GDP, M&A, EBITDA, P/E, NASDAQ, Econo-thread Part 12

[Ted Striker]

Originally posted by Imran Siddiqui

The cause being that government industries are run for political objectives not financial ones. But if your objective function is job creation, than maybe you can make an argument.

Exactly... and they are one and the same. Because they are political they do a good job creating jobs. Of course, a great many of the jobs are useless to create (massive hidden unemployment in the government).

But it does depend on whether you value efficiency or job creation (though they don't have to be at opposites... just in the government ).

What are some examples of government run industries with political motivations?

[Imran Siddiqui]

The sexual tension in this thread is running high!

It always does Derek .

[Imran Siddiqui]

What are some examples of government run industries with political motivations?

Not specifically 'industries' in the US, but across the pond in the UK, plenty of government run industries (like British Airways) were fairly inefficient before Maggie privatized it. Though it was good for a job .

Amtrack is a quasi-government industry in the US, and I don't have to tell you the problems there with efficiency .

[Ted Striker]

Originally posted by Imran Siddiqui

The sexual tension in this thread is running high!

It always does Derek .

I don't know about you but those equilibrium charts do wonders for my libido.

[Imran Siddiqui]

J-curve, baby... J-curve .

[TCO]

Amtrack. Postal service.

[Ted Striker]

I thought the argument for those was that they were for the greater good and not job creators (well they are job creators but those are necessary services).

[DanS]

The postal service was pretty explicitly a jobs sponge at various times in its existence. For instance, the mail was delivered twice a day for many years.

Hershell has questioned why we haven't privatized this service, since we've privatized most other things. I've come around to agreeing that there would probably be a benefit to doing so.

[Ted Striker]

2002 was a record loss for the Post Office.

[DanS]

Yes, while FedEx and UPS seem to do OK.

[Ted Striker]

Well, actually the idea of some limited job sponging sounds appealing, there needs to be a place that remains constant in terms of human resources requirements, as these places give people a place to retreat to when they get canned by the "efficient" private companies.

[DanS]

All that would do is reward inefficiency. I think the unemployed should find refuge in healthy industries. The ability and tendency to shed jobs so quickly is an advantage for US industry, since the contraposit (hiring so quickly) is also true.

[DrSpike]

Originally posted by DanS
All that would do is reward inefficiency. I think the unemployed should find refuge in healthy industries. The ability and tendency to shed jobs so quickly is an advantage for US industry.

Exactly......productivity growth can reduce employment within an industry, but not at the aggregate level.

[Ted Striker]

When there is limited job growth across the board in the private sector, the public sector can serve as a buffer while the private sector gets its act together.

[DanS]

I DanSed you some.