to make and keep your stakeholders (principally customers, but also employees and shareholders) happy.