Socialism

[gad-fly]

Alia asked "What is necessary service?" Let me return to British Rail, whom that old lady in Red Roses depended on to visit her grandchildren every weekend. "I must do it", said she. Necessary service is essential public service, including affordable housing and affordable travel. Providing necessary service is a government obligation to the public.

How do you run train profitably by private concern and non-profit by government agency in parallel? There are many examples to show that you can. Private and public schools, hospitals, and universities co-exist around us. Choose if you can afford. If not, still fine.

To suggest that "if you cannot afford a car, don't travel" is CRUEL. Force eviction from home village is cursory sweeping under the carpet. We should do better, and that is an understatement. Our civilization has advanced well beyond the law of the jungle.

[gad-fly]

On efficiency between private enterprise and public management. Suppose a trader is selling a good costing him $10 at $12. With 1000 sold, he would make $2000 profit. Should he increase or decrease price? If he can sell more than 2000 at $11, he should do so, right? Unfortunately, he cannot foretell. Whatever his decision, the market must be recognized as inefficient, since some consumer would be prevented to acquire the good at the selling price of say $10.50, when the cost price is only at $10. In this respect, inefficiency arises from market distortion.

Suppose this trader cannot monopolize. Let another come in, offering to sell at $11 without foretelling volume of sale. Selling price is now uniformly reduced to $11. Yet another comes in, offering to sell at $10.50. Eventually, selling price is reduced, say to $10.10, when there is very little room for movement. Now we have efficiency, or very small inefficiency, or as good as it gets.

But why not have a government agency monopolize trade, to fix price at $10.10 in the first place? Because there is no need to, let alone that the price may yet be fixed at $12 to generate revenue rather than increase tax. In this connection, all government has to do is open the market, and efficiency will follow competition. Besides, buying and selling is not expected to be government's business, unlike banning monopoly, law enforcement, and so on. Mismatch is another route to ineff'iciency.

[LuckyR]

On efficiency between private enterprise and public management. Suppose a trader is selling a good costing him $10 at $12. With 1000 sold, he would make $2000 profit. Should he increase or decrease price? If he can sell more than 2000 at $11, he should do so, right? Unfortunately, he cannot foretell. Whatever his decision, the market must be recognized as inefficient, since some consumer would be prevented to acquire the good at the selling price of say $10.50, when the cost price is only at $10. In this respect, inefficiency arises from market distortion.

Suppose this trader cannot monopolize. Let another come in, offering to sell at $11 without foretelling volume of sale. Selling price is now uniformly reduced to $11. Yet another comes in, offering to sell at $10.50. Eventually, selling price is reduced, say to $10.10, when there is very little room for movement. Now we have efficiency, or very small inefficiency, or as good as it gets.

But why not have a government agency monopolize trade, to fix price at $10.10 in the first place? Because there is no need to, let alone that the price may yet be fixed at $12 to generate revenue rather than increase tax. In this connection, all government has to do is open the market, and efficiency will follow competition. Besides, buying and selling is not expected to be government's business, unlike banning monopoly, law enforcement, and so on. Mismatch is another route to ineff'iciency.

The problem with using governmental decree instead of market forces, is that the market is self correcting, whereas the ability of humans to predict the future is, shall we say, poor.

If company A thinks folks will need 1000 widgets next year because he sold 1000 this year, they build 1000, and company B thinks folks will want 10,000, even though they sold 1000 this year, so they take a risk and build 10,000. Lets say B guesses right, somewhere around February company A is sold out for the year and B can jack up their price (and profits), the gamble paid off. B is incentivized to look for trends, take a risk and profit handsomely. Similarly if folks only want 2000 this year, B will likely have a fire sale and sell the last 9000 below their cost and their stock value will tank, their CEO will be out and replaced with either someone with a better track record of anticipating trends or more conservative at minimum.

OTOH, if a remote, uninterested government committee is in charge, they don't want to make waves at their job, since there is no incentive to rock the boat, why risk it? They likely will tell A (there is no need for B) to make 2000. So if folks need 11,000 there are lines in the street, the official price will be fixed low, but the shelves are empty so it doesn't matter. Meanwhile the Black Market will sell them for gouging prices. The committee keeps their lifelong job and rinse, repeat next year.

[gad-fly]

I agree with what LuckyB has said. Public agency (or committee) has no incentive to execute educated projection even with high probability. It is in their genes. If not, they would not choose to be civil servants in the first place. Theirs is for stability, steadiness, and smooth transition. In this respect, they are not fit to be smart market traders, reacting fast to price, supply, and demand fluctuation. Conclusion: public agency, even with the best intention, is not qualified, and will be inefficient. Best for them to leave the market alone while monitoring against monopoly.

[Alias]

Alia asked "What is necessary service?" Let me return to British Rail, whom that old lady in Red Roses depended on to visit her grandchildren every weekend. "I must do it", said she. Necessary service is essential public service, including affordable housing and affordable travel. Providing necessary service is a government obligation to the public.

Nice thought. Government is not 'obliged' to do anything. If a majority government was elected on a platform of economic reform and major tax restructuring and then does something quite different, what happens? Maybe they lose the next election - but the reform still doesn't get done. Or maybe they try to fulfill their campaign promises, but fail. What happens? Maybe they lose the next election to a party campaigning on the exact opposite.
There is no force compelling them to provide any 'obligatory' service.
You're stating what you think ought to be, not what is.

How do you run train profitably by private concern and non-profit by government agency in parallel? There are many examples to show that you can.

Statistics?

Private and public schools,

That worked for a while, as long as the private schools didn't demand public funding. But pretty soon, they do. First, rate-payers had to tick off on their registration forms whether they support public or Catholic schools with their property tax. Then other religious schools want a cut of the tax money. Then the US comes with the bright idea of "charter schools". At each stage, the support, both political and financial, for public education is diminished and the quality of public education declines.

hospitals, and universities co-exist around us. Choose if you can afford. If not, still fine.

Not fine. The same thing happens. Money gravitates to the private sector; the private hospitals attract the most ambitious doctors, get the best equipment, stiff the union workers; fewer and poorer tax-payers are supporting the public system, which also loses its bargaining power when dealing with corporate suppliers.

To suggest that "if you cannot afford a car, don't travel" is CRUEL.

So? Capitalism is cruel. It divides society into bosses and machine-parts. As long as there is a surplus of labour, the bosses do whatever they want, and the government works for them.

We should do better,

Of course we should.

Our civilization has advanced well beyond the law of the jungle.

Is that really what you see on the evening news?

[Alias]

The problem with using governmental decree instead of market forces, is that the market is self correcting, whereas the ability of humans to predict the future is, shall we say, poor.

Couple of things about that.
- "The market" tends to correct itself with boom-and-bust cycles. A recession every ten years, that requires massive tax bailouts of private enterprise to set right again; a depression every generation, that take a world war to generate an artificial, tax-supported economy, and once in a while, just for fun, a complete economic collapse.
- The entire "market" consists of humans contracting monetary deals. The ability of some humans to predict the future is damn accurate, while the combobulation of human notions, plans, hubris, greeds, hopes, fevers and deceptions which make up "the market" is a very poor predictor. (JK Galbraith wrote a pretty good novel about that. https://www.goodreads.com/book/show/270 ... _Professor)
- OTH, a government with the power to regulate and a five-year mandate could take advantage of the best individual forecasters, rather than rely on bubbles and fads.

Govenrnance, and public economic policy are not about the number of widgets. They should be, as gadfly insists, about the welfare and security of the populace. The 'market' doesn't give a sff who gets trampled.

[LuckyR]

The problem with using governmental decree instead of market forces, is that the market is self correcting, whereas the ability of humans to predict the future is, shall we say, poor.

Couple of things about that.
- "The market" tends to correct itself with boom-and-bust cycles. A recession every ten years, that requires massive tax bailouts of private enterprise to set right again; a depression every generation, that take a world war to generate an artificial, tax-supported economy, and once in a while, just for fun, a complete economic collapse.
- The entire "market" consists of humans contracting monetary deals. The ability of some humans to predict the future is damn accurate, while the combobulation of human notions, plans, hubris, greeds, hopes, fevers and deceptions which make up "the market" is a very poor predictor. (JK Galbraith wrote a pretty good novel about that. https://www.goodreads.com/book/show/270 ... _Professor)
- OTH, a government with the power to regulate and a five-year mandate could take advantage of the best individual forecasters, rather than rely on bubbles and fads.

Govenrnance, and public economic policy are not about the number of widgets. They should be, as gadfly insists, about the welfare and security of the populace. The 'market' doesn't give a sff who gets trampled.

I don't necessarily disagree. In areas of welfare of the populace, a benign governmental monopoly is much better than private enterprise. For example the prison system. In the US, for profit prisons have driven profits through kickbacks to judges to railroad juveniles towards them as well as numerous other scandals. Great for shareholders, bad for innocent defendants.

OTOH, I am happy that the auto industry is not a governmental monopoly. Compare East German and West German cars, among the worst and the best, built a few hundred miles apart by workers with similar backgrounds.

[gad-fly]

Being cyclical is a phenomenon common to nearly all aspects of life. Some cycles are very regular, as in day and night every 24 hours. Not so business cycle, which last from one recession to the next recession. A bust and boom cycle is the accumulation of many business cycles. Each cycle is different from what precedes it and what comes after. To this effect, it is fallacious to pick some cycle or example to be typical such that it can apply to others without close scrutiny.

The market will correct itself? Of course. Every movement will correct itself, one way or the other. Sometimes the government helps with some bailout, sometimes not. How can and if it does is difficult to foretell. Is bailout good or bad? Depends on each case.

Privatization of prisons prisons requires government subsidy to the operator. It must be licensed with regulation to deter inappropriate management such as differential treatment between rich and poor prisoners. Like any other measure, licensing is subject to abuse. If such abuse is statistically significant and beyond control/correction, then the license should be cancelled in favor of direct management, even if it can also be subject to abuse. In this respect, the competition between public and private management is apparent.

[Alias]

OTOH, I am happy that the auto industry is not a governmental monopoly. Compare East German and West German cars, among the worst and the best, built a few hundred miles apart by workers with similar backgrounds.

While I don't think the travesty of 'communist' [puppet] governments in Europe show us very much about public vs private administration, I agree in the specific instance.
I agree in the area of 'goods' generally - so long as that doesn't include food and shelter.
When private enterprise has free control of food production and distribution, we get high prices, much waste and enormous ecological damage. When private enterprise has free control of shelter, we get mortgage bubbles, foreclosures, tenements and homelessness. You know what happens when private enterprise has free control of health-care.
If government took its mandate to be: insure the welfare of the citizens, then essentials would be in the public sector and luxuries would be in the private sector. When it comes to things we don't need but might want, I'd welcome all competition...
so long as the private sector's use of resources were regulated for environmental safety.

[LuckyR]

OTOH, I am happy that the auto industry is not a governmental monopoly. Compare East German and West German cars, among the worst and the best, built a few hundred miles apart by workers with similar backgrounds.

While I don't think the travesty of 'communist' [puppet] governments in Europe show us very much about public vs private administration, I agree in the specific instance.
I agree in the area of 'goods' generally - so long as that doesn't include food and shelter.
When private enterprise has free control of food production and distribution, we get high prices, much waste and enormous ecological damage. When private enterprise has free control of shelter, we get mortgage bubbles, foreclosures, tenements and homelessness. You know what happens when private enterprise has free control of health-care.
If government took its mandate to be: insure the welfare of the citizens, then essentials would be in the public sector and luxuries would be in the private sector. When it comes to things we don't need but might want, I'd welcome all competition...
so long as the private sector's use of resources were regulated for environmental safety.

I agree with much of your post, though I would put heath care in the same category as transportation. The government runs the city buses, but you are free to buy a Cadillac. No one is forced to walk.

[Alias]

I agree with much of your post, though I would put heath care in the same category as transportation. The government runs the city buses, but you are free to buy a Cadillac. No one is forced to walk.

The public transport has to be ensured first. The public health-care system has to be solidly established, reliably funded, supplied, maintained and staffed on a scale and at a quality sufficient to serve all of the public, all of the time.
Once that's in place, then go ahead and create whatever private frills you like.

[LuckyR]

I agree with much of your post, though I would put heath care in the same category as transportation. The government runs the city buses, but you are free to buy a Cadillac. No one is forced to walk.

The public transport has to be ensured first. The public health-care system has to be solidly established, reliably funded, supplied, maintained and staffed on a scale and at a quality sufficient to serve all of the public, all of the time.
Once that's in place, then go ahead and create whatever private frills you like.

Might make sense if a country was starting from scratch right now, but I am unaware of such a country. The city buses and the Cadillacs both drive on the same roads. The roads already exist. It's just a question of allocating enough money to pay for enough buses to accommodate everyone who doesn't own a car.

[Pattern-chaser]

It's just a question of allocating enough money to pay for enough buses to accommodate everyone who doesn't own a car.

I think perhaps it's a matter of "allocating enough money to pay for enough buses to accommodate everyone", so that cars can be phased out. But that's more about ecocide than Socialism, so maybe it's off-topic here?

[gad-fly]

In a healthy society, competition is everywhere, and should be welcomed anywhere. Competition leads to equilibrium in supply and demand and market efficiency. The beauty of competition is that it emerges with little or no interference.

On the other hand, government's rationale to interfere cannot be denied. Such interference includes monitoring and regulation to deter malpractice and cut-throat competition. It is not the government's job to join in the fray, unless to fulfill its social welfare obligation. In transport, for example, government should never take a position to favor either the public or private sector, but its participation in public transport cannot be denied, since such cannot survive without support from the public coffer. Government can either run public transport, or it can license private enterprise. Competition between public and private transport? So much the better. Own a car or take transit: up to you to choose. Competition for customers between privately-owned bus and public railway? Will drive for efficiency. If no public transport, those poor living remotely cannot move around. Subsidy of public transport, however, should be to the extent it considers affordable, but not for those living in the middle of nowhere.

[Alias]

[The public transport has to be ensured first. The public health-care system has to be solidly established,]

Might make sense if a country was starting from scratch right now, but I am unaware of such a country.

I was responding to the theoretical desirability/fairness of a two-tier system. Not to what's currently easy to accomplish...
And yet, some countries achieve a better approximation than others.

The city buses and the Cadillacs both drive on the same roads. The roads already exist.

How did they come about? Roads were built, in the main, by private contractors paid from tax revenue by governments. That tax revenue was collected - unequally - from the public transit riders and the Cadillac drivers. The public transit riders keep paying higher fares every year, while the quality of their service declines, and the traffic structure - the way those public roads are used and zoned - invariably favours the drivers.

It's just a question of allocating enough money to pay for enough buses to accommodate everyone who doesn't own a car.

That's a small part of what needs to be done. If you simply add more buses, you add more congestion, make the streets even less safe for pedestrians and cyclists and impede everyone's mobility. Municipal government needs to regulate the use of its roads and make timely changes to both the transportation infrastructure and the organization of urban traffic, to accommodate changing demographics and their requirements. Its not just allocation of resources; it's also planning, design, zoning, technological innovation, adaptation of functions, policing, sustainability, public safety and environmental health - all these decisions need to be made in keeping with the citizens' welfare.

In health care, it's even more complicated. But every decision - even small changes to how an existing service is delivered, managed or funded - would be a better decision if the central question were: How does this affect the citizens?