Elon Musk: Always A Douche

[viper37]

This is untrue.
Privatised railways in many countries have been a failure, privatised utilities are just a disaster, then you come onto stuff like military manufacturing where the current private system really isn't working, privatised post is a joke, and so on.
The sweeping ideologically motivated idea that privatisation is always the best option has caused a lot of damage. The best tool should be chosen for the task.

It's always relative from one country to the other, but the Canadien National Railroad privatization was a success:
https://www.policyschool.ca/wp-content/uploads/2016/03/boardman-vining-privatization.pdf

We found that during the four-year period immediately prior to the change in management at
CNR (1988 through 1991), CNR's real average total cost (ATC) per revenue-tonne kilometre
of freight shipped was 6.66 percent higher than CPR's ATC during the same period. Assuming
that this cost differential would continue if CNR were not privatized and using CPR's actual
costs, the authors constructed a counterfactual for CNR's ATCs for the 1993-2003 period.
CNR's actual costs were subtracted from these counterfactual costs to obtain an estimate of the
annual ATC savings. This difference was multiplied by CNR's actual volumes to obtain
estimates of the annual (total) cost savings. Finally, these amounts were converted to real
dollars and discounted using a real social discount rate of 3.5 percent. We estimate that the
present value of the cost savings due to privatization was just over $3 billion (in 1992 dollars)
for the 1993-2003 period. Projecting the future savings beyond 2003 and discounting these
amounts back to the year of privatization yielded $12 billion in additional cost savings. Thus,
we estimate the total welfare gain from the privatization of CNR was about $15 billion.

This welfare gain was shared between shareholders and the government. Government received
the sale proceeds of almost $2 billion and additional tax revenue following privatization of
about $6 billion. The hardest component to estimate was the foregone profits under
government ownership from the time of privatization. We provide a range of values with a
mid-point of about $1 billion. Aggregating these components implies that the change in GS
was about $7 billion, as shown in Table 3.26 By subtraction, and assuming that the λs equal
one, the change in producer surplus was about $8 billion. As Table 3 also shows, most of that
surplus accrued to foreigners because they were long-term shareholders

Page 12

[Grey Fox]

It is not a success anymore.

[Norgy]

When you privatise a national service in places like Norway, it rarely gives any benefit to the consumer. We tried that with the railroads. Thing is, it is hard to make a railroad run more efficiently by cutting costs and having a few more directors on the board.
It has been a disaster, making the old state-run NSB seem reliable and friendly even.

If you privatise parts of, say health care, it would probably benefit the public because of specialisation. That has sort of worked in Norway, and if you are in the care business you certainly earn better than in the public sector. And that has meant most health care workers leave the public sector, and a new business opportunity again arises. The temps. I think the local council here paid something like 62 million NOK (around 580.000 dollars/Euros) for temps last year.

Either you privatise the lot, and make sure that everyone, every single one, has insurance from birth funded by the state, or you run a state enterprise by not letting some imaginary market decide.

Hayek was in some respect a genius when saying the market is a source of signals about needs, wants and supply. I respect the man. Although I am more of a Keynes and Galbraith reader, I see you can't have few monopolies and expect that "the market" works. But there will always be more demand for eyelifts, boobjobs, assjobs and prostate exams than for care for the dying or elderly, and how do you fix that with more private industry? You all know what pays better.

[Savonarola]

This is untrue.
Privatised railways in many countries have been a failure, privatised utilities are just a disaster, then you come onto stuff like military manufacturing where the current private system really isn't working, privatised post is a joke, and so on.
The sweeping ideologically motivated idea that privatisation is always the best option has caused a lot of damage. The best tool should be chosen for the task.

It's always relative from one country to the other, but the Canadien National Railroad privatization was a success:
https://www.policyschool.ca/wp-content/uploads/2016/03/boardman-vining-privatization.pdf

You and Josq are discussing two different business models; CN is a freight carrier and Josq is describing passenger rail.  This would be more like if you were to privatize VIA (or we would privatize AMTRAK.) 

The difference in rail models between North America and Europe is vast.  The UK has 80.5 Billion passenger kilometers per year while Canada is about 1.5 Billion.  On the other hand Canada has 352 Billion Tonne Kilometers of freight per year while the UK 24.4 Billion Tonne Kilometers of freight.  The countries and the business models are so different that it's difficult to draw any meaningful conclusions from comparisons between North American and European rail.

[Savonarola]

Public train lines suck too. It's almost like trains themselves are the problem


Sorry Sav, friendly fire

 

Outside of the Northeast Corridor and a few other lines it's hard to have a viable business model for intra-city trains in The United States.  I think it would be impossible in Canada since the country is so vast and the cities are so far apart.  Regional trains have potential but, in Canada, we're starting with antiquated technology.

[HVC]

I was mainly trying to goad Josq . While I do have qualms with GOTransit it is convenient at times.

[Sheilbh]

Yeah - I think there's two plausible benefits to privatisation.

One is that it increases user choice and that I think is particularly relevant if there is a plausible market of alternatives. You think of air travel, healthcare in most of Europe where there are lots of social insurance providers or TV (the BBC wasn't privatised but there was a huge debate over ending its monopoly on TV and allowing commercial operators). Often still areas that require a lot of regulation. That user/consumer could include the state - but it relies on their being a market with real choice and that will encourage better services, efficiencies, innovation etc.

The other is that it increases investment and this is true in the UK of rail and water - it's also part of the reason for tuition fees. In the UK when we had state owned companies they were seriously under-invested in (same with universities) because ultimately they were competing against universal education for kids, the NHS etc for funding which was always a challenge. In all those cases of privatisation (or tuition fees) there was a large increase in investment which supported increases in capacity. This is where I slightly worry about nationalisation (or ending tuition fees) is that it's not clear where the money to even sustain current levels of investment would come from.

One other aside on nationalised companies is that it should lead to greater democratic accountability but that isn't always the case. We've seen this with the Post Office scandal - or that report on water companies which were the three effectively state owned companies (in Wales, Scotland and Northern Ireland). Because we don't want politicians to be taking operational decisions (and they shouldn't be) we have arms length relationship but that means it can be difficult for those companies to be held accountable (especially if politicians, on the advice of civil servants, are basically told to believe the company or what the limits of what they can do are) as we've seen with the Post Office or those water companies.

I think you need a service with a genuine market so there is actual competition on price and quality, but also you need an ability to relatively clearly measure whether the service is being delivered or not, and you need the private company to take the risk. If you have those conditions then it's makes sense to privatise or contract out and it'll work well. Otherwise you end up in situations like Carillion or G4S or Serco providing really complicated services with hundreds of metrics, badly, and with the taxpayer on the hook if anything goes wrong.

But I'm not ideologically wedded to either. I really don't care about private providers helping deliver healthcare for example and think there's a lot we could learn from European social insurance models (unfortunately in the UK everyone thinks the choice is: our precious NHS or America ). For me I think the focus is less on state or private than on identifying strategic sectors/capabilities and making sure that exists in the country. On railways and public transport I actually think the TfL model - which is still private providers - is one that really works.

It's tempting to view the Valley people as a monolithic bloc, and in some ways they are similar, but there are different roads to Trump for them. Thiel is an anarcho-capitalist who wants to replace nation-states with privately run governments; you can guess why someone like him wants to see Trump back in with his protege JD Vance. Andreesen and Horowitz over-invested in crypto and are desperate to see the SEC gutted, even if it takes a lot of the rest of America along with it.  The VCs want to see Biden's tax proposals off. Elon has his own personal crazy going on.  And so on.

Fair point and you're right that they're not monolithic. But I think there is a distinctive strand of Silicon Valley thought at play on the right - maybe not monolithic but an eco-system. I think it is very contemptuous of democratic control (which at the minute can only really be exercised by the nation-state) and very elitist in a sort of Randian way.

And I think that elitism is at odds with an anti-intellectual/anti-education stuff on the right. It's incredibly disdainful of people who don't do STEM, who don't go into tech or other similar sectors - there is maybe a liberal education dusting on top of it but it's very much instrumental "who are the top five classical authors every CEO should read" sort of thing. And it basically thinks any constraint exercised by democratic power - whether politicians, regulators or even central banks (ultimately) is basically illegitimate and holding back the free expression of their human genius. I think it ties into and backs some of the anti-intellectual stuff - but I think that's often seen as basically the rube-ish Evangelical Christians and I think it's very different (even with overlap).

(Also not to get into the whole fascism debate - but I do think this is a bit of American conservatism that I think is relatively newly prominent and is a bit that seems to me more fascist.)

[The Minsky Moment]

Fair point and you're right that they're not monolithic. But I think there is a distinctive strand of Silicon Valley thought at play on the right - maybe not monolithic but an eco-system. I think it is very contemptuous of democratic control (which at the minute can only really be exercised by the nation-state) and very elitist in a sort of Randian way.

Sure they are elitist and contemptuous or democracy but that is/was also true of Wall Street and the Koch Brothers.  It's not insignificant, but never under-estimate the lengths that certain obscenely rich people will go to shave a few percent off their tax rates or to kneecap the regulators in their industry area of interest.  That simple motivation often explains more than any elaborate weltanschauung.

[Sheilbh]

True - and I was very struck by Jamie Dimon's comments that basically Wall Street are kind of open to Trump now. I think there was a bit of fear in 2016, but now they think he's manageable and there'll probably be more tax cuts/less regulation.

And maybe in a way it just reflects the shift in American industry/capitalism? So the moneyed, elitist, little bit contemptuous of democracy wing of the GOP used to be a Brooks Brothers wearing Wall Street type, or people like the Kochs - which could at least read as establishment. Now it's Peter Thiel and that psycho who ran for Senator in Arizona, who see themselves more as "disruptors". But the impulse and reason they're in the GOP coalition is the same.

[Tonitrus]

If there is one thing that often tends to supersede political philosophy, values, or ethnic/racial divisions...it is being a rich bastard.

[Oexmelin]

People who were contemptuous of democracy in the past weren't contemptuous of society.

[crazy canuck]

People who were contemptuous of democracy in the past weren't contemptuous of society.

What examples do you have in mind?