Monday, 12 September 2011

Drive and the impact on economics

This issue is a more difficult chalice for left wingers to take I think.  Yes we can chime the successes of State run NHS over the terribly inefficient American system, and the impartiality and creativity of the BBC against many corporate opponents, but I don’t think it really does proper service to the issue, especially when right wingers can just mention the 1970’s and its horrible, ineffective model of economics. And although it’s not true it pushes us into a debate that won’t lead anywhere, so I will attempt to explain how the state is not the problem, but there is certainly a problem here.

Now firstly please take a look at this little thing, (most papers are pay-walled and this is shorter and more succinct). The first test mentioned here, undertaken by the federal reserve shows that most creative industries have an inverse effect to what is assumed in the theory of incentives (an idea with a fraught enough history as it comes, especially since its creator has railed against it.) I would say this leads to three main points we can make from it:

1. Humans desire a sense of agency
2. Money is a disincentive to creative work after a point.
3. Humans are at their core fixers and value a sense of purpose (social capital) to large paychecks.

This is important because the main arguments against the state run industries are:

1. Humans are self interested to a psychopathic degree
2. Earning money without any fear of it going is a disincentive to work hard.
3. Humans have no sense of moral duty, work is work is work. It all about making them papers!

What these sort of tests prove is that there is nothing innately wrong with state run industries, the government isn't magically stupid. The failings of the state to provide certain services, while in others they surpass the private sector is a matter of no small debate, one i am in no way capable of easily answering, but here are some suggestions:

1. Services which have a high degree of agency but with little need for diversity are brilliant at being lead by the state. The obvious one for this is the NHS and other types of socialized medicine. Doctors and nurses work in very unsociable hours for very long periods of time, in incredibly stressful conditions, and although Doctors make quite a bit of money this is still less than a lawyer who probably doesn't have to deal with the psychological stress many hospital staff must go through. This job has a great sense of purpose: I am saving peoples lives. And a clear goal to this, use the most cutting edge practices to do so (which is of course decided by a medical review board). Other groups have a similar advantage like the armed forces and education, rather the inefficiencies in these departments grow when the private sector is brought in (the wasted billions in NHS budgets on private outsourcing, billions wasted in overdue deliveries from MoD weapons beneficiaries and the Academy system which pulls out much needed funds and bright children from areas (Not strictly bright children but kids with pushy parents as Academies are often built in the better areas of cities.)

2. Micromanagement, Unnecessary bureaucratic and target based managerial does not really work in creative fields, regardless of the sector: A difficulty arises here in that it is clear that bureaucracy and it being unnecessary is one of those length of string arguments, its very unclear, but large organisations, be these a multinational consortium or a state monopoly tend to have a larger than necessary middle management team, all too often get into weighty guidelines on trivial matters of dress codes. These three matters all serve to abstract problems and bring less agency to those on the front, but also make everyone feel like less of a valued workforce. Teachers groan at offsted inspections because these things force you into a conformity that doesn't really serve any use, why the fuck do we need to outline the lesson to people in the beginning? Not that it's necessarily bad but its totally nonsensical to demand. Guidelines are of course important for any work, but when they begin to micromanage every aspect of the work environment then firstly there will be a lot of wasted time calling people up on it (think of the millions wasted on offsted inspection teams and other such quangos, many of which are filled with useless bureaucrats, but more importantly all the time wasted). 

3.Monopoly's issues are offset on the product they sell, a simple product that is a necessity works well as a state run industry. Water, Energy, Education, Health, Transport. Are all areas i would say don't need to be in competition to work. These are all products that do not need to change with consumer demand, there will always be a need for these things in their raw form, they don't go out of season, they don't become outdated. All that is required is for a government to run these institutions is to be able to keep investment reasonably strong to stay ahead of the curve and this can be hugely beneficial to other industries in the country. We say what happens when you deregulate energy and allow private interests to run amok with Enron in 2005. I would say that with looming environmental catastrophe approaching that it is a public necessity to ensure that our energy needs have direct oversight, as they need a radical change to green energy as soon as possible. There are certain industries that just work best as a monopoly, energy, water and transport do best with one set of taps, power lines and rail tracks, putting a company in charge of any monopoly is just a moral hazard waiting to happen, corporations are by their nature psychopathic, in legal documentation they have to pursue profit (otherwise shareholders wouldn't invest, makes perfect sense but that's the problem) and if in control of a public necessity like water, well as was seen in Bolivia in the mid 2000's would raise the price to as high a point as they could conceivably go. Attempting to create a market doesn't help either, there are 33 companies with a stake in the ticket fairs alone in our rail system and the costs and inefficiencies have ballooned since its inception in the early 90's.

So yes, the state is not the perfect engine for everything, by any means. But when it comes to industries where the good that is being sold is clearly definable and unchanging in what it basically does - Education needs to educate, Healthcare needs to stop people dying, Then the state champions the private sector because it does not need to declare a profit (though there should be an overall gain in the welfare of society from their actions)  
If a monopoly is in the hands of a party not interested in turning a profit then society as a whole need pay less for that service and more into whatever the hell they feel like. Which is good, expenditure should equal the cost of the product (taking into account wages etc) not the amount someone is willing to pay for it. Just because everything can be priced and everything has a willing buyer does not mean that all products are essentially the same.

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