Wikipedia:Reference desk/Archives/Miscellaneous/2016 April 2

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April 2

Privatisation of public services

Why is it that governments of developed countries are increasingly privatising public services such as utilities, healthcare, transport etc? Is this basically to cut government debts and move risk to the private sector, even if at the expense of public safety? 82.132.218.40 (talk) 15:50, 2 April 2016 (UTC)

Pros:

1) Private industry tends to be more efficient, because they need to be to survive, while government does not, at least not to the same extent. If another company can get the job done at half the price yours can, then you won't be in business for long. But if another government can get the job done at half the price, that doesn't necessarily mean your government will collapse. However, the fear of losing their jobs due to privatization may be enough to increase the competitiveness of government agencies.

Cons:

A) Private companies ultimately don't have the public interest in mind. That is, if they can increase profits by doing something counter to the public interest, then they will do so. This can also happen in government agencies, though, in the case of regulatory capture, for instance. This is caused by government employees who came from the industry they are supposed to regulate, and plan to return to that industry after they leave, and get lucrative job offers for them and family members in return for doing as they are told, combined with oversight by a legislature which takes millions in campaign contributions from those same industry lobbyists (at least in the US).

B) Giving private companies a profit motive then causes them to lobby government to increase their profits. For example, privately-owned prisons now have an incentive to increase the number of prisoners, by getting tougher sentences passed by the legislature, eliminating appeals, denying the accused representation by competent lawyers, etc. StuRat (talk) 16:41, 2 April 2016 (UTC)

The experience has generally been that privatisation makes everything worse for the great majority, rarely with any gain in efficiency, especially when accounted for carefully. The cons almost always grossly outweigh the pros. As Joseph Stiglitz says, it is better called "Briberization". So why do it? Government enterprises are big. So there is a lot of money to be made by privatizing them, usually at fire sale prices to connected insiders, who then usually jack up prices and cut services. No other reason.John Z (talk) 17:21, 2 April 2016 (UTC)

Could it be argued that even nationalised organisations are increasingly becoming commercialised, and are thinking about ways to cut costs, recover costs at the expense of service quality? 2A02:C7D:B907:6D00:69B3:64F1:11C:17ED (talk) 18:17, 2 April 2016 (UTC)

Did you ask that same question a few months back? ←Baseball Bugs ^{What's up, Doc?} carrots→ 18:20, 2 April 2016 (UTC)

The idea is to cut costs without reducing service quality, but that's only possible to a certain extent, beyond which, cutting costs further does reduce service quality. Reducing the hours a government agency is open to serve the public is one obvious way in which the service quality is reduced. Increased wait time is another. StuRat (talk) 18:39, 2 April 2016 (UTC)

One surprising way that government services can be improved, in some cases, is through bribery. For example, say you needed to get a copy of your birth certificate. The typical government agency wouldn't care how long it takes to get it to you, but, if the person responsible for getting it to you will only get his bribe once it's delivered, he might be amazingly fast at doing his job. In a way, it's pay for performance. Of course, you don't want every government worker to be open to bribes, or they might look the other way on safety violations, such as giving out occupancy permits like free candy. StuRat (talk) 18:44, 2 April 2016 (UTC)

posting by banned user removed. Fut.Perf. ☼ 10:10, 3 April 2016 (UTC)

A certain amount of money is needed to run any operation, yes, but money alone is no guarantee that it will be run efficiently. Government workers frequently have no incentive to be efficient, if they know they will be paid the same either way. StuRat (talk) 07:34, 3 April 2016 (UTC)

As someone who's lived in a place where bribery is common including for some government services (not to the extent of birth certificates but transferring ownership of properties), I would disagree bribery improves government service.

In nearly all cases it actually harms the situation. It generates a situation where the civil service expects bribes to do their job rather than the professional civil service that you want. You generally end up with a downward spiral, no one gives any respect at all to the civil service and avoids them as far as possible (while this happens every without bribery, you get it to a different extent) and where even people far from the best don't want work for the civil service. So the service gets worse, bribery expands to more areas and you get a classic example of excessive bureaucracy who are also often not doing their job properly but instead looking for how they can make money rather than what the law says or what's right.

And it's very difficult that you can allow level seemingly harmless corruption while preventing corruption on security and other such important issues. This means even for those who do pay the bribe, they're generally getting a worse service than they would under a professional civil service who take proper pride in their job and do it because it's their job.

And for those who don't pay the bribe, they can get terrible service, remembering that not everyone can afford to pay the bribe. (To give an example, my mum had to wait years for a relatively simple property transfer. While there were some complications initially since my mum wasn't a Malaysian citizen and initially the law had strong restrictions, it was a few years after the change before we got the transfer.)

Obviously no service is perfect and one big problem in most places with high bribery is low wages (along with other culture and similar issues), still bribery is not a useful solution. BTW, in most cases you have to pay the bribe before anything starts to happen, not after. Also this is seperate from whether or not a well implemented performance pay system would help.

Nil Einne (talk) 08:21, 6 April 2016 (UTC)

Projects in large organisations

Is it common to all large organisations that employees, including project managers hired to manage long term/strategic projects, often get distracted by short term or day to day work and are able to spend less time on long term strategic projects?2A02:C7D:B907:6D00:7821:541A:8F17:77E9 (talk) 16:49, 2 April 2016 (UTC)

Sure, but I don't see why that would be unique to large orgs. StuRat (talk) 17:04, 2 April 2016 (UTC)

In large orgs, you could have a people who are solely responsible for long-term goals, something not as likely in smaller orgs. NASA might be a good example. Different people are planning missions to Mars decades ahead than are tracking missions currently in space. StuRat (talk) 05:56, 4 April 2016 (UTC)

Money tied up in housing (UK, US, etc.)

I take as my starting point that the UK housing market is in a mess. Certain factors are shared with other countries, but some seem to be UK-specific. It is my impression that an unusually high proportion of the national wealth is tied up in what is colloquially known as bricks and mortar. (I'm thinking specifically of housing of whatever sort, rather than offices, factories, shops, and other buildings.) Presumably, if these funds weren't locked in people's houses, they could be used to invest in businesses, or for other productive uses. So: 1) How much is the British housing stock worth? What proportion of the national wealth does this represent? 2) How does this compare to other countries? 3) What do other countries do with their "extra money"? E.g. maybe they have a higher rate of new business openings. Or more personal savings, and lower rates of endebtedness. I've kept this deliberately open, to see what articles and resources the RefDesk hivemind can come up with, to help me (and others) understand this phenomenon. Carbon Caryatid (talk) 17:04, 2 April 2016 (UTC)

There are about 25 million houses in the UK, and the average house price is now just over £200,000 - which gives a total value of about £5,000,000,000,000 = five trillion pounds if I have counted the zeros correctly. Finding data for other countries seems quite difficult - the lists all seem to give costs in relation to earnings, to make the comparisons more relevant, so the actual prices are not obvious. 217.44.50.87 (talk) 17:42, 2 April 2016 (UTC)

in a free market, people spend money how they choose...subsidies can cause more money going into housing than otherwise would, however (like tax subsidies in the USA, for example)....but there's no "extra money"...people spend the money on housing instead of whatever else because they want to...if something else comes along that's more attractive to spend money on than housing then people will spend it there...68.48.241.158 (talk) 19:32, 2 April 2016 (UTC)

Given that people need houses to live in, the overall value of housing is going to be much the same whether it is owned by the occupiers, by commercial landlords, or by the state as social housing. If no-one bought a house for themselves, everyone would have to rent - and in the long run the cost of renting over a lifetime is usually higher than the cost of buying a house. 217.44.50.87 (talk) 21:37, 2 April 2016 (UTC)

I agree - if the OP's concern is that the country as a whole has too much invested in housing, then what are the alternatives? Caves? Tents? What's really being said is that individuals have too much tied up in houses - but in truth, most of them are paying mortgages - so the money is borrowed. It doesn't much matter to the economy whether individuals borrow the money and slowly repay it - or landlords borrow the money and repay it from rent income. The end result is rather similar. The cost of construction is lent by the banks, the money is repaid from the earnings of individuals. Whether the houses are rented or mortgaged doesn't really matter until the loan is paid off. At that point, the owner (be it landlord or individual house owner) now takes a large profit from either the rental income or "free" housing. The difference is large for individuals who choose to buy rather than renting - but for the economy as a whole, I don't see why it matters. SteveBaker (talk) 20:56, 4 April 2016 (UTC)

In developed economies, housing is frequently the largest lifetime investment a person/family makes. It is also generally considered to be a good store of wealth (“safe as houses”), although that view might be challenged in the last several years. If one does not purchase housing, and instead saves that same amount (plus any other, such as pensions) for retirement, rent will need to be paid. In addition, some governments offer incentives to invest in housing by way of interest rate payments being deductible from taxable income. So, while the price-to-value ratio in the UK may not currently be to your liking, perhaps housing is not such a bad investment.DOR (HK) (talk) 11:22, 4 April 2016 (UTC)