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February 22, 2009

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I love these morons- "I pay my bills, I don't want to give money to people who don't!"

Yeah? Well guess how much your house is worth after every other house on the block is foreclosed.

These blind right wing fools don't understand that a market full of foreclosed homes means less new housing built devastating the construction industry. They blindly assume that a family facing foreclosure will not sell the SUV and vacation home first. Or send their kids to public school. The right loves to make up demons to make their deluded points seem credible.

Tom Foreman is ALWAYS dumb.

(I was all for managing bureaucracies more effectively; it was the people who seemed to resent their very existence who puzzled me.)

Simple. Government bureaucracies are generally monopolies, and thus naturally become sclerotic and unresponsive over time -- just like private monopolies. Remember Lily Tomlin's classic routine?

"We don't care. We don't have to. We're the Phone Company."

Same thing.

Government entities are theoretically accountable to the citizenry, but the accountability passes through our elections apparatus and it's too indirect to do any good. When some incompetent or malignant bureaucrat from the DMV, IRS, park service, DHS, whatever, screws you over, you often can't do anything about it. This is especially infuriating if you have ever worked on the front lines for a business that HAD to be accountable to its customers, hence the traditional affinity of small business owners for small government politicians.

Any time that you can figure out how to solve a public problem without resorting to monopolies, you keep people like me from having to hold our noses and vote for the opposition.

When some incompetent or malignant bureaucrat from the DMV, IRS, park service, DHS, whatever, screws you over, you often can't do anything about it.

Time for russell's standard post on unresponsive government agencies.

I haven't dealt with the DHS or the park service but I have dealt with the DMV, the IRS, the MA state income tax guys, the registry of deeds, and a number of town agencies. With rare exceptions, they've all been as responsive as I needed them to be. They didn't kiss my butt, and there was no free schwag, but what I needed done got done.

My experience dealing with private companies is far more spotty.

Then, there are all of the private companies whose actions effect me every day, but with whom I have exactly zero leverage, either because I'm not a customer of theirs, or not a particularly significant customer of theirs.

Maybe I just live a charmed life, but I've just never found dealing with public agencies to be all that traumatic.

Regarding the housing thing, if we want to make sure that only the morally pure get help we'll never get anything done.

It was a bubble. People did dumb stuff. Some folks didn't do anything dumb at all but just got caught in the undertow, as it were.

Staunch the bleeding. Then let's go back and put reasonable lending standards back in place. Whatever we decide those need to be.

Then let's move on. We have lots of other problems to solve.

Yeah, a week's worth of posts at Consumerist.com should reinforce russell's point quite nicely. Go read if you want to be educated on the topic.

One word: Louisiana. Fixation on the "undeserving" was/is something that crippled the post-Katrina recovery. Then-Gov. Blanco had a $7+ billion pot of money for the Road Home program but concern trolls (opportunistic or otherwise) were so "alarmed" by the idea that a small percentage might game the system that the 95% who unquestionably qualified. When a group of us went in 2007 to NOL to try to help jump start the public hospitals, less than 500 residents had received aid although 100,000+ had qualified. Brilliant. New Orleans people paid the real price, but it also busted the career of Blanco who caved into (or misguidely agreed with) all the concern about the "undeserved." Stupid, stupid, stupid.

One view:

Higgins:You mean to say you'd sell your daughter for fifty pounds?
Pickering:Have you no morals man?
Alfred P. Doolittle:No, no, I can't afford 'em, gov'ner. Neither could you if you was as poor as me. Not that I mean any 'arm, mind you, but if Eliza's getting a bit out of this, why not me too? Eh? Why not? Well, look at it my way - what am I? I ask you, what am I? I'm one of the undeserving poor, that's what I am. Now think what that means to a man. It means that he's up against middle-class morality for all of time. If there's anything going, and I puts in for a bit of it, it's always the same story: "you're undeserving, so you can't have it." But my needs is as great as the most deserving widows that ever got money out of six different charities in one week for the death of the same 'usband. I don't need less than a deserving man, I need more! I don't eat less 'earty than 'e does, and I drink, oh, a lot more. I'm playin' straight with you. I ain't pretendin' to be deserving. No, I'm undeserving. And I mean to go on being undeserving. I like it and that's the truth. But, will you take advantage of a man's nature to do 'im out of the price of 'is own daughter what he's brought up, fed and clothed by the sweat of 'is brow till she's growed big enough to be interesting to you two gentlemen? Well, is five pounds unreasonable? I'll put it to you, and I'll leave it to you.
Actual solution: crazy socialist Milton Friedman. More.

Hilzoy... the thing is, I dont see why we can't computerise all the personal information we have, centralise all of it, and the next time someone wants to do some means testing, just key it in and it will churn out a list. Its not that difficult you know. The biggest problem would be doing the actual keying in to make sure that all records are electronically stored. Moreover, its not like you dont have this information already. You have birth certs, social security, home addresses, phone numbers, tax claims (hence stated income) Make everything electronic and just set up a good security system. Its the 21st century for God's sake we dont need beurocrats proing through casefiles. Data mining and text mining algorithms are pretty darn advanced nowadays.

truth101 wrote, These blind right wing fools don't understand that a market full of foreclosed homes means less new housing built devastating the construction industry

Hmm...I consider myself quite liberal (actually "left" in many ways), and I don't like the Obama plan much.

It's reasonable to argue that there are some people who, on the margin, could be given a little help which would prevent foreclosure.

But in general? Not possible. Multiple trillions in home values have evaporated, and there's going to be lots of foreclosures, period, end of story. It's too big for Uncle Sam to buy our way out of. That damage has already been done. (Hyperinflation would undo it, I guess, at least for people with fixed rate mortgages, but I don't think that's such a good idea.) So the argument about the negative externality of foreclosure is misplaced.

Furthermore, the idea that we should help people being foreclosed upon is wrong. I'm sorry, but you can't have it both ways. To the extent that someone has no equity in their house, it doesn't do them any good whatsoever to stay in the house if they can't make payments. (And if they bought in the last few years, chances are that they never put anything down anyway.) All you're doing is handing money to the idiot bankers holding the loan. To the extent that they do have equity, but can't make the payments, they're not poor.

In terms of setting up simple procedures to determine who to bail out, it's going to be extremely hard to do. During the boom, asssessments were a joke. That system is still broken, and banks will use it to their advantage to bilk taxpayers of more money. (I bought a house in June, and---lo and behold!---it assessed exactly at the contract price!)

As one commenter---himself pretty liberal in general, AFAICT---put it on another blog:

Well, bailing out the wannabe small speculators is better than bailing out the professional big time crooks, but it is still bad. Because it is even more diffuse reward for moral hazard. Why should the government be handing out free mansions to those who squat in them with mostly fraudulent mortgage applications?

The only possible reason is buying the right-wing leaning votes of mortgage owners (it is well established that those who become or think have become landlords are much more likely to vote for right wing policies than renters).

Perhaps the best policy would be a combination of Austrian and Keynesian: let the asset madness collapse and the “malinvestment” burn itself out, but protect people’s income with job creation schemes.

After all, everybody needs a job and an income, and that is what moves the economy, not everybody needs to be given an opportunity to become a landlord and get a nice shot at a capital gain.

Would you like to see losers unemployed without health insurance and in line for soup kitchens and wannabe speculators and fraudsters who chose to buy an ever appreciating asset being winners rewarded with huge chunks of free money?

liberal --

Actually, the number I've heard for the total value of foreclosed mortgages is on the order of $125 billion*. The trillions of dollars that you hear about are for mortgage- backed securities, which are now worthless. When $70,000,000,000,000 goes "poof", you have a financial crisis.

* McCain's "plan" for solving the financial crisis was for the gov't to buy up all the "bad" mortgages. $125B was the cost given for this program.

"A billion here, a billion there -- pretty soon you're talking real money." -- Everett Dirksen

lightning wrote, Actually, the number I've heard for the total value of foreclosed mortgages is on the order of $125 billion*.

I don't think that's right.

(First, to repeat, the trillions I was referring to was lost home values---(leftwing economist Dean Baker routinely cites numbers in the trillions). Yes, many homeowners have paid off their mortgages long ago, etc, etc, but your number can't be valid.)

Let's figure $500K per mortgage. (Yes, might be high, but this is an order of magnitude calculation.) $125 B is then 250,000 mortgages.

Is that realistic? The national foreclosure rate is perhaps 2% (or maybe higher now). For that to get 250,000, you'd need a base of 12.5 million, which is off by almost an order of magnitude I think.

I don't have time to do a detailed search (gotta work to pay off that mortgage I acquired in June! (not entirely joking...)), but one hit was "RealtyTrac: Colorado No. 5 in 2008 foreclosure rate, Denver No. 19.". Note this:


Among U.S. metropolitan areas, the Denver-Aurora area’s 2008 foreclosure rate ranked No. 19 in the RealtyTrac report, at 3.20 percent of all housing units. The company tallied 32,920 foreclosure filings in the area in 2008, up 23.61 percent from the previous year.

I think it's not believeable that more than 10% of all forclosures are in the Denver metro area.

In fairness, you're numbers probably are off by less than an order of magnitude, and while I think you're off quite a bit, it's not two orders of magnitude off. I'm talking base 10 here. OTOH, these are presumably annual rates. And as the years go by, the numbers are really going to add up.

(More fairness: I don't know what fraction of those Denver area "homes" are condos, which presumably are cheaper than my $500K number.)

Again, to repeat myself---people who can't pay who are underwater should just walk away. Their only financial loss is the hit to their credit rating. Yes, yes, I understand, even when renting the credit rating gets checked, but there are presumably less expensive ways to deal with that.

"'A billion here, a billion there -- pretty soon you're talking real money.' -- Everett Dirksen"

Just for the record, this is apocryphal.

Atrios says: But one day I hope this country grows up and recognizes that the fear that maybe someone is getting something I'm not and they don't deserve shouldn't be the primary philosophy of governance.

I've read two autobiographical books by Nobelist James Buchanan, a major figure in public choice economics and the brains behind Welfare Cadillac Republicanism, and there's ample evidence that his primary philosophy of governance is exactly what Atrios was talking about. He came from a gentry family in a bigoted area of the ex-Confederacy, and he left the Democratic party in 1948 during the Dixiecrat rebellion. There's plenty of evidence besides that, too.

The Welfare Cadillac meme is very powerful propaganda because everyone can think of someone they know personally who a.) they hate, b.) is a moocher and a scrounge, and c.) benefits from a government program that many other, better people do not benefit from. (This is the Republican politics of envy).

Because they're very concrete and vivid, people like that are the anti-welfare state poster children. They are especially useful for anonymous, faceless scam artists systematically looting the government for much larger amounts of cash. (Public choice economists seem to have been infinitely less vigilant about looting by deregulation and privatization.)

Just for political reasons, I think that Democrats and liberals should be more attentive to this problem. I'm hardly a New Democrat, but the political realities are pretty obvious.

All you're doing is handing money to the idiot bankers holding the loan.

Bankers are the undeserving rich. They have even less claim on our sympathy than Alfred P. Doolittle.

HOWEVER: the thing about bankers is that by and large they lend out other people's money. Underwater homeowners can walk away from their "toxic asset" by mailing the keys to the bank. But on the flip side, "bankers" can write off their toxic assets by just mailing the deeds to the homeowners. Why is that unthinkable? Because the houses were paid for with other people's money.

The "bankers" screwed things up, but good. The simple way to avoid rewarding the bankers is to claw back their personal gains from screwing things up, and limit their pay until we clean up their mess.

To clean up the mess "bankers" have made, we have to reconcile competing claims among non-bankers: the "other people" who expect some sort of return on their money and the "homeowners" who need a place to live. We don't have a housing shortage, we have a housing glut. The investors whose money the bankers used to finance the housing glut will take a financial hit, foreclosures or no foreclosures. If government action can minimize their financial discomfort, and simultaneously minimize the real discomfort of people losing the roof over their heads, it's a good thing to do. If "bankers" end up enjoying a "collateral benefit" in Barney Frank's phrase, that's a shame -- but a shame which can be expiated by other means.

--TP

John Emerson wrote,


Because they're very concrete and vivid, people like that are the anti-welfare state poster children. They are especially useful for anonymous, faceless scam artists systematically looting the government for much larger amounts of cash. (Public choice economists seem to have been infinitely less vigilant about looting by deregulation and privatization.)

Yes, that's definitely true.

But that doesn't contradict the claim that most people in the current foreclosure crisis are not morally deserving of financial "support" (scare quotes because, again, the "support" is really supporting the fraudulent banksters).

You might as well argue that we shouldn't wince at our tax dollars being dumped on shareholders and debt holders of Citi, BofA, etc, because "anti-welfare means right-wing."

What the hell happens to the "no corporate welfare meme?" with this line of thinking?

It's like claiming free market zealots are too anti-regulation (I agree with that claim) and then claiming that a "free market" policy shift is never "pro-environment" (flat false, because getting rid of government hurricane insurance subsidies in FL would really help preserve habitat there).

I think that, for political reasons, liberals and Democrats should make ritual moves in the direction you suggest. I expect them to be moderately costly and not terribly effective, and to harm a few people unnecessarily, but that's politics. And I said as much at the end of my comment.

This argument goes back into the nineteenth century, with the undeserving poor, etc. It's always been a stumbling block for any sort of charity or government welfare program. I suspect that the problem is always exaggerated and that there are always hidden agendas, and that the solutions throw out too much baby with the bathwater, but that's the political realities.

Someone who feels like doing a little research should look up the history of social security and unemployment insurance legislation during the New Deal. The bill we got was specifically designed to exclude the undeserving poor by limiting benefits to former wage earners. The competing Lundeen bill did not, and in addition was explicitly colorblind. As a relief measure the Lundeen bill would have been superior, but Roosevelt needed Southern support.

To go on: The "no corporate welfare" meme is a not-very-effective attempt to turn the Republicans' own weapons against them. It might have had some effect if the voters had been paying attention or if the Republicans had been acting in good faith. But I'm willing to let it die.

There are plenty of reasons to oppose so-called "corporate welfare" besides the comparison to black welfare mothers.

Remember Lily Tomlin's classic routine? "We don't care. We don't have to. We're the Phone Company."

And if you think that the average customer's experiences with, say, Verizon, are any less infuriating and kafkaesque than they were back in the bad old days of Ma Bell, I've got the deed on a lovely and historically significant piece of New York City infrastructure that's going for a song to the right buyer. Drop me a line.

liberal --

I was off by an order of magnitude (astronomical version -- a factor of 2, not 10) A bit of Googling shows that the McCain campaign claimed it would cost $300B. Of course, a Presidential candidate would *never* underestimate the cost of a proposed program (:-)

The crisis is not now, and never has been, the defaulted mortgages themselves. It's the other things like credit default swaps that were backed by them. Each dollar of mortgage debt backed up to $50* of other securities. The fact that nobody really knows how much any particular security (not mortgage) is "really" worth is the major part of the problem.

So much for a completely unregulated securities market.

* The normal leverage for this kind of thing is about 10x ($1 of investment backs $10 of loans). 50x is ridiculous.

liberal: "It's reasonable to argue that there are some people who, on the margin, could be given a little help which would prevent foreclosure.

But in general? Not possible. Multiple trillions in home values have evaporated, and there's going to be lots of foreclosures, period, end of story. It's too big for Uncle Sam to buy our way out of."

I'm curious: have you read Obama's plan? I summarized it, and linked to the relevant documents, here.

If so: what about it makes you think that it is an attempt to stop all foreclosures, or replace all that lost wealth, or in any way to do more than the bit that you say you agree with?

Uncle Kvetch:

And if you think that the average customer's experiences with, say, Verizon, are any less infuriating and kafkaesque than they were back in the bad old days of Ma Bell,

Anecdotally, my experience with Verizon customer service has been markedly superior to past experiences with Pac Bell, and Verizon's cellular connectivity is excellent. But I'm ditching Verizon anyway soon (and a Vonage account as well) to deal with AT&T because of my new iPhone. It's nice to have choices, no?

Anyhow, it's not surprising that phone company customer service would continue to suck to this day, because as with airlines, the bulk of consumer demand is price-driven above all else. After the breakup of Ma Bell, long distance rates plummeted. Same with Canada and Europe when they liberalized phone service. Consumers could have spent the money they were suddenly saving on better service, but they've chosen to spend less money instead.

You might be content to deal with commercial monopolies, and russell's anecdotal experience might suggest that we should adopt a command economy, but history has moved on.

It's nice to have choices, no?

Depends on the choices, no?

Why is this so difficult to know who to help and who not to help?
Those people who have owned their homes before George Bush became president (my preferred choice) and who have lost their homes because they lost their jobs are eligible.
Clearly these people have established their bona fides as honest hardworking Americans, paid their mortgages for 8 years, and only stopped paying because they lost their jobs.
Yes, some good people will lose their homes who bought one less than 8 years ago. So what? Bad things happen to good people. The issue is to prevent a continuing downward spiraling housing value due to broad economic failure.
Sure the system could be rigged by somebody who owns their own home for 8 years and quits their job but are we really going to focus on fraud prevention when we can take them down later with fraud correction when we find them?
Eight years of ongoing successful mortgage payments is a lot of integrity in my opinion.

The angry commenters who are sitting in judgment of distressed homeowners over at my place need to read this.

It's unbelievable!

"The angry commenters who are sitting in judgment of distressed homeowners over at my place"

Oy vey.

(Although the self-declared engineer who talks about facts and reason, but of course can't resist spouting off on how anthropogenic climate change is a myth just sorta sums it all up for me.)

Leigh,

Looks like you have a lot of trolls over at your place!

russell's anecdotal experience might suggest that we should adopt a command economy

No, my anecdotal experience might suggest that folks should quit bitching about government agencies and the people who work for them.

Some people will actually do a good job even without the whip of market forces at their back. They'll do so because they're decent people and they take their responsibilities seriously.

And if you run across someone who does not do a good job, there's plenty you can do about it.

Finally, I'll thank you to not put words in my mouth to make some point you want to make. Make your point on its own merits, if you can. I'll speak for myself.

russell:

they're decent people and they take their responsibilities seriously

So were the vast majority of Ma Bell's employees. And yet, as the long distance marketplace became competitive, prices dropped precipitously.

The fact that markets are more efficient than monopolies has nothing to do with the absolute moral fiber of individual participants. It has to do with how humans behave on average when placed in a system with effective incentives and disincentives. Most people -- from line workers to entrepreneurs -- do a better job when they are held accountable. There is nothing shameful about that; it's just human nature.

And if you run across someone who does not do a good job, there's plenty you can do about it.

The DMV in California during the late 90s was a basket case. When possible I paid AAA to handle the simple stuff, but there were certain situations where I had no choice but to wait in line for hours on end.

As a remedy, I could vote for politicians who promised to fund the DMV adequately, but that's an incredibly blunt instrument compared to switching to a competitor in an open marketplace.

So were the vast majority of Ma Bell's employees. And yet, as the long distance marketplace became competitive, prices dropped precipitously.

You're talking about two different things: the performance of institutions and individuals in those institutions, and whether a service is available to you at lowest possible cost.

These aren't the same thing. They're not even related.

You claim that the performance of any monopoly provider of a good or service -- government or otherwise -- will inevitably become sclerotic and unresponsive.

I claim that's a lot of crap. I further claim the burden of proof is on you to demonstrate otherwise.

I deal with "monopolistic" government bureaucracies all the time, and they are quite often responsive and effective. They get what needs getting done, done. They do so because the people who work for them are decent, serious, responsible people, and they like doing a good job. They don't need 'market pressure' to make them that way, they just are that way. I appreciate that, and tell them so.

You are correct to say that performance often comes down to incentives. But the pressure of market competition is not the only form that incentives can take.

The CA RMV sucked in the 90's. How is it now? MA's also sucked a while ago. It got better. Now it's quite good. They brought in someone who was a good manager. Problem solved.

I'm glad your experience with Verizon was a good one. Mine wasn't, nor was my experience with Comcast, both of whom are available in my area. I'm not picking on them, I'm just making the simple observation that some goods and services provided in a market environment suck. And that doesn't automatically result in the demise of that good or service, to be immediately replaced by a much better one. More's the pity.

Some private companies suck. Period. And some sucky private companies hang in there for quite a while. Don't know why or how, but they do.

My conclusion: markets aren't perfectly efficient. Quel suprise!

At some point, we in the US decided to move the provision of phone services from a government sanctioned monopoly to a more market-based model. In general, that has been, net/net, a good move. Among other things, it's made the cost of long distance service go down. It's not all unalloyed goodness, but it's good enough.

We could, and might, make similar choices about other things. But there are lots of goods and services currently provided either directly by government or through a government-regulated single private provider that I definitely DO NOT want to move to a market model. Generally those are things that are either naturally monopolistic, or which are necessary but not particularly economic to provide, or are things where it's more important to me that the service be available at a certain level of quality than that it be available at the best price.

Horses for courses.

But the mantra that the market will always provide things in the most efficient way, let alone the best way, doesn't pass the smell test with me. The reason it doesn't is because I can look with my own eyes and see that it doesn't.

It's an ideological stance, not a description of reality.

I prefer reality.

Thanks -


"But the mantra that the market will always provide things in the most efficient way, let alone the best way, doesn't pass the smell test with me."

To the extent that it is like a natural system, the market is profligate in its search for optima. To the extent that it's *not* a natural system, it's hobbled by human cognitive weaknesses like our weak grasp of probability and our poor prediction abilities.

I've heard people refer to the market as Darwinian and efficient in the same sentence. They're contradictory qualities.

russell:

You're talking about two different things: the performance of institutions and individuals in those institutions, and whether a service is available to you at lowest possible cost.

These aren't the same thing. They're not even related.

They are very closely related, by the concept of "value". As taxpayers, we should always want maximum value for our tax dollars. We should always question whether government institutions are functioning at maximum productivity and seek to improve their efficiency, so that we can do more with less and enjoy a higher standard of living.

But the mantra that the market will always provide things in the most efficient way, let alone the best way, doesn't pass the smell test with me.

Indeed, that's not what I believe. As I stated in a recent thread, perpetual competition is an unnatural state requiring some level of government intervention to maintain. Many marketplaces -- health care, finance, telecommunications -- develop pathologies.

The feds had to break up the Bell monopoly two decades ago. The feds are going to have to clamp down on the financial industry today, hopefully resulting in a marketplace with lots of individual private banks competing to outperform each other, yet none of which are "too big to fail". If we handle the regulation correctly, we get the benefits of marketplace competition yet buffer some of the instabilities that arise from it.

The same concept can be applied to government. State governments compete with each other. Branches of the military compete with each other -- for instance, the Air Force has to justify the outlandish cost of the F22 air superiority fighter in the face of an Army and a Marine Corps clamoring to spend those dollars on counter-insurgency training.

Whenever possible, we should design our institutions to include a competitive dynamic, because it is a potent engine that drives them to maximize value.

As taxpayers, we should always want maximum value for our tax dollars.

I agree.

"Maximum value" is not identical to "lowest cost", or even "highest efficiency".

If the postal service can deliver a letter for 10 cents, but it is only 90% likely to arrive, I'll pass.

If the water authority can bring water to my tap for half the cost, but the likelihood of chemical contamination is 50% higher, I'll pay more, thanks just the same.

What we don't want is waste, or use of resources in ways that don't create value.

None of this necessarily means lowest cost, nor does it necessarily require competitive pressure to make it happen.

Astounding as it may seem, some folks will do very good work even absent a market dynamic.

They are very closely related, by the concept of "value". As taxpayers, we should always want maximum value for our tax dollars. We should always question whether government institutions are functioning at maximum productivity and seek to improve their efficiency, so that we can do more with less and enjoy a higher standard of living....

Whenever possible, we should design our institutions to include a competitive dynamic, because it is a potent engine that drives them to maximize value.

This is written to sound as though the concept of "value" clarifies something. It doesn't. The question of what we "value" is at the heart of this whole discussion, so to write as though it's has a settled and agreed-upon answer doesn't get us anywhere.

There are many things that people might value besides "productivity," "effciency," and a "higher standard of living," even assuming that we all agree on the answers to the questions like "Productive at what?" Efficient at what? How do you measure a 'standard of living'?"

They are very closely related, by the concept of "value".

To reiterate what JanieM said: "value" is a meaningless term, and a near-meaningless concept without context.

Also, this is clearly untrue without modification:

Whenever possible, we should design our institutions to include a competitive dynamic, because it is a potent engine that drives them to maximize value.

Such competition is good provided the only optimal strategies for the competitors are ones which maximize the value for the right people. But note what's being assumed here:

1) There's a well-defined metric for "value", which in turn assumes a near-universal notion of what "value" means in this context.
2) There's a well-defined group of people for whom we're trying to maximize the "value" -- along, presumably, with some way of compositing their individual valuations into a single metric.
3) That all optimal strategies -- and really, all locally optimal strategies -- for the competitors actually produce good, ideally optimal, valuations for the target group of people.
4) That competition is antithetical to cooperation, and that there are no externalities to the former that outweigh the potential gain over the latter.

[Typical illustration of #4: in company A, everyone's a team player; in company B, everyone's at each other's throats. B might well produce more "value", at the cost of the happiness of its employees and the corners they'll cut to win the competition.]

That all four are met when you say "[a competitive dynamic] is a potent engine that drives [our institutions] to maximize value" is one hell of an assumption, and one I'm not prepared to accept without considerably more justification.

And in this vein, I'll second russell's anecdata that the only bureaucracies I've dealt with that have truly sucked have been the corporate ones. I've always regarded this as rational, too: I'm one individual with tiny capital and market power compared to a company, so any decisions they make to optimize their earnings will almost automatically disregard anything I have to say. Conversely, government agencies are at least ostensibly out to help everyone, regardless of fiscal magnitude; and that's certainly tracked with my experiences.

[That being said, the worst of the worst are the de facto corporate monopolies, like my local cable company. God, how I loathe them... but they're the only game in town for what I need, so I'll have to deal with them for the time being.]

I meant "value" as it is commonly understood in the business world: maximum return on the dollar for a given purchase.

Some vendors supply high quality but low value because their products are over-engineered and exceed unnecessarily high standards. Other vendors fail to meet a minimum standard, as in russell's unreliable mail delivery example:

If the postal service can deliver a letter for 10 cents, but it is only 90% likely to arrive, I'll pass.

For e.g. financial mail, that's obviously unacceptable -- just as an even lower purchase price of 1 cent and a 25% delivery rate would be. But for marketing mail, that might actually be a good value. If you don't need your mail delivery vendor to meet a 100% delivery rate, lower cost is better.

The point is that every purchase has quality constraints. Sometimes you realize after the fact that your specification was inadequate and should have included additional constraints, but that doesn't change the definition. The product with the best value is the one that meets your standards at the lowest total lifetime cost.

I meant "value" as it is commonly understood in the business world: maximum return on the dollar for a given purchase.

If by "return" you mean financial return, I'd say that was a deficient measure for questions of public policy.

Perhaps "deficient" isn't quite the right word. Financial return alone misses the point of public services and goods.

If by "return" you mean something other than financial return, I think all you've done here is trade one insufficiently well defined word for another. I.e., "value" is now well defined, but "return" is not.

Yes, financial return.

Financial return alone misses the point of public services and goods.

That's what the product specs are for. You want to add arbitrary constraints, sure, no problem.

Then we can measure how much it cost to meet your specs.

You want to add arbitrary constraints, sure, no problem.

I guess what I'm trying to say here is that what you're calling "arbitrary constraints" are most likely the point of the effort.

I understand completely the need to function in a world of finite financial resources, and I also completely agree that public money shouldn't be wasted.

What I disagree on is that financial return on investment is a useful model for thinking about public efforts.

Some of them are flat out uneconomic, and we should assume that any return on investment will be negative. We do them for other reasons.

Those other reasons, which can only be accounted for in your calculus as "arbitrary constraints", aren't arbitrary at all. They are the point.

As a personal aside, I really wish people would stop trying to fit public life into a commercial model. It's corrosive.

If you don't want to waste money, great. Nobody does. But trying to measure "what you get for your dollar" by a purely, or even primarily, financial metric is, IMO, wrong. As in ab initio, from the jump, straight up wrong. Wrong headed.

In, of course, MVHO. But that's where I'm coming from.

Give me a purchase spec. Tell me something you want our tax dollars to buy. For example...

* Water delivery to 100,000 household taps.

But that's not enough. For the public good, we need to add on:

* Arsenic levels cannot exceed X parts per billion.
* Mercury levels cannot exceed X parts per trillion.
* Etc.

Keep adding constraints. Eventually, you have a budget item. The lower the cost to deliver that item, the higher the value.

It seems the idea of actually spelling out what the government is buying makes you uncomfortable. You know what would make me uncomfortable? Giving money to a government that does ineffable, unquantifiable things that somehow please russell.

But the government isn't buying just water. In relation to water, it's buying public health and the health of the individuals who make up "the public."

Balancing things that are unquantifiable is central to the enterprise of figuring out what we want to spend our collective resources on. Behind the decision about whether to buy water at so many cents a gallon or paving materials at so many cents a square foot is the need to decide how much we value public health as compared to highway safety. And that's of course a vast oversimplification of the real process involved in running the public affairs of a nation of 300 million people.

You can quantify part of the process of buying pencils and textbooks at such and such a price, and helmets for the football team, and an information booth for a public park, and some new F-22's. But how you're going to quantify the return on those investments is a question you have yet to address, or even give any evidence of recognizing.

JamieM,

If you can't tell me what you're going to buy with my tax money and why, I'm voting for someone who can.


Balancing things that are unquantifiable is central to the enterprise of figuring out what we want to spend our collective resources on.

Like these things, for example:

..establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity

Some aspects of these things are quantifiable, other are not, and never will be. I should think that point would be obvious to anyone who understands the difference between a political system and a procurement system, but then I've been wrong before.

"and secure the Blessings of Liberty to ourselves and our Posterity"

I'd also add that these words do not mean "screw you, I'm all right, Jack."

I'd also add that these words do not mean "screw you, I'm all right, Jack."

For the record, they also don't mean "I'm a little teapot."


I'd also add that these words do not mean "screw you, I'm all right, Jack."

That would be from the alternative version which read:

"and secure the Blessings of Liberty to ourselves and our Posteriors"

Amazing how much difference a few letters makes - if one is a Literalist, that is.

If you can't tell me what you're going to buy with my tax money and why, I'm voting for someone who can.

What does that have to do with whether what we're buying is quantifiable or not?

You're arguing with some fantasy creature now; I never said what you imply I said. I never said I couldn't tell you what I'd like to buy, I said that what I/we might like to buy isn't always (or hardly ever, in the last analysis, as TLT and Gary have pointed out) quantifiable, much less quantifiable only in terms of dollars.

Furthermore, it's not "your" tax dollars we're spending, it's your tax dollars and mine. It's "our" roads and "our" public health and the education of "our" next generation and "our" national defense and "our" blessings of liberty and so on.

To frame a response that first makes up something I didn't say, then frames our collective/public enterprise as if I'm making all the decisions and you're providing all the money, is so off base that I begin to think that my investment of thought and time here isn't bringing any return worth having.

Not only have you responded to something no one said, you continue to ignore an implicit point that I'm about to make explicit: the public enterprise is our enterprise, not yours, not mine, ours. Besides the fact that we're dealing with many unquantifiable things we might want to acquire for our collective enterprise (again, what dollar value does an F-22 bring?), we have to make our decisions collectively. Not my decisions; ours. Not your money; ours. Not my roads and your water supply, our roads and our water supply. Not your police force and my military, our water supply and our police force.

Some of them are flat out uneconomic, and we should assume that any return on investment will be negative. We do them for other reasons.

I tend to think that most things done for the public good, if not having a direct positive financial return, in the long run do have a financial return regardless of whether or not we can come up with a good estimate of it. Such returns are often diffuse in space and time. We could probably discuss some specific examples and make specific arguments regarding them.

To me, it parallels what I think about morality and what it costs in the short term to do the right thing. Often the right things will appear too costly in the shorter view, but one comes to find later that the right thing would have paid for itself many times over in time, or in ways that may not be apparent at first.

Think of Gary's example on another thread discussing public daycare and what happens if parents can't afford to work or if the kids are left to fend for themselves.

Another example would be rail transit as a friend of mine and I discussed last week. Rail transit systems tend not to pay for themselves in terms of operating cost versus revenue. This leads some to criticise rail transit on economic grounds. This ignores the positive externalities of pollution reduction, congestion easing and the facilitating of other economic activity in the areas served by such systems.

Being a moral and generous person, in the long run, is really the best way to selfish in some sense.

I should think that point would be obvious to anyone who understands the difference between a political system and a procurement system, but then I've been wrong before.

It's simple. Same result, two different costs. Lower cost equals higher value.

* Uphold constitution: 3 trillion.
* Uphold constitution: 2 trillion. <-- higher value.

I'm telling you, and JamieM, and russell, that you can put whatever you want in that budget item. "Park information booth." "Alternative medicine." "Punish evildoers." "Corporate welfare for ADM." It doesn't matter.

Same fixed result. Lower cost equals higher value.

CG,I hope you or anyone you know doesn't fall victim something like O-157 on spinach or salmonella in peanuts, or children choking on toys, or cars failing a crash test. It would be the death of your certainty on what is valuable.

* Uphold constitution: 3 trillion.
* Uphold constitution: 2 trillion. <-- higher value

I realize you were being somewhat sardonic, but seriously: if your paradigm requires that you reduce "uphold constitution" to an atomic proposition, your paradigm is wrong. Heck, if your paradigm requires that you reduce "uphold constitution" to a universally-agreed upon invariant set of constraints, your paradigm is wrong.

Also, count me in the chorus who say that money is not always the appropriate metric for "value". In fact, like most of the above, I think money is a piss-poor proxy for most of the things we deem valuable: health, happiness and dignity -- and upholding the constitution -- among them.

liberal japonicus,

You are kind to wish not-death on my loved ones. Thanks bunches.

XOXO,

I'm even more kind than that. I wouldn't even wish death on your certainty that money is the final arbiter of value, cause the cognitive dissonance might be the death of you.

Give me a purchase spec. Tell me something you want our tax dollars to buy. For example...

* Water delivery to 100,000 household taps.

But that's not enough. For the public good, we need to add on:

* Arsenic levels cannot exceed X parts per billion.
* Mercury levels cannot exceed X parts per trillion.
* Etc.

Keep adding constraints. Eventually, you have a budget item. The lower the cost to deliver that item, the higher the value.

I have no argument with this.

If there are two ways to go about getting what it is we want to get, one of them is less expensive, and they are otherwise more or less equal, let's do the less expensive one.

This falls under the category of "not wasting money".

My only caveat here is that cases where 'otherwise more or less equal' is actually true are not that common. Usually if you spend less money, you get less of something you want. Not always, but usually.

So, you have to pick what it is you really, really want and can't do without, and what you can maybe do without. That brings us back to JanieM's question.

Also note that, in your example, what you get in return for spending money is water, not more money. So, in fact, we are not talking about 'return on the dollar' in the normal business sense.

In the normal business world, it's not enough to have water. Having water also has to, in some way, turn into more money in your pocket down the road.

In public spending, this really isn't a requirement. It's enough that we decide, collectively, that we want safe, drinkable water delivered to 100,000 homes.

And there are other examples that are even less defensible in ROI terms.

What's the ROI of buying undeveloped land, or forgoing the income you could derive by selling or licensing that land for development, purely for the purpose of keeping it undeveloped?

There is no ROI there that can usefully be measured in dollar terms, but I'd say it's a great use of public money.

It's just something we might think is A Good Thing, and so we'll spend money on it.

And so, we return once again to JanieM's question of what things are Good Things.

What things are worth spending money on? In the public realm, unlike in the business world, the answers are not restricted to things that will result in a net increase of capital.

It seems the idea of actually spelling out what the government is buying makes you uncomfortable. You know what would make me uncomfortable? Giving money to a government that does ineffable, unquantifiable things that somehow please russell.

Actually, if you have a few days to spare, I'd be happy to spell out my very long laundry list of things I'd like to see the government spend money on. In detail.

As it turns out, the things that please me are quite capable of being effed.

And there's no need to be a dick. I'm not being a dick to you.

Thanks -

Hilzoy -

I think you're right, but one quibble about the issue of welfare fraud:

My mom worked for the Welfare Dept for many years, several as a case worker, and several investigating fraud. The amount of fraud they caught (as a department) depended on the allocation of resources.

You can allocate all of your personnel to doing new intakes or tracking down lost checks - and you'll never find fraud. Or you can make intakes slower and spend more time on home visits and fraud investigations. The amount of fraud they caught depended on whether there was an active effort to look for it. The allocation of their efforts really depended on the ideological bent of the government in power at the time.

So you could argue that this was about efficiency, but it really was much more about the general attitude to welfare. And catching welfare cheats and reducing the size of government need not be mutually-exclusive.

In the business world, it is common for "high-value" upstarts to compete with "high quality". The "high quality" competitor often doesn't realize that their product exceeds their customers' requirements until "high value" swoops in and eats their lunch.

What typically follows is that "high quality" looks to cut costs, "focus on core competencies", and so on, in an attempt to increase the value of their product and win back their customers.

The retrenching phase is often painful for individuals within the company who take pride in performing "high quality" work. It's management's responsibility to reconcile these employees to the cruel judgment their customers have handed down, and to let go anyone who cannot adapt.

It's also common for "high value" to compete with "low value" -- i.e. the quality is the same, but one product costs less. The "low value" competitor may have no idea that they are inefficient until their customers vote with their dollars.

The effort expended by line workers at both "high quality" and "low value" probably doesn't differ very much from that put forth by line workers at "high value". All are staffed with the kind of decent, hard-working people whose praises you sing above.

The vicious, eat-or-be-eaten competition between these entities -- the engine that drives that the productivity increases that improve our standard of living -- primarily takes place at the level of ideas. Keeping the engine running hot takes energy and effort, in the form of unemployment insurance, administration of liberal business bankruptcy laws, regulation of pathological markets, etc, but we expend that effort because it maximizes the benefit to society.

"Decent people" who "take their responsibilities seriously" are not enough. Workers who take pride in their work can even be an impediment to innovation if they are insufficiently flexible. Maximizing value requires marketplace forces that communicate to these decent people in brutally frank terms what their customers truly want.

Thus, whenever possible, it is to our benefit to design our institutions to include a competitive dynamic.

I expect them to be moderately costly and not terribly effective, and to harm a few people unnecessarily, but that's politics.

Maybe this here is the wrong group of liberals to ask, but I have a question. When it comes to welfare programs of any stripe, the attitude above seems to be the thinking of those who support such things. That it is better to have a program and suffer the scammers and their victims (the deserving people who are unable to get help because the scammer got it instead), than to hope the charity of others can handle the load.

The question I have, is why do liberals also seems to support over protective laws regarding bad behavior, the famous "If it saves just one child, it'll be worth it, it's for the children" type laws. Laws that try to force people to be safe and try to legislate away stupidity and responsibility.

I mean, if it's OK to spend billions of dollars to save mortgages at the risk of losing a percentage of that aid to fraud and graft (thus endangering random victims), why is not OK to merely educate people about risk and allow those who are too stupid to use such common sense to be the ones to suffer?

In the voice of Napoleon Dynamite: What the heck are you even talking about?

In the business world,

We weren't talking about the business world.

Thus, whenever possible, it is to our benefit to design our institutions to include a competitive dynamic.

If you say so, Creamy.

Look, you have a point, which is that competitive pressure can drive people and organizations to operate more efficiently.

You have another point, which is that, all other things being equal, it's good if a given good or service bought with public money can be gotten at the best possible price.

I don't think anyone is arguing against either of these two points.

My point in all of this is that, in the public arena, the primary goal is not always to maximize return on the dollar. It may be *a* goal, and it's always a good thing, but it's not always a primary or necessary goal.

Let's take mail delivery. Let's say we want to make plain old first class mail delivery available on a daily basis to every address in the US, six days a week, for a uniform postage cost.

Someone smarter than me, perhaps with an ops research background, could run the numbers and tell us that the optimal level of mail service, in terms of total letters delivered per unit of postage, would be daily in cities, every other day in the burbs, and once a week in rural areas.

If this was a for-profit private concern, especially a publicly traded one, *that is the level of service that would be offered*. Or, something else would have to give. Service wouldn't be offered in rural areas, or cost of postage would reflect actual cost of delivery. But the option of intentionally doing something that is less than optimally economic would not be on the table.

But public efforts do not have the same motivation. We can decide, if we wish to, to offer mail service as described above, even though it's not the most efficient value for dollar cost plan.

We might do that because we think daily postal delivery at a uniform cost of postage *is a good thing for us to have*.

It's our money. We shouldn't piss it away, but we can also spend it as we wish. Even if that is not the most efficient way to do so. Even if the way we want to spend it actually delivers no particular economic value at all.

The reason I belabor this is because, IMO, the business model, where every expenditure has to prove it's value in some form of dollar-valued return, is a *very poor* one for public efforts. It puts us in the position of trying to evaluate things whose value is not primarily economic, or not economic at all, in terms of economic return. At some point, this line of thinking leads to an impoverishment of our quality of life, and in fact of our basic values as people.

Nobody's looking to piss money away. But designing public efforts so as to maximize efficiency can often miss the point of the effort.

I doubt I have anything more enlightening to add on the topic, so that last word is yours if you care to have it.

"Some private companies suck. Period. And some sucky private companies hang in there for quite a while. Don't know why or how, but they do.

My conclusion: markets aren't perfectly efficient. Quel suprise!"

I know why a lot of them suck, including the ones in your examples--they have governmentally protected monopolies or oligopolies and spend lots of time making sure that the government keeps their competitors out. See especially Comcast. So blaming it *entirely* as a market failure seems wrong--the failure part is made worse by the government.

As far as the topic on hand, isn't it seems to me that the welfare case and the mortagage case aren't very similar. The level of fraud you have to prevent to add up to lots of money in the welfare case, is a lot higher than the amount of fraud you have to prevent in the mortgage case.

Each mortgage case which is properly screened out is worth high tens or hundreds of thousands of dollars.

they have governmentally protected monopolies or oligopolies and spend lots of time making sure that the government keeps their competitors out.

That's true, Seb.

In my area, Comcast is the exclusive provider of broadband over cable. We have Verizon, but only over phone lines.

The issue here, I think, is that the cable itself, as a physical piece of infrastructure, would be kind of wasteful to build out redundantly.

We don't want to roll cable as a public facility, so we license the right to build it out to private companies. In return, they get a monopoly as a provider in the areas where they have built out the infrastructure.

The predictable problems occur. Once they've locked in the contract as a provider, there's not a lot of day-to-day motivation for them to stay on top of their game.

Regarding cable companies, I'd prefer to see the infrastructure be publicly owned, and allow market competition among service providers on that infrastructure.

Interestingly, we get electric power from our town. They don't generate the power, they buy it off the grid. But the public service side of things -- installations, repairs, etc -- are provided by the town. Our linemen are public employees.

Were I to compare my experience with them compared to my experience with Comcast technicians, I would say the town guys win hands down.

I don't know why that's so, and I realize that it flies in the face of 'market force' received wisdom. But it's so.

the town guys win hands down.

If the service doesn't suck, you're paying too much. ;)


Let's take mail delivery. Let's say we want to make plain old first class mail delivery available on a daily basis to every address in the US, six days a week, for a uniform postage cost.

Someone smarter than me, perhaps with an ops research background, could run the numbers and tell us that the optimal level of mail service, in terms of total letters delivered per unit of postage, would be daily in cities, every other day in the burbs, and once a week in rural areas.

If this was a for-profit private concern, especially a publicly traded one, *that is the level of service that would be offered*. Or, something else would have to give. Service wouldn't be offered in rural areas, or cost of postage would reflect actual cost of delivery. But the option of intentionally doing something that is less than optimally economic would not be on the table.

Funny you should bring up this example.

There is this little problem involving what economists call "Externalities" with measuring value delivered for the money spent. Negative externalities improve the profitability of businesses that generate them by dumping some of the costs of the business onto somebody else. It worked really well for the US mining industry for example, at least until they polluted ground water supplies so heavily that they were regulated out of existence (more or less).

But there are also positive externalities - and they can sometimes be found associated with govt. initiatives which look upon first inspection like giveaways to some undeserving group. Take RFD (Rural Free Delivery), for example - this was very controversial back in the 1890s. Why should city folks pay (via indirect subsidy) for those free loaders living out on the farm to get free mail delivery, instead of making them pay a fair price? Turns out that RFD wasn't such a bad deal for the city folks either - it sparked a revolution in marketing, sales and distribution of manufactured goods (via mail order catalogs) to a still mostly rural population here in the US, one which rivaled the internet based boom in e-commerce of today. Many of our former retailing giants (e.g. Sears, Montgomery Ward) are products of that era. Guess where this stimulated employment? In the cities.

The problem is externalities (both positive and negative) are very hard to predict (and even harder to quantify) in advance. They are almost always recognized post-facto. That is one reason why not everything can be quantified and put into a cost-benefit calculation so as to convert public policy into a branch of financial accounting. Making qualitative decisions regarding things which cannot easily be quantified is one of the purposes of our political system.

If the service doesn't suck, you're paying too much. ;)

LOL

The problem is externalities (both positive and negative) are very hard to predict (and even harder to quantify) in advance. They are almost always recognized post-facto. That is one reason why not everything can be quantified and put into a cost-benefit calculation so as to convert public policy into a branch of financial accounting. Making qualitative decisions regarding things which cannot easily be quantified is one of the purposes of our political system.

I tried to make this point up-thread, but you did it much better, TLTIA. Thanks.

Thanks to Russell and ThatLeftTurn for continuing to try to shed light.

I remember chuckling, many months ago, as one of the regulars both here and and at TiO wrote (on a TiO thread) about how he shouldn't have to subsidize us rural mail receivers....... I will try to remember ThatLeftTurn's analysis next time someone frames it that way.

As to cost and service, part of what I find so frustrating about buying things and services these days is that there is rarely a mechanism by which it's possible to choose to pay more for good service, or any human service at all. Which, in many cases, I would happily do, although the jump from coach to business or first class on airplanes isn't one of them (too big a jump).

OT, but...

I was traveling a lot earlier in the month and not checking in here much, so maybe I didn't notice when it happened, but did the comment paging go away? Seems like this thread has more than 50 comments... ??

CG: If the service doesn't suck, you're paying too much. ;)

Russell: LOL

Me too.

I have to ask, though, whether CG's witty aphorism applies to, say, restaurants. People have been known to patronize eateries where platoons of tuxedoed waiters stand ready to provide non-sucky service. And not just patronize those places, but clamor for reservations in advance for the privilege of "paying too much". Are those people crazy? Are they hurting, or helping, the economy?

One difference between Bill and Bob's Roast Beef (a fast food place Russell may know), and Locke-Ober's (an ancient Boston restaurant of the tuxedoed-waiter type) is this: L-O converts a given quantity of food into way more GDP than B&B does. One way to "grow the economy" is to consume more goods like food, another way is to "consume" more "services" like attentiveness from tuxedoed waiters. The population at large has only so much stomach capacity. So at some point, and I claim we long ago passed that point, "economic growth" becomes a matter of employing more people in tuxedoed- waiter-type jobs to achieve "higher value-added" from a given quantity of material inputs. Note that tuxedoed-waiter-type jobs pay better than fast-food jobs precisely because diners pay more per food calorie at Locke-Ober's than at Bill and Bob's. Note, too, that financial-services jobs often pay even better, while providing no nutrition at all; they represent an infinite ratio of value added to raw materials consumed.

In a "service economy", doesn't "economic growth" essentially require "paying too much" as CreamyGoodness defines "paying too much"?

--TP

a fast food place Russell may know

Junior beef, lettuce and tomato, light sauce. :)

"We don't want to roll cable as a public facility, so we license the right to build it out to private companies. In return, they get a monopoly as a provider in the areas where they have built out the infrastructure.

The predictable problems occur. Once they've locked in the contract as a provider, there's not a lot of day-to-day motivation for them to stay on top of their game."

Right, but this predictable problem doesn't go away just because you call the service provider. Similarly all of your previous assumptions about good hard working people apply to private companies like ComCast. So I guess I don’t understand why you are able to identify the problem with monopoly providers like ComCast, but are so harsh on those of us who think that such problems apply to all monopoly-like situations whether they are governmental or private.

"Right, but this predictable problem doesn't go away just because you call the service provider"

should read "Right, but this predictable problem doesn't go away just because you call the service provider 'government'".

Right, but this predictable problem doesn't go away just because you call the service provider 'government'.

Government: you can't change providers, but you do get a vote in it by birthright.

Cable: you can't change providers, and if you want a vote you have to buy stock in the damn thing.

Your vote may count for very little in either case, of course.

--TP

So I guess I don’t understand why you are able to identify the problem with monopoly providers like ComCast, but are so harsh on those of us who think that such problems apply to all monopoly-like situations whether they are governmental or private.

Pretty much everything I've written in this thread has been in response to this:

Government bureaucracies are generally monopolies, and thus naturally become sclerotic and unresponsive over time -- just like private monopolies.

My participation in this thread has basically been intended to call bullshit on the 'thus naturally' part of this.

In my experience, public institutions, agencies, and employees are neither sclerotic nor unresponsive. In general, they compare quite well with private institutions and people, whether they are operating as a monopoly or not.

Since it is the common assumption of conservatives that public agencies, absent the whip hand of the market to urge them on, will always act in a sclerotic or unresponsive manner, I leave it to you to explain why my power company is quite responsive, while Comcast kind of isn't.

Because, again in my experience, the predictable problems do not appear nearly as often when the service provider is called 'government'.

Maybe I'm just a lucky, lucky guy.

I will offer one possible clue to this mystery. With very few exceptions, the individual people I deal with from Comcast have generally been perfectly fine. In general my problems with Comcast have to do with policy level decisions made further up the chain of responsibility.

As a practical matter, I have no lever to apply to those folks to get them to do what I need them to do.

I've had very productive dealings with the assemblymen in my town, my state rep and senator, and my US House rep. Ditto with all kinds of town, county, state, and US agencies.

US Senators, not so much, but that's getting kind of rarefied. I also sent Cheney an email once telling him I wanted him to resign, but he didn't reply.

But I've never had a similarly productive conversation with anyone at a comparable level of responsibility at Comcast, or in fact at any private company beyond the level of neighborhood mom-and-pop places.

Which is one reason I prefer to spend my money with those kind of folks, rather than with big boxes.

My point of view is not rooted in some kind of ideological dislike of private industry. I've worked in the private sector, exclusively, for not quite thirty years. I've been an equity holder in corporations that I've worked for, I have a significant (but dwindling) amount of my savings in private equities. My wife is self-employed, and is herself a corporation.

I got nothing against the private sector.

I'm just objecting to the assumption that "government" equals inefficient, sclerotic, and unresponsive.

Because in my experience it is not.

The fact that it is not, in spite of government agencies being 'monopolies', causes me no cognitive dissonance. I'm not sure I have anything to explain. If it's hard for other folks to get their heads around that phenomenon, I'm not sure what I can do about that.

The vast majority of my dealings with folks in the public sector have been productive and pain free. I appreciate the folks who work in government. IMO public service is actually a good and useful thing to do in life. In my experience public employees do a good job, and it pisses me off to listen to people run them down to make an ideological point.

So when I get the chance I speak up for them.

That's all.

"I will offer one possible clue to this mystery. With very few exceptions, the individual people I deal with from Comcast have generally been perfectly fine. In general my problems with Comcast have to do with policy level decisions made further up the chain of responsibility.

As a practical matter, I have no lever to apply to those folks to get them to do what I need them to do."

With a government enforced monopoly of course you do. Call the exact same assemblymen, rep or senator that you would call on a government matter. Because they are pretty much in charge in both cases.

If you are saying that given a monopoly situation, individual workers are no less likely to be nasty in government or private sector. I'm on board. But that may not be a good argument for government so much as it is an argument against monopoly.

If you are suggesting that a private worker is MORE likely to be nasty and hard to deal with, I think you have a very idiosyncratic experience.


Because, again in my experience, the predictable problems do not appear nearly as often when the service provider is called 'government'.

I'll echo that although my dealings with the govt have not been as broad and extensive as what russell has described.

The most direct comparison I'm familiar with on a large scale (i.e. the plural of thousands of anecdotes is data) is in shipping. The US Postal Service vs. UPS, FedX and other commercial package carriers handling bulk freight.

The USPS wins hands down on cost, quality of customer service, speed of total delivery time at the same rate level, and loss/damage rate. It isn't even close, in my experience.

And that is with the govt. and the private companies performing the exact same task.


If you are suggesting that a private worker is MORE likely to be nasty and hard to deal with, I think you have a very idiosyncratic experience.

Again, folks, just one week's worth of reading here.

Sebastian - Personally, it's because when I was in private industry[1] my motivations, (the incentives CG mentioned way back upthread), were explicitly pointed at cost-cutting, stonewalling and service denial. When I've worked in government, the focus was on thoroughness and service provision.

[1] Except for Intel, oddly enough. They were absurdly customer focused and responsive.

"The question I have, is why do liberals also seems to support over protective laws regarding bad behavior, the famous 'If it saves just one child, it'll be worth it, it's for the children' type laws. Laws that try to force people to be safe and try to legislate away stupidity and responsibility."

I suggest naming some specific laws, and asking who supports them, as otherwise your question is completely impossible to answer.

The USPS wins hands down on cost, quality of customer service, speed of total delivery time at the same rate level, and loss/damage rate. It isn't even close, in my experience.

At various times I've done a lot of buying and selling of used drums.

UPS used to be pretty good, DHL was also pretty good. Then they weren't.

When I do stuff like this now, I just use the USPS. Their "overnight" letter service is not as reliable as Fedex. Other than that I find them to be a higher quality provider.

But then, outside of first class mail, they're not really a monopoly. They're just pretty damned good.

Again, I'm not making an ideological point. I'm just seeking to *counter* the (what seems to me to be) the ideological assumption that government services are by necessity inefficient and of low quality.

When I've dealt with them, they've been pretty good.

The Massachusetts Dept of Revenue was pretty crappy. Other than that, pretty much all good.

I don't know why. I understand the reasoning by which, in theory, they shouldn't be. But they are.

It's a reality. I just accept it.

Phil, the volume of consumer complaints at consumerist.com is worthless if we are performing a comparative analysis of private industry vs. government.

russell, you are arguing from anecdotal evidence.

ThatLeftTurn, you are also arguing from anecdotal evidence:

The USPS wins hands down on cost, quality of customer service, speed of total delivery time at the same rate level, and loss/damage rate. It isn't even close, in my experience.

Your experience doesn't square with data from the American Customer Satisfaction Index on the express delivery industry for 2008:

  • FedEx: 85
  • UPS: 83
  • All others: 77
  • US Postal Service: 75

(The ASCI also provides numbers for the Postal Service as a whole rather than limited to express delivery.)

Your experience doesn't square with data from the American Customer Satisfaction Index

You know anything about this group and its methodology? Because what they have on their web site is crap.

CG - Some here may be arguing from anecdotal evidence, I certainly am. But russell is very clearly refuting a universal claim with a single counterexample. Which is how you refute universal claims.

Phil, the volume of consumer complaints at consumerist.com is worthless if we are performing a comparative analysis of private industry vs. government.

Is that what I was doing? Because I thought I was responding to a comment from Sebastian about the likelihood of private sector workers being nasty and difficult.

"Because I thought I was responding to a comment from Sebastian about the likelihood of private sector workers being nasty and difficult."

But you didn't. Because likelihood involves comparison.

"... the front lines for a business that HAD to be accountable to its customers"

Guess you weren't an investment banker or a hedge fund manager, huh?

"The biggest problem would be doing the actual keying in to make sure that all records are electronically stored."

Hey, I need a job, and I've done that kind of work before!

Plus which, make everyone charge anything, and then you can find out just WHO put in granite and who was satisfied with formica.

"Cable: you can't change providers, and if you want a vote you have to buy stock in the damn thing."

Even buying stock in the company won't get you a meaningful vote, as companies restrict the proxy ballots to deny shareholders the right to get anything on them!

russell, you are arguing from anecdotal evidence.

aka "reality".

And you are arguing from a theory.

But you didn't. Because likelihood involves comparison.

Yes. I was comparing your statement, "If you are suggesting that a private worker is MORE likely to be nasty and hard to deal with, I think you have a very idiosyncratic experience" -- which suggests both that public workers are objectively more likely to be nasty and hard to deal with, and that russell's experiences with private workers are sui generis -- to actual experiences from actual consumers with actual nasty and hard-to-deal-with private workers.

Since you didn't offer any actual experiences of actual nasty and difficult-to-deal-with public workers, that's all I had to go on, Sebastian. Perhaps you'd like to move from the realm of categorical statements into actual experience, and then we can do some real side-by-side looks.

If you are suggesting that a private worker is MORE likely to be nasty and hard to deal with, I think you have a very idiosyncratic experience

I should probably clarify this.

I don't find private workers nastier and harder to deal with, on average, than public workers.

What I find is that public institutions and organizations are, on average, more responsive to me and what I need than private ones.

If what I need is right in the sweet spot of their normal operations and policies, both are generally fine.

If not, I've found public organizations a lot easier to deal with. I can find somebody who can make a decision, and I can get a decision made. It might not even be the perfect decision from my point of view, but I can get something useful done.

In private companies, especially larger companies, I've found it far more difficult to get past the first and second tiers of customer support folks and get to someone who can actually make something happen.

By "far more difficult" I mean that my wife and I have each spent many hours -- hundreds of hours -- trying to get satisfaction on a variety of very simple, basic issues. From very successful, household name companies.

I'm sure if I was, for instance, arrested, or caught up in some INS issue, my opinion might be different. I know folks who have been through a Kafkaesque hell in those situations.

But in my experience I've found public institutions more responsive than private ones. Not universally, but enough so that I see a fairly consistent pattern.

I'll leave it to brighter minds to explain why.

Well, and part of the reason for that is that, when you call a customer service call center, the name would imply that the people who answer the phones there get paid to serve customers, but that isn't the case.

They get paid to follow a very specific script, a script that's devoted to exactly two things: Customer retention, and product/service upsells and cross-sells. If you want something that's not on their script, as far as they're concerned, you're the problem, and will be treated as such.

The person at the DMV, on the other hand, just gets paid to register your car.

In my experience, the easy- or difficult-to-deal with heirarchy has gone something like this:

Local government people -- very easy to deal with. I've never had any problems with anyone at City Hall.

State government people -- Haven't had a lot of dealings with them, but they've generally been terse if professional.

General retail -- At the registers, usually fine, although sometimes completely oblivious, as if I'm not even part of the transaction. The people behind the customer service desks are almost always pricks. (Esp. at my local Target. Wal-Mart is slightly better in this regard.)

Specialty retail -- Clothing stores, great. Electronic stores, please do not talk to me unless I am trying to give you money, because you are both unknowledgeable and unhelpful, a deadly combination. Musical instrument stores, these guys are awesome.

Phil, "Yes. I was comparing your statement, "If you are suggesting that a private worker is MORE likely to be nasty and hard to deal with, I think you have a very idiosyncratic experience" -- which suggests both that public workers are objectively more likely to be nasty and hard to deal with"

You're going with an idiosyncratic reading of 'MORE likely' in that sentence if you believe that suggests that public workers are more likely to be nasty and hard to deal with (especially as I was talking about counterpart monopoly situations). It suggests equality. Since the rest of your analysis is based on that confusion, it goes rather far off the rails.

"I'm sure if I was, for instance, arrested, or caught up in some INS issue, my opinion might be different. I know folks who have been through a Kafkaesque hell in those situations.

But in my experience I've found public institutions more responsive than private ones. Not universally, but enough so that I see a fairly consistent pattern.

I'll leave it to brighter minds to explain why."

I doubt I'm a brighter mind, but I think you are on to something with the INS and criminal justice system comments. Where your dealings with the government institutions about things deeply important or controlling of your life? Does it disturb you at all the the government in such areas seems to have an incredibly bad reputation? (Building code issues are another classic. I'm sure it isn't universal that building inspectors are nearly impossible to schedule with, have deep idiosyncracies of their own in what they inspect for, and that getting a variance from the council on non-safety issues remains nearly impossible, but it certainly seems very common). I also would query about whether or not the government workers actually broke the rules for you. Historically (and by that I don't mean just the US, I mean as far back as bureaucratic institutions in China almost 1000 years ago or Church hierarchies in Europe) having byzantine laws which could be manipulated by officials has been one of the classic ways of trading for favors, gaining influence, and extorting from the public. (And I'm not saying that is what you did, I'm pointing out that if getting your answer involved breaking rules, you are setting up a situation where the incentives for that are high). That is even true if rules were not 'broken' but rely on wide discretion of an insulated employee. (Though that at least is theoretically more defensible from a flexibility standpoint).

Also query why the scripts are so tight nowadays in the private sector. The days of "we'll fix that" before making sure it wasn't your fault are long gone due to the litigation (which is a fascinatingly complicated public/private interaction).

Sorry been trying to be better about the labeling. "I'm sure if I was, for instance, arrested..." was by russell

Oh and to tie it all back, if government employees are so good, and if the savings are so large (the marginal savings from avoiding one inappropriate mortgage bailout would appear to be both much larger and much easier than multiple cases of welfare fraud), why is looking at the individual cases so threatening/impractical?

You're going with an idiosyncratic reading of 'MORE likely' in that sentence if you believe that suggests that public workers are more likely to be nasty and hard to deal with (especially as I was talking about counterpart monopoly situations). It suggests equality. Since the rest of your analysis is based on that confusion, it goes rather far off the rails.

Oh, Jesus Christ, Sebastian.

Given precisely two possibilities which, without any other context, are approximately equally likely, choosing one rather than the other -- based on what I know of your outlook and posting history -- is now "idiosyncratic?"

Get one (1) dictionary, please. Then sit on it.

Hey Sebastian -

Thanks for your reply. Those are all very good questions.

The particular things I've gotten involved with government agencies have included:

Income tax screwups (on my part)
Building inspections for work I've done on my house
Request for zoning variance for work I've done on my house
Presenting items for vote at town meeting
Basic title and deed research when my wife and I bought our home
Acquiring security clearances for work
Getting postal mail forwarded when I moved

In the tax thing, the IRS was extremely helpful, and the Massachusetts DOR was extremely not.

The building inspection guys were superb. No rules were bent or broken. Convenient appointments were made and kept. Helpful advice for adhering to code was given. The guys are champs.

One member of the zoning board was a bit of a PITA, the others were fine.

The item presented at town meeting was a resolution against the USA Patriot Act. It was controversial. The selectmen went out of their way to be helpful in explaining the process of getting stuff on the town warrant. They were by no means united in their support for the resolution, and one member thought it did not belong in town business at all, but they did right by me nonetheless.

My US House Rep and state House Rep and Senator were very helpful in providing their support and assistance as well in the USAPA effort. They happened to be sympathetic to it politically, no doubt if they had not been they would have been less forthcoming. But they and their staffs were approachable, responsive, and extremely helpful.

Title and deed stuff is a county function in my area. The Registrar of Deeds' office was, basically, service with a smile. They also host a very helpful website where you can look up documents online.

Security clearance stuff was by the book, as it should be, but nobody was looking to bust chops. They did their due diligence, and were generally helpful where they could be. They were a little rude to my landlady at the time, other than that they got the job done effectively and professionally.

The mail forwarding thing was kind of a nightmare. The deliveryman simply would not forward my mail. I went back to my old neighborhood, found him on his route, and told him to get his sh*t together and start forwarding my mail. He started forwarding my mail.

I understand that not everyone's experience is like mine. I live in a smallish town (20,000 people, 4 square miles). My US and state House reps are local guys, most folks with an interest in knowing them know them. Registrar of Deeds is not rocket science.

My positive experience with the IRS was a surprise to me, frankly, but there it is.

Make of it what you will.

I'm not trying to prove anything here. All I'm trying to do is point out that many, many government institutions are effective and responsive, in spite of being 'monopolies' in their area of responsibility.

They get the job done, well, in a timely fashion, and quite often with a smile. Can't ask for more than that.

And yes, it does bother me that the justice system and the INS are so brutally dehumanizing. I would like to see that change.

Thanks -

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Whatnot


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