Govt. run as a business (Derail from Santorum thread)

thebloodfiend · Feb 8, 2012

j. Adams said:
*shrug* It happens when people say things that are utterly wrong.

And there's also a thing called tact. I vehemently disagree with Chrissy about a number of things, but I respect her enough to not insinuate that she's stupid.

j. Adams · Feb 8, 2012

thebloodfiend said:
And there's also a thing called tact. I vehemently disagree with Chrissy about a number of things, but I respect her enough to not insinuate that she's stupid.

This isn't a subjective question where the personal opinion one has actually carries some relevance. This is something that has a right answer and has been known for eons. If you've ever studied business, finance, or Econ, the answer to this question is very easy. But as usual, she's being stubborn and trying to hold on to her POV even though its dead wrong. After a while of that...you tend to lose patience.

In as far as tact is concerned, on the internet I prefer a big ol' Club to get my point across

Williebee · Feb 8, 2012

In as far as tact is concerned, on the internet I prefer a big ol' Club to get my point across

MOD Note:
Leave your club in the closet. It impresses no one, and it's hurting the points you are trying to make.

j. Adams · Feb 8, 2012

Chrissy said:
Yes, that is exactly what I am saying. The government sector has a "specialized" view of fiscal responsibility that is wasteful, and therefore, IMO, detrimental to the taxpayers that it serves.

Interesting word choices. We can be respectful, can't we? I enjoy the dialogue, and I know you can make your points without the dramatic extras.

To answer the above, I agree that it's not the same thing. I'm saying it should be. Just using your own definition of the federal government as a monopoly: Monopolies aren't even legal in most cases. Why? Because there's an inherent belief that monopolies are too powerful and lead to abuse of that power.

I've already responded to the social benefit versus bottom line concept. You've exaggerated my position as far as "profit" is concerned. In a previous post, I mentioned that non-profits run their businesses in the same way that profit businesses do. Income in, expenses out. The End.

I'd really like you to expand on the bolded statement. You're not providing any basis for it.

And again, you're exaggerating. My point was not that we should look at people's needs like a cost/benefit analysis. Maybe that's what you think I'm suggesting--that any program that isn't somehow "profitable" should be shut down? Never said anything of the sort. There is obviously benefit in helping people. This is why nonprofits spend money, while all the while they still have to be accountable for their expenditures and they don't have a bottomless well of foreign credit, nor are they allowed to shift funds earmarked for other programs to do social experiments that may or may not (and usually don't) work in practice.

What you don't seem to understand at all is how much money is being wasted due to the giant, bureaucratic slug that the federal government has become.

Regarding the bolded statement:

A government run business (Which is a monopoly) will never be as efficient as a private run business due to the lack of competition.

There's no "if" there. It will never happen.

j. Adams · Feb 8, 2012

Williebee said:
MOD Note:
Leave your club in the closet. It impresses no one, and it's hurting the points you are trying to make.

From her prior posts I've read on this site, its pretty clear that she will never change her POV in regards to what she thinks is right.

I could try to explain it further, but if she doesn't have a background in Econ/Finance/Business, its doubtful that she will ever understand it. The main problem here is that she is making conclusions based on incomplete information.

She has this bizarre idea that a private business is the same as a government run business. At this point, I don't know what else to say other than...well, you're wrong. (As I explained)

j. Adams · Feb 8, 2012

Chrissy said:
I wish the federal government had this problem. And I don't think anyone "doesn't understand" that the government isn't "in it to make a profit."

When I say "run it like a business," I'm not referring to a greedy, money-hoarding, every-man-for-himself, rape-the-land mentality. The fact is that the government should aim for profit -- except that the profit would be used for additional programs that benefit the country. Like a non-profit business, it's still a business.

Interesting assessment. It's sounds like you're saying that a typical business is not interested in asset management, or in the conservation of its assets. That would be (and is, where it exists) really stupid business. Intelligently-operated businesses ARE like this--they care about their employees and they cultivate their land/assets/etc and this is because of the profit motive. For the production of future income. They put money back into the company with long-term goals to continue to be in existence and to be profitable. I'm not talking about irresponsible businesses or businesses who run their people and their assets into the ground. That kind of management eventually will fail. Which kind of circles back to my point, that the only reason the federal government hasn't failed is because for years, they've been dipping into funds that should be off limits and borrowing money. Basically, raping the social security system and becoming indebted to other countries.

The fact is that there is so much fiscal waste, and no one seems to be truly motivated to keep expeditures equal to income, let alone reduce the national deficit. Not since I was wee child and Reagan was in office.

I do accounting and taxes for profit and non-profit businesses. A common goal of both of these businesses is to operate within their means and to continue to exist. This is much stronger motivation where there is no temporary "out" in the form of loans, or even, I daresay, in increasing the taxpayers' burden.

The problem here is not expenditures (as you seem to think). It's the large reduction in tax revenues that is the problem. If you really are an accountant, then I'm honestly appalled as to how you could possibly be getting this so wrong.

Slashing expenditures so that they match current revenues will only accomplish one thing: A massive reduction in aggregate demand that would trigger another Great Depression.

You see in 1929, the Geniuses of that time thought that slashing expenditures would also get them out of their current mess. In the end, it blew up in their face. Austerity measures have been proven time and time again to not work.

What you need is an increase in tax revenues with a small reduction in expenditures.

Chrissy · Feb 8, 2012

j. Adams said:
In private business, there is this thing that's called COMPETITION When there are lots of companies vying for your dollar, they compete against each other, and the end result is usually a lower price for you, as well as a more efficiently run industry. The companies that can't adapt and change either go bankrupt or leave. If a company is inefficient and is running at a cost higher than the others in the industry, they will eventually go bankrupt. So either they adapt or they leave.

Government run monopolies (i.e. social programs) have no competition. There are no competitors to drive these programs to become more efficient, or more importantly to help drive down costs.

That's the name of the game here. Competition.

If you think that Romney is going to magically clean up the government and make it run more efficiently, then IMHO you're off to LA La Land. It will never happen. You can't just magically make a business run more efficiently if you don't actually have competition. It just doesn't work that way.

So you're saying that if there is no competition, there cannot be more efficiency. I disagree. It's called accountability and responsiblity to the taxpayers who provide your revenue (and vote for you).

Regarding bold: Never did I say this about Romney. Just have to make that point, because I would never vote for him. Among other things, he spends too much time on hair and makeup. I distrust his motives.

But that's outside the scope of our debate, and I still hold forth that a government enterprise, without any competition, is capable of becoming streamlined and maximizing the benefit of the taxpayers' dollars. Many state and local governments are much closer to this and make these priorities.

Williebee · Feb 8, 2012

Looked at from the outside? You two are both a little bit wrong, and a lot right. And yeah, that's an opinion, just like yours. As near as I can tell, the disagreement may well arise because you aren't clear on what each other is saying. (I could be wrong... It happens.)

For example:

j. Adams said:
She has this ~~bizarre~~ idea that a private business is the same as a government run business.

Looking past the rudeness, Chrissy, is this actually what you said? If so, is it exactly what you meant to say?

Don · Feb 8, 2012

Chrissy said:
You have just made my point. (Now I'm supressing laughter ) That is one of the most ridiculous, waste-inducing justifications for spending money that I have ever heard of. We need to change this. I.E., run it like a business. So you don't lose your funding just because you didn't spend it by the end of the fiscal year.

Chrissy, I agree with you 100%. Unfortunately, it's not that simple. Really. Ludwig von Mises explained it thoroughly in 1944 with the seminal work Bureaucracy, wherein he explains that government-run entities with no profit motive and a budget based on the political process are designed from the ground up with incentives for every employee that work diametrically to those incentives required to run an organization as a profit-making (or non-profit, donation-funded) organization.

In public administration there is no market price for achievements. This makes it indispensable to operate public offices according to principles entirely different from those applied under the profit motive....

A bureau is not a profit-seeking enterprise; it cannot make use of any economic calculation; it has to solve problems which are unknown to business management. It is out of the question to improve its management by reshaping it according to the pattern of private business. It is a mistake to judge the efficiency of a government department by comparing it with the working of an enterprise subject to the interplay of market factors.

And thus, from the summary listed below:

The greatest entrepreneur, if appointed head of a government department, could not be expected to duplicate his success in his new position. He would lack the compass that was readily available in his former situation: market prices, the tool of economic calculation by which he could guide his efforts to earn profits. In his government department, he would essentially be like any other bureaucrat, and his success in the marketplace would count for little. True, his department might have to buy supplies in the market, and as a former businessman, he might strive for the best deals. But that would not constitute placing his department on a businesslike basis, for its “output” would never be offered for sale on the market and thus would command no price. So economic calculation would be impossible.

Mises also rejects the notion that the “tools of scientific management,” such as time and motion studies, are relevant to bureaucracies. He writes, “Like any kind of engineering, management engineering too is conditioned by the availability of a method of calculation,” profit and loss, which is missing in bureaucratic management.

This is a decent brief summary, although I recommend reading it in its entirety. It's only 120 pages.

The book is available as a free PDF from this link.

And it's also available for online reading or browsing at http://mises.org/etexts/mises/bureaucracy.asp

j. Adams · Feb 8, 2012

Chrissy said:
So you're saying that if there is no competition, there cannot be more efficiency. I disagree. It's called accountability and responsiblity to the taxpayers who provide your revenue (and vote for you).

Regarding bold: Never did I say this about Romney. Just have to make that point, because I would never vote for him. Among other things, he spends too much time on hair and makeup. I distrust his motives.

But that's outside the scope of our debate, and I still hold forth that a government enterprise, without any competition, is capable of becoming streamlined and maximizing the benefit of the taxpayers' dollars. Many state and local governments are much closer to this and make these priorities.

The marketplace does not operate on the principles of human benevolence. I think you're dreaming if you honestly think that people will do the right thing when it comes to money and being efficient, when there is no push to actually become more efficient.

That's the primary reason why a government run business operates on the principle of maximizing expenditures. Since there is no competition, profit
does not matter, and the only aim is to use up its budget
in a way that makes the tax payer feel like he gets a good return on his tax dollars.

Conversely, a private business has to compete with other business's. Because of this competition there will be a never ending war to become more efficient when it comes to costs in order to drive down long run average costs, ultimately, in order to maximize profits. Here profits always matter as the business has to answer to the shareholders or the owner. With no profits, the business does not stay in business for long.

j. Adams · Feb 8, 2012

Don, are you a fan of the Austrian School of Economics?

Chrissy · Feb 8, 2012

j. Adams said:
The problem here is not expenditures (as you seem to think). It's the large reduction in tax revenues that is the problem. If you really are an accountant, then I'm honestly appalled as to how you could possibly be getting this so wrong.

Slashing expenditures so that they match current revenues will only accomplish one thing: A massive reduction in aggregate demand that would trigger another Great Depression.

You see in 1929, the Geniuses of that time thought that slashing expenditures would also get them out of their current mess. In the end, it blew up in their face. Austerity measures have been proven time and time again to not work.

What you need is an increase in tax revenues with a small reduction in expenditures.

I read through all of the posts, and I am really amazed that you think that your opinion is so obvious and mine is so wrong. I'm not some lone crusader in my views regarding government spending.

Yes, I am a CPA, I have Masters in Taxation and took an awful lot of economics and finance classes. There is plenty of room for debate on the subject, and I don't believe there is some "magic cure" in increasing taxes to compensate for wasteful spending.

And since you really feel that you're just humoring me and getting angry at my inability to see the light, then there isn't much to be said, is there? That's too bad.

No hard feelings on my end.

Don · Feb 8, 2012

j. Adams said:
Don, are you a fan of the Austrian School of Economics?

No, I just quote Mises to piss off the Keynesians.

...and since you're relatively new here, I'll throw in this sign. :sarcasm

ETA: Read my signature. There are a few things there that might give you some indication of my position as well.

j. Adams · Feb 8, 2012

Chrissy said:
I read through all of the posts, and I am really amazed that you think that your opinion is so obvious and mine is so wrong. I'm not some lone crusader in my views regarding government spending.

Yes, I am a CPA, I have Masters in Taxation and took an awful lot of economics and finance classes. There is plenty of room for debate on the subject, and I don't believe there is some "magic cure" in increasing taxes to compensate for wasteful spending.

And since you really feel that you're just humoring me and getting angry at my inability to see the light, then there isn't much to be said, is there? That's too bad.

No hard feelings on my end.

An "educated" opinion is worthless unless you can actually back it up.

Feel free to look at the question from a historical perspective (I have). That's if you're honest about
your ability to actually want to learn something.

What I'm seeing here is a lot of meandering and deflecting. You have yet to answer a question thoroughly.

Chrissy · Feb 8, 2012

Williebee said:
She has this bizarre idea that a private business is the same as a government run business.
Looking past the rudeness, Chrissy, is this actually what you said? If so, is it exactly what you meant to say?

If I take the sentence literally, then no, I didn't say they ARE THE SAME. But from a financial point of view, I think they should be more the same. As I understand it, right now, any given government program will spend money because they HAVE the money and if they don't spend it, it could be taken away. To me, this is motivation to throw money at anything, rather than get a budget reduction next year. Money equals hurry-up-and-spend-it? Completely different from a non-government entity's point of view. What I'm saying is that the government should have the same motivation to not waste money or overspend that a profit organization does (or even an nonprofit, as are some of my clients).

Chrissy · Feb 8, 2012

j. Adams said:
An "educated" opinion is worthless unless you can actually back it up.

Feel free to look at the question from a historical perspective (I have). That's if you're honest about
your ability to actually want to learn something.

What I'm seeing here is a lot of meandering and deflecting. You have yet to answer a question thoroughly.

I feel exactly the same way about all of your posts.

Don · Feb 8, 2012

Chrissy said:
If I take the sentence literally, then no, I didn't say they ARE THE SAME. But from a financial point of view, I think they should be more the same. As I understand it, right now, any given government program will spend money because they HAVE the money and if they don't spend it, it could be taken away. To me, this is motivation to throw money at anything, rather than get a budget reduction next year. Money equals hurry-up-and-spend-it? Completely different from a non-government entity's point of view. What I'm saying is that the government should have the same motivation to not waste money or overspend that a profit organization does (or even an nonprofit, as are some of my clients).

But it doesn't. There is no data available for economic calculation in a taxpayer-funded bureaucracy. It's not there to be used.

j. Adams · Feb 8, 2012

Chrissy said:
I feel exactly the same way about all of your posts.

Sorry, but no. If anything, I have explained why in great detail.

You're just "hoping" that a government run business should be operated the same way as a privately run business.

Your POV has been debunked thoroughly. Several times in fact.

Chrissy · Feb 8, 2012

Don said:
But it doesn't. There is no data available for economic calculation in a taxpayer-funded bureaucracy. It's not there to be used.

Well I understand it's not inherently there. That's what I think the problem is, or one of them. I will read your link Don, and maybe it will help me learn some lingo, including how to express my points from a more non-capitalism-oriented construct.

ColoradoGuy · Feb 8, 2012

Chrissy said:
. . . I have Masters in Taxation . . .

That's a pretty ominous-sounding degree.

j. Adams · Feb 8, 2012

Regarding how much money government run programs get:

What the Government does is take the expenditures from the last year, then they factor in economic realities, ultimately, in order to come upon a fiscal projection regarding how much money that program will need for the upcoming year. And they then put that into the national budget and then run it through both houses.

If that program uses up less money, they will in all probability get less money the coming fiscal year. That's why they operate on the principle of maximizing expenditures.

That's Economic reality.

Maxinquaye · Feb 8, 2012

I don't really understand why there should be no competition in government services. For instance, here in Sweden we have a voucher-based public education system. That has lead to the creation of many, many schools over the last few decades: private, co-ops, and public.

The state funds the education, and there is no discrimination against any type of school. All have to follow the national curriculum, and all have to be operated by educators. But to the state it is irrelevant whether the school is private, cooperative or public. They all get the same moneys per student.

That has meant there is competition for students, among the schools, and what they compete in is education quality. If parents feel that in a particular school, their kid gets a good education, they send the child to that school. If a school has problems, violence, disturbance - then the parent pulls the child from that school and sends him or her elsewhere.

This has had a dramatic effect on schools in for instance minority areas that used to be hell-holes. Some of the best schools in the country is now in deprived areas, and well-to-do parents put their children in queue to go there.

Chrissy · Feb 8, 2012

ColoradoGuy said:
That's a pretty ominous-sounding degree.

It's hideous. I'd rather be writing.

j. Adams · Feb 8, 2012

Well, now you're entering the realm of privatization, which can be a minefield.

I don't disagree with you on primary/secondary education. Education in the US is a MESS. Privatizing it could in fact make it more competitive. which could help it in the LR. The problem here is that of relative size. What can work for Sweden might not necessarily work for the US due to the population differential.

MattW · Feb 8, 2012

Maxinquaye said:
I don't really understand why there should be no competition in government services. For instance, here in Sweden we have a voucher-based public education system. That has lead to the creation of many, many schools over the last few decades: private, co-ops, and public.

Vouchers are a great example of competitive forces in public service. Unfortunately, they are so rare in the US, and fought so vehemently by teachers unions that the value has been little realized.

Govt. run as a business (Derail from Santorum thread)

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