Social Democrats in the Wilderness

[Camerus]

What's Judt's grand vision then?  Metaphorically rolling back the clock to the Attlee years, in which building (anew) a British socialist state gives society back its moral cohesion?

[Admiral Yi]

What's Judt's grand vision then?  Metaphorically rolling back the clock to the Attlee years, in which building (anew) a British socialist state gives society back its moral cohesion?

His principal policy proposal appears to be reducing income inequality.

[Camerus]

What's Judt's grand vision then?  Metaphorically rolling back the clock to the Attlee years, in which building (anew) a British socialist state gives society back its moral cohesion?

His principal policy proposal appears to be reducing income inequality.

Well, that's the goal, not the means.  I am curious how he would like to see that achieved.

[The Brain]

"Moral cohesion" sounds horrible.

[Sheilbh]

Dealing specifically with the privatisation vs keep public debate, I find the analysis on both sides of overly simplistic.  In this province we went through a privatisation spree over the last 20 or so years and the results are very much mixed.  There are some things that government simply does better then private actors because there are some things that will never be profitable or perhaps better put, should never be profitable.  For example prisons, the military, many infrastructure and transportation projects.

Well this is entirely right.  I think the privatisation of the railways is a case in point.  It's notable that the only significant development in terms of infrastructure (our first high speed rail line) will be built with government support.  Even then it needs very long-term commitment to spend money which requires cross-party consensus.  I think there's a reason the railways has always had to have a lot of government guidance.  It's an industry that needs long-term coherent plans and long-term commitments to spending.

However, there are also some things that are better left to the private sector.  For example, we have had a fair amount of success making our utilities run on a private model - although still heavily regulated.

This I find somewhat true.  I think the issue is what Judt points out.  Even after privatisation all of these things are still too big or too important to fail.  So you've got no private risk with these privatised businesses.  All that'll happen if the railway infrastructure firm cocks up, or struggles to make money is that they'll get endless government help because we can't let them fail. 

I broadly agree about telephones and water.  I am somewhat less sure about energy, simply because that again seems a sector that needs a very long-term commitment to money that not many private companies would want.  For example in the UK we want to get more nuclear plants yet EDF - world leader's at this - will need the British government to put up hundreds of millions to build the plants because they're such a large investment project.  It does seem striking that the UK and, to the best of my knowledge, US and Canada don't have huge nuclear sectors I think because (in the UK and possibly the others) the private sector won't bear that sort of cost and local communities have too much power.  The world leader in nuclear power is France, which still has national champions, where the government's very involved in the energy sector and power's slightly more centralised.

I'll return to this later.

[grumbler]

Current society lacks moral purpose because communal moral purpose is in opposition to individual freedom of choice.  Communists have moral purpose; Utopians have moral purpose; Religions have moral purpose.  States that elevate individual freedom of choice do not have moral purpose absent an external threat.

Minor quibble:  communists believe that one can have both moral purpose and complete personal freedoms.  That is why communism doesn't work above the enterprise level.

[crazy canuck]

There are some things that government simply does better then private actors because there are some things that will never be profitable or perhaps better put, should never be profitable.  For example prisons, the military, many infrastructure and transportation projects.

Why should running a prison never be profitable?

Because the State should not be paying the premium to make it profitable.  It should just be run at cost.

[crazy canuck]

I broadly agree about telephones and water.  I am somewhat less sure about energy, simply because that again seems a sector that needs a very long-term commitment to money that not many private companies would want.  For example in the UK we want to get more nuclear plants yet EDF - world leader's at this - will need the British government to put up hundreds of millions to build the plants because they're such a large investment project.  It does seem striking that the UK and, to the best of my knowledge, US and Canada don't have huge nuclear sectors I think because (in the UK and possibly the others) the private sector won't bear that sort of cost and local communities have too much power.  The world leader in nuclear power is France, which still has national champions, where the government's very involved in the energy sector and power's slightly more centralised.

The utilities work here in British Columbia because energy production is relatively cheap hydro electric generation.  Our natural gas delivery also works on a private model but again we have access to cheap natural gas in our back yard.  Oil exploration, development and refining is of course private but that is because the profit margins are large enough to sustain capital intensive exploration and development.

All of which is to say that I we agree.  Going private only makes sense when profit margins are available without government subsidy.  If government is essentially paying for the operation it should also control it.

[The Brain]

There are some things that government simply does better then private actors because there are some things that will never be profitable or perhaps better put, should never be profitable.  For example prisons, the military, many infrastructure and transportation projects.

Why should running a prison never be profitable?

Because the State should not be paying the premium to make it profitable.  It should just be run at cost.

No matter how much money the state loses by doing so?

[crazy canuck]

There are some things that government simply does better then private actors because there are some things that will never be profitable or perhaps better put, should never be profitable.  For example prisons, the military, many infrastructure and transportation projects.

Why should running a prison never be profitable?

Because the State should not be paying the premium to make it profitable.  It should just be run at cost.

No matter how much money the state loses by doing so?

The cost is what it is.  The State will lose more money by paying for the profit of a private operator on top of that cost.

[grumbler]

There are some things that government simply does better then private actors because there are some things that will never be profitable or perhaps better put, should never be profitable.  For example prisons, the military, many infrastructure and transportation projects.

Why should running a prison never be profitable?

Because the State should not be paying the premium to make it profitable.  It should just be run at cost.

Understanding that "cost" is higher in a government-run system than a privately-run system, given that the latter has incentive to reduce costs and the former does not?

I think the choice isn't between what shouldn't be run without profit and what should be, it is between efficiency and risk.  Government should run things for which efficiency is not as important as reliability.  Monopolistic enterprises such as most public transportation systems are an obvious example.  Prisons may be less so.

[grumbler]

The cost is what it is.  The State will lose more money by paying for the profit of a private operator on top of that cost.

Neither of these statements are true a priori.

[The Brain]

There are some things that government simply does better then private actors because there are some things that will never be profitable or perhaps better put, should never be profitable.  For example prisons, the military, many infrastructure and transportation projects.

Why should running a prison never be profitable?

Because the State should not be paying the premium to make it profitable.  It should just be run at cost.

No matter how much money the state loses by doing so?

The cost is what it is.  The State will lose more money by paying for the profit of a private operator on top of that cost.

Except that the cost isn't "what it is".

[crazy canuck]

Understanding that "cost" is higher in a government-run system than a privately-run system, given that the latter has incentive to reduce costs and the former does not?

That is the normal assumption but as we have found out here that is not always the case.  This is one of the criticisms I have for the privitisation crowd.  They work from the assumption that the private sector can always do things for less cost but with the same outcomes or value.  For some things that is true.  For others it is not.

I think the choice isn't between what shouldn't be run without profit and what should be, it is between efficiency and risk.  Government should run things for which efficiency is not as important as reliability.  Monopolistic enterprises such as most public transportation systems are an obvious example.  Prisons may be less so.

Again you are making the assumption that private actors will always be more efficient.  I realize that a strong cultural truism in the US but it is not our experience here.  The thing about private actors in a non-government related field is that the most inefficient businesses simply fail.  But when private actors are being funded and subsidized by government that does not occur.  The opposite can occur.  The private actor simply adapts to find ways to get as much out of the government as possible to increase its profitability.

This is one of the reasons I think Obama's health care strategy is bound to fail.  I dont understand all the details but generally he seems to be trying to keep a private structure which is now going to be funded largely from tax dollars.

[crazy canuck]

Except that the cost isn't "what it is".

Yes it is.  You are simply making the same assumption that Grumbler makes that private actors can always reduce cost.  That is too simplistic.  I agree that sometimes they can but not always and the question has to be asked for each venture and not merely assumed.