Monday, May 12, 2014

Things get screwed up when you remove the profit motive

Duh.  The UK Labour party wants to renationalize the rail transport system.  Anyone with two brain cells to rub together sees how this will play out once the "greedy profit" is gone:
If this were true, then Amtrak, the New York Metropolitan Transit Authority, and pre-priviatization BritRail would all have generated plenty of revenues to fund their operations and maintenance. But they didn’t and don’t; instead, they require huge subsidies and even then offer poor service due to unfunded maintenance backlogs.

Profits serve the important purpose of giving people and companies incentives to provide the services that consumers want. In contrast, when government run things, the needs of consumers are soon obscured by demands from public employee unions, manufacturers, and other suppliers to the government agency. The mission of providing transportation is soon replaced by such multiple missions as providing jobs, boosting economic development, and protecting the environment. The result is that profitable operations become money-losing operations and the needs of consumers are forgotten as unions and suppliers capture most of the revenue.
The left hates profit, but doesn't realize (or perhaps want to realize) that profit more than anything is a signal on what customers want.  Eliminate profit by putting the government in charge and the signal will shift to what politicians want.  Always.  The Antiplanner concludes his post with why that fails:
But politicians are more concerned about getting elected today than the negative impacts of their policies tomorrow.
No wonder lefties don't want to think about this.


Katabasis said...

It's worse than that, Borepatch.

The Labour party (for the second time) are promising to renationalise the railways. They're also committed to the UK remaining within the EUSSR.

The problem is to renationalise the railways (even if somehow affordable and desirable) would require leaving the EU, because of this:

Alan said...

Socialists know prices signal what consumers want, they just don't care.

The ivory tower socialist is certain they know what you need and your wants are immaterial.

Unknown said...

Katabasis - the previous UK Labour govt managed to effectively re-nationalize Railtrack PLC, the 91/440 track operating company. And they have the current EU action against germany for not keeping the track and passenger operations sufficiently distinct as a cheat-sheet for how to have both as public entities yet do it within the law

foseti said...

I wish it were that simple.

Swiss Federal Railways is a national company, and there's no country in the world with better railways. I'd much rather take a nationalized Swiss train than a private British one. Frankly, there aren't very many private companies that work better than Swiss trains.

The only thing worse than taking nationalized Amtrak trains to New York from DC is taking private airplanes.

Just saying . . .

Nosmo King said...

I think Alan has the answer; Adam Smith cannot be that widely unknown.

Rick C said...

Yeah, I was going to say what Alan said.

The socialists are of the opinion that the New Soviet Man will have the concerns they want him to, not his own crass desires.

Goober said...

foseti - yeah, but SWISS.

There is a different way of being in Switzerland that most of us just won't understand. Such things won't work in the UK, or in the US, nearly as well as they will in Switzerland.