Why do people still believe that profit motive = efficient? My employer is plenty profit-driven, but a coworker just spent five days dicking around doing nothing because his computer broke and we’re too incompetent to provide adequate spare resources. Don’t tell me the profit motive makes organizations efficient.
It's a misleading simplification. Profit motive (or "private sector") is not equal to efficiency. But it's a strong motivator for it. Not perfect though, and the further you are from getting outcompeted and dying, the more space you have for inefficiencies to creep in.
One of the big sources of inefficiency affects governments and companies the same - the difficulty of keeping an organization functioning grows superlinearly with the number of people in it. That's why in a small company, if your computer breaks, you can just borrow the company card and go to the nearest store to buy a new one, while in a large company, you'd be dealing with procurement and five layers of management approvals. A large company looks not quite unlike a government organization.
(Also worth mentioning that absolute efficiency is not a good thing either, when it comes to dealing with people.)
But a government has (self-imposed) financial constraints as well.
Besides, if you decide mostly or only based on financial constraints and not based on reason and good ideas then you should not be in the position to decide what to do.
Resources might be wasted on purpose to avoid tighter financial constraints in the next year that takes into account the spending of the current year.
If Microsoft loses $33 billion per year for ten years (equivalent to ~1/3 of sales), it will go bankrupt. In fact, if it loses money like that for just four years, it will likely go bankrupt.
If the US Government bleeds $1 trillion per year for ten years (equivalent to ~1/3 of its tax revenue), it will tax you more and or print away some of your standard of living. See: Japan's budget deficit versus tax revenue the last decade. Nothing stopped the Japanese Government from being fiscally wildly irresponsible, then debasing the Yen and stealing the standard of living of the Japanese people to pay for it all (still continuing now).
The need to not lose money perpetually, enforces at worst a minimum required level of efficiency by the vast majority of private businesses. There are very few exceptions to that, even in quasi protected monopoly situations such as railroads, telecom or airlines.
The US Government has no inherent efficiency enforcement mechanism. As witnessed by the public debt going from $5.6 trillion to $21 trillion in just 17 years or so.
If you want to talk about required efficiency, trying running a manufacturing business with a 6% profit margin, or Walmart with a 2.x% net income margin, or a liquor store or convenience store with a 5% profit margin. You'll instantly learn how brutal and unforgiving the private sphere tends to be versus the more typically spendthrift ways of government.
Most of the time if you think something is that simple, you're leaving something out.
It's a myth that the private sector is inherently more efficient than public sector. You only need to compare healthcare systems across developed countries to find an enormous counterexample.
Government has a different system of accountability than private industry, sometimes it's less efficient, but sometimes it's more efficient. It depends--there's nothing simple about it.
Healthcare is an obvious exception, and religiously fundamentalist capitalists won't admit to that, but the reason is simple. Healthcare has virtually infinite demand, and the demand for more expensive solutions is intense. It is one of the few sectors of the economy where traditional capitalist price optimization algorithms don't function properly. I wish people would admit this and move towards more rational healthcare considerations, but I also wish people would stop using obvious exceptions to argue against rules.
(Healthcare is also an ethical battleground in a sense that many industries never can be. Should a hospital administrator be willing to spend a million dollars to save one life, or should that money go to equipment that could save more lives? The answer seems obvious, but most people react with a sort of justifiable horror at the thought of letting some poor child die so the hospital can buy some new machines.)
Defense and infrastructure are inherently the responsibility of the state. I'm not a small-government libertarian. Market forces should be used here whenever possible (military-industrial complex, etc) but there obviously can't be competing national militaries or competing national highway systems.
Scientific research: maybe, it depends. Innovation is complicated and there's no linear investment-to-payoff in research. People concerned with profit at least are discouraged by the profit motive from dumping huge amounts of money into failed research. At the same time, some critical research isn't market-profitable.
Universal rules definitely exist in the form of things like supply/demand curves. I would rather live in a hardcore capitalist hellhole than in the shambles of a failed society that would result from the alternative. We should be wary of assuming that non-market intervention is necessary, but we shouldn't shy away from acting when that intervention is necessary.
>Universal rules definitely exist in the form of things like supply/demand curves.
There are no universal rules for economics in reality. There are generally useful models, that often fail spectacularly. All the universal rules you can think of depend on simplifications that never actually hold--rational actors, perfect information, perfect competition etc...
>I would rather live in a hardcore capitalist hellhole than in the shambles of a failed society that would result from the alternative.
That really depends on the alternative. USSR?, North Korea?, Cuba?, Feudalism? I can think of some pretty bad failure states for capitalist hellholes.
> We should be wary of assuming that non-market intervention is necessary, but we shouldn't shy away from acting when that intervention is necessary.
> It's a myth that the private sector is inherently more efficient than public sector.
Stating it, doesn't make it so. You've provided zero argument for your position. You haven't even provided a logic basis for your claim.
Healthcare systems across developed nations? Ok. Germany, Japan and Switzerland all have highly successful private segments to their healthcare systems. They're all as efficient, or more efficient, than comparable overwhelmingly public systems such as in France, Britain or Canada.
Your assertion is that profit motive leads to greater efficiency than any of the motives that drive government agencies.
Just because you state it doesn't make it so.
If you're honest with yourself, I think you can come up with some problems where a public agency would be more efficient/effective than a private company.
