Hello and welcome back to Pie ponders in which Pie tries to understand things. This is a different type of Pie ponders, in which I try to better understand what drives certain arguments with the help of crowdsourcing – that is where you bunch come in. You need to use crowdsourcing and big data and machine learning these days to stay relevant you know, basic bitch reasoning don’t cut it no more. So to proceed…
Today I focus on the debate about private X and public – aka state managed tax funded through the lens of competition. As a libertarian I think you know where I stand. Off course, I have my biases, and I try to listen to the opposite opinion. In this case I am, as in most others, at a loss to understand the fetish some have for the concept of public and their opposition to competition. I leave it to the commenters to point out where my thoughts and arguments may be wrong.
To generalize, we want X, and doing it requires people, materials, management, in general cash, mullah, dough. So the debate boils down to who uses these things better and I struggle to understand how some believe it is the government.
So what are the arguments? One would be against profit, which supposedly takes away money from the actual task at hand, but this is, in itself, irrelevant. If X is accomplished better and cheaper overall while some money goes to profit than when it does not, profit is not in any way a waste. It is a cost of efficiency. Profit is, in fact, often a valuable signal. It tells a company whether they are doing what they should. In commie Romania, many factories were not driven by profit and had no competition to speak of, and yet, shockingly, were extremely inefficient, had stocks of products that no one wanted and shortages of products in demand, all of poor quality, and overall no way of knowing if the way they produce is good. In general if a company changes something and profit improves, they get the info that the change was good.
Beyond the first argument, some people seem to have the ridiculous notion that for certain X, no one should make a profit, because that is somehow immoral. Why this is, I could never understand. Beyond money bad. There is the argument that profit incentivizes people to maximize profit instead of maximizing X, but in a market situation that is not distorted by government, most times the two things go hand in hand. And furthermore, how can one know they are maximizing X?
In the end, all people want profit. Or better said increased satisfaction. But in the public healthcare systems of Europe, doctors who at dinner parties will claim “making a profit from healthcare is immoral” – happened to me several times – and a month later strike for higher salaries. But that is not profit somehow.
A second observation of mine is humans overall perform better when there is competition. This should be a straightforward fact, but somehow isn’t. This has two factors. One, simply because humans can easily get complacent if there is not something to keep them on their toes. Second, if you have different concepts, ideas, methods to organize an activity, there really is no better way to see which works best except letting them compete. Due to the many complexities of the world, second and third order effects, unknown unknowns, you cannot outright say which way is better, which is what bureaucrats and governments claim to do.
X, people will say, it is too important to be left to competition. Or competition does not work for X. Why competition would work for something else and not for X is not always clearly explained. But what is the alternative? The dream of a group of “experts” figuring out the best way, which does not work nor has it ever worked?
The fact about X – healthcare, education, whatever – being too important is also not a valid idea. The thing about competition is that it either works or it doesn’t. It is not it works for product A but not for product B. Because the product is not the key here, the human is. The importance of X does not in any way change the fact that humans do not function efficiently without competition. You need buildings, people, and supplies. As such these are subject to the same economic laws as coffee or clothing.
I find it strange how people believe the human perceived importance of something changes the underlying issues. If a plane is crashing, physics cares not about how important it is to the passengers to recover. If competition is necessary to make TVs, it is necessary for healthcare.
The way I see it is this: the things that are key is not the field or product, but humans and human nature. Going from cars to medicine does not change the fact that humans are involved, and the same constraints of humanity apply in the same fashion. You still need labor, allocation of capital, decision making. There is still self-interest, dishonesty, ego, the whole package. These do not go away because healthcare is important.
There are many bad arguments against competition. One is someone loses. Sometimes sure, but the loser is not taken out back and shot. Yes from competing ideas, if one is better, the worse one is abandoned, that is a good thing. Unless every single thing needs to be implemented so someone does not feel bad. Another is working together is better than against each other. Which, like most things meant for children, idiots and leftists, sounds superficially good. Until you realize that cooperation has limits and it will hit the invariable issue of being unable to automatically see what works best from multiple solutions.
Competition is a race to the bottom is also popular, although what this is based on escapes me. Certainly not of the high quality of government monopoly services or the how bureaucrats strive to make things easier on the public. Not when privatizing certain services or introducing competition usually is accompanied by significant improvements in efficiency. In competitive private sectors, plenty of high quality products are made, unlike government owned businesses thorough history. So what is this race to the bottom?
We cannot gamble with our children’s future, I heard. But what is the alternative? Sticking them all in a failing system? Or the alternative is the magic committee of experts solving all problems?
In the end, decisions have to be made, and the general idea for some seems it is better to be made by bureaucrats than by people receiving a given service. While I do understand how this could be an issue for emergency services – cannot choose hospitals while you are unconscious, there are multiple ways to solve it in a private system.
There have been a myriad of studies for private vs public education, healthcare and such. And the concept that public works better is simply not supported, no matter how much proponents claim. This will not be solved anytime soon given the massive bias in all studies made, by either side, the massive amount of information existing and missing, and the impossibility of controlled experiments. I will not do a literature review on this, I am trying to approach this by basic reason. Some strict empiricists will dismiss such arguments, but I do not see strict empiricism working in this case.
A further issue is that, when you look at it, in general, bureaucrats are not always the most competent of people. Certainly, the best and brightest seldom dream of becoming civil servants. Nor are they more motivated, more caring or in general better people, and outside leftist delusions you have no reason to believe they would be. Most countries on this planet have plenty of literature and art mocking bureaucrats. So it is quite a known phenomenon.
But I want to give an example of what I mean. The significant innovation and cost reduction introduced in the field of space exploration. SpaceX – whatever you may think of E.M. – is quite the success. This was clear when European government audits a while back informed the European Space Agency that it will be in no way competitive in the future if it does not radically change its MO. And the ESA and Ariane and their other contractors reacted by starting to research reusable rockets, using in part SpaceX innovations, by contracting with more companies and startup, by pushing innovation. This raises the question: why did they not really do this before competition forced it? Why I think this is relevant? Because, if you want to see a field which does attract the best and brightest, this is it. These are people who are at the top of their field, the best education, and furthermore many of them do work they enjoy and are passionate about. And still, without some competition, they were complacent for years and the innovation rate quite slowed down. If in this field this happened, why expect differently for others?