What are the pros and cons of state owned businesses?

[Spiffor]

Originally posted by Imran Siddiqui

The State, however, defines what are its interests in general, and those are often the same as the population's as a whole.

state run businesses would have helped the population big-time, whereas profit-driven companies couldn't have done so.

Why do you think so? IF the population wanted less poluting cars they would have made that clear by their purchasing choices. Right now you have hybrid cars. If the population wants cars that pollute less then they'll buy them, and every manufacturer will quick produce them. The market is infinetly better than planned economies in deciding what the consumers (which are the population at large) want.

1. The population wants fewer air pollution. And every individual sure wants that the neighbour pays for it

2. When someone is considering buying a car, the air pollution it generates is an incredibly small facotr except for the most ecologcally aware consumers. It leads people not to exigate the manufacturers to produce non-polluting cars, except for a small minority of highly green consumers.

As such, a purely individual perspective (the perspective of the market) means that no steps are taken against air pollution as a collective problem, because nobody wants to pay individually against it.
The trust in the market belated the introduction of non-polluting fuels bigtime, and their distribution leaves much to be desired even today, 10 years after the issue was brought on the agenda. Besides, the use of non-polluting fuels can be mostly explained by the very favourable taxation towards non-polluting fuels, which profit almost only the middle-upper and upper class.

Had a "public" perspective been used, where the individual is not only seen as a consumer but also as a citizen, the situation would have been much better today. Still, we half-assed the job, which explains why there are low pollution cars at all.

(I avoided to say "fuel efficient" in this example, because fuel efficiency is nearly obvious around here. I'm talking about the introduction of new kinds of fuels, whose air pollution is much much lower)

[Imran Siddiqui]

So why not have the government introduce incentives (tax-wise) for the research and development of these 'new fuels'? There are better options than the government taking over efficient companies. And in this way you still have parts of the market system, because companies evaluate if it is worth it to spend the research money for the tax break.

After all, if every individual is a citizen and REALLY wants lower air pollution, wouldn't he have voted in those that promise this?

[Spiffor]

Originally posted by Imran Siddiqui
So why not have the government introduce incentives (tax-wise) for the research and development of these 'new fuels'?

I do not know if these incentives did exist or not, but I wouldn't be surprised at all if they did. It would be quite strange if there were only tax incetives towards the demand. Mind you, I suppose the research had already started back when Renault and Elf were public companies.

[Az]

How do you predict what 'they' need? Do you know what every human needs?

The same way corporations predict. There are surveys, test groups, etc.

Another bureaucratic mess, then?

No, it would be similar to the way shareholders meet.





I would like to point out that in Israel, 2 of the 3 major banks are government-owned, and they fare very well against the private banks.

[DAVOUT]

Originally posted by Azazel
If all the Industry is government owned, you can predict what will be the supply and the demand, and regulate various manufacturing capabilities, the training of specialists, etc. accordingly. The Market is good, in that that it's self-correcting, but it uses resources less efficiently.

This is extremely controversial; for two reasons:
1. There are very few outputs answering the conditions to be centrally planned. Those conditions are: huge volume of a unique product and high cost of production facilities.
2. For all other outputs, the central planning could have been considered in the past due to the fact that only the government had the bureaucratic tool to collect and process the immense amount of data required. Now, the data are readily available to all business people interested, and this fact has a tremendous impact on the allocation of resources which is now adjusted continuously.

This is why the theoretical efficiency in allocating resources of the central planning is now a pure myth.

[Az]

Originally posted by DAVOUT


This is extremely controversial; for two reasons:
1. There are very few outputs answering the conditions to be centrally planned. Those conditions are: huge volume of a unique product and high cost of production facilities.

Why so?

2. For all other outputs, the central planning could have been considered in the past due to the fact that only the government had the bureaucratic tool to collect and process the immense amount of data required. Now, the data are readily available to all business people interested, and this fact has a tremendous impact on the allocation of resources which is now adjusted continuously.

This is why the theoretical efficiency in allocating resources of the central planning is now a pure myth.

Ok, so the private sector can do this. Why can't the government do this as well, again?

[DAVOUT]

Originally posted by Azazel

Why so?

Because a national industry manufactures millions of DIFFERENT parts, and in a modern country tenths of thousand more every year. This is properly handled by hundreds of thousand of enterprises totally devoted to some of them. Most necessitates small capital expenditures which would be ridiculous to decide centrally.

Ok, so the private sector can do this. Why can't the government do this as well, again?

The government must act in the production only when the private sector cannot handle properly the problem. This is an example of the *subsidiary principle* : the state should do only what it is obliged to do. From a practical point of view, the state culture is not a ground where the day to day facing and solving problems to get the production done can satisfactorily exist.

[Az]

Originally posted by DAVOUT


Because a national industry manufactures millions of DIFFERENT parts, and in a modern country tenths of thousand more every year. This is properly handled by hundreds of thousand of enterprises totally devoted to some of them. Most necessitates small capital expenditures which would be ridiculous to decide centrally.

Instead of first manufacturing units, and then finding use to them, when a certain detail would be needed for a product, it would be researched. In areas in which more is always better, like better computer pereformance, a cost/benefit (i.e what do we need to get it/ how much do we need it ) analysis would be made.

The government must act in the production only when the private sector cannot handle properly the problem. This is an example of the *subsidiary principle* : the state should do only what it is obliged to do. From a practical point of view, the state culture is not a ground where the day to day facing and solving problems to get the production done can satisfactorily exist.

Whatever that culture is, why can't the same culture exist in the state organization, just like it exists in bussiness? ( If it exists in bussiness at all, that is )

[DAVOUT]

Originally posted by Azazel

Instead of first manufacturing units, and then finding use to them, when a certain detail would be needed for a product, it would be researched. In areas in which more is always better, like better computer pereformance, a cost/benefit (i.e what do we need to get it/ how much do we need it ) analysis would be made.

Are not you reinventing the wheel? The current practice in the car industry is to build every car according the specifications of the customer who ordered the said car. And about the high tech industries, the last 20 years have proven beyond any doubt the amazing efficiency of the private undertaking (dont forget that the first desktop computer was marketed in 1978 with a 5k memory).

Whatever that culture is, why can't the same culture exist in the state organization, just like it exists in bussiness? ( If it exists in bussiness at all, that is )

I recognize that the business culture is quite trivial : it is the permanent urge to get the next unit produced, shipped, billed, and the cash collected. You cannot expect from people involved in public services and general interest, enjoying life employment, to have their attention focused on such petty things.

[Dauphin]

Originally posted by Lazarus and the Gimp


There's competition. Several companies operate, tendering for certain regional networks. Connex has been stripped of it's operating licence on two networks for surreal levels of incompetence..

I can testify to that. Connex is a true joke. They reduced the number of carriages so much that you physically can't get on a train at most stations due to overcrowding. Cattle carts have more amenable travel conditions. And rather than improve the service they seemed only to invest in ticket machines to find fare dodgers.

[Az]

Originally posted by DAVOUT


Are not you reinventing the wheel? The current practice in the car industry is to build every car according the specifications of the customer who ordered the said car. And about the high tech industries, the last 20 years have proven beyond any doubt the amazing efficiency of the private undertaking (dont forget that the first desktop computer was marketed in 1978 with a 5k memory).

So, let me summarize your points:
-"Azazel, your idea works".
-"I am right, because I said so".

You've proven that private commerce works. Nothing new about it. I claim that my system can work better.

I recognize that the business culture is quite trivial : it is the permanent urge to get the next unit produced, shipped, billed, and the cash collected.

Must I remind you of all the "things to do to look busy at work" threads here? The urge to be lazy at a non-challenging, uninteresting job is just as stong whether in private or public working place.

You cannot expect from people involved in public services and general interest, enjoying life employment, to have their attention focused on such petty things.

enjoying life employment? WTF? Where did I say that?

[Kuciwalker]

Originally posted by Azazel
Must I remind you of all the "things to do to look busy at work" threads here? The urge to be lazy at a non-challenging, uninteresting job is just as stong whether in private or public working place.

However, a company that tolerates this (or is incompetent enough to be incapable of stopping it) will go bankrupt in the private sector, but it will persist in the the public sector.

[Az]

Originally posted by skywalker


However, a company that tolerates this (or is incompetent enough to be incapable of stopping it) will go bankrupt in the private sector, but it will persist in the the public sector.

No, if you ensure proper control of them.
Besides, factories, and companies, despite being owned by the government, and having forecast of demand, will be financially independant.

[DAVOUT]

I claim that my system can work better.

You wish it could work better. I am not even sure it could work at all. And I never feel necessary to replace a system working satisfactorily by a system that we dont know if it will work.

[DAVOUT]

Originally posted by Azazel


No, if you ensure proper control of them.
Besides, factories, and companies, despite being owned by the government, and having forecast of demand, will be financially independant.

If you ensure proper control (that is the right to fire incompetent managers and lazy workers) and they are financially independant, I dont see the purpose of your reform.