Just my opinion -part 1

[Derek McGowan]

We should clarify...

Many times when people describe government vs private business, they state that business is more efficient/ government is inefficient. I think that that is too broad a claim. I feel that as a people who value reason primarily, I think our argument should be more nuanced. What do I mean? Am I saying that I disagree about the waste that government produces? Not at all, I agree wholeheartedly with that statement, but can (and many times does) give the impression that business is more efficient as a principle. The listener can come away with a idealistic notion that business, as a monolithic group = efficiency automatically as if some universal law is continuously upheld. What many of you already know (but many times is not explicitly stated) is that business only becomes efficient through competition. Well.... that's not always true either.

Government produces waste and business produces waste. Neither one, as a monolithic group, are efficient. A few examples of government waste: Paying many MANY individuals 100,000 per year who do 5 hours or less worth of work per week. Paying 600+ million for a website. Paying multiple contractors WAY more then the project costs. IRS and other departments taking employees on trips costing the tax, etc.

But of course there are many examples of business waste: AIG paying employees 200 million in bonuses during 2009 bailout period. Any business (which is many of them) who still print multiple paper copies of records even while saving them onto hard drives. Trucking companies that allow thousands of trucks to idle for hours per day, burning off precious fuel. Any business with excessive decoration, such as water fountains, paintings and live flowers (this is only called for in restaurants, for the ambiance and for personal investment firms, as they need to project an image of wealth to their clients), etc.

The fact is that as a monolithic whole, business is pretty bad on the efficiency scale. With half of all businesses failing in the first year, and with incompetency being the main reason, business AS A MONOLITHIC whole is at least as wasteful as government. Think of all the dot com sites that blew up despite 100s of millions of dollars of investment.

The big difference is that business is financed by people who voluntarily either invest, or buy the company's products or services, so that if/when that business fails it is not taking dollars with it that came from the average citizen that would never have financed any portion of the project. Also, that business can fail, thereby opening up a slot for another competitor to have an earnest go at it.

The government (almost) cannot be shut down now matter how poorly it does, and that is the problem. BUT we must keep in mind that their are businesses that we consider successful that were/ are saddled with (proportionally) as much debt as the government. Amazon was not profitable for 6 years, Facebook for the same. Tesla Motors for 10 years, etc. Then there are government projects that are/were efficient. One example would be Social Security, which was solvent for decades. Leaving aside the fact that it was an involuntary tax, leaving aside the many times that officials raided its coffers, the point is that Social Security was set up in a very efficient, well planned way. Was it sustainable in the very long run, no but neither was Montgomery Ward, Circuit City, Bear Stearns, hell even Apple went down hard in the 80s.

I think we could first look at each side of the coin as distinct parts and not as monolithic wholes and second when explaining the difference between the two, we should simply add a line or two and address the realities of the failures of business and the reason why it is still preferable to government. Again, as folks who value reason, we should be open and honest with the facts when presenting our case.

Thank you

ps. another statement about business in need of clarification to come

[Jonathan]

Many times when people describe government vs private business, they state that business is more efficient/ government is inefficient.

Well, that's kind of an inaccurate way of labeling the issue. A better use of terms would be to say that the free market is more efficient than a centralized or planned economy, or than any other economy that partly or fully introduces initiation of force against individuals.

And such a statement is not "too broad a claim." An economy which consists of billions of decisions being made freely by billions of individuals based on their own desires and knowledge of what they need, wish to produce, and what they're willing to risk, and their experiencing the consequences of their decisions accordingly, is necessarily more efficient than those decisions being made by authorities who cannot possibly have knowledge of all individual needs, desires and potential risks vs rewards, and who do not experience the consequences of very bad decisions, but instead are often rewarded for them.

J

[anthony]

Hi Derek.

I'm all for searching out nuance (and have a strong disinclination for wastage and inefficiency) but I'm sure you'd agree that yours is a pragmatic argument. How does one mentally disentangle Government from industry and commerce nowadays, anyway? Subsidies, lobbying, protective tariffs, tax rebates etc. complicate the picture immensely. It is safe to assume that business practise would be...different, in any laissez-faire future.

As you're aware, Objectivism champions capitalism as selfishly moral - not as a Bentham-esque "greatest happiness for the greatest number" utilitarianism -and also not primarily because it's necessarily more efficient. (Though any business that wasn't lean and mean would deserve to fail.)

[Derek McGowan]

How does one mentally disentangle Government from industry and commerce nowadays, anyway? Subsidies, lobbying, protective tariffs, tax rebates etc. complicate the picture immensely. It is safe to assume that business practise would be...different, in any laissez-faire future.

Good point,.. only that when I hear my opening statement uttered from quite sincere people, they have all been talking about current private business in whatever why it acts in this environment. Perhaps this too should be clarified when teaching.

[BaalChatzaf]

We should clarify...

Many times when people describe government vs private business, they state that business is more efficient/ government is inefficient. I think that that is too broad a claim. I feel that as a people who value reason primarily, I think our argument should be more nuanced. What do I mean? Am I saying that I disagree about the waste that government produces? Not at all, I agree wholeheartedly with that statement, but can (and many times does) give the impression that business is more efficient as a principle. The listener can come away with a idealistic notion that business, as a monolithic group = efficiency automatically as if some universal law is continuously upheld. What many of you already know (but many times is not explicitly stated) is that business only becomes efficient through competition. Well.... that's not always true either.

Government produces waste and business produces waste. Neither one, as a monolithic group, are efficient. A few examples of government waste: Paying many MANY individuals 100,000 per year who do 5 hours or less worth of work per week. Paying 600+ million for a website. Paying multiple contractors WAY more then the project costs. IRS and other departments taking employees on trips costing the tax, etc.

But of course there are many examples of business waste: AIG paying employees 200 million in bonuses during 2009 bailout period. Any business (which is many of them) who still print multiple paper copies of records even while saving them onto hard drives. Trucking companies that allow thousands of trucks to idle for hours per day, burning off precious fuel. Any business with excessive decoration, such as water fountains, paintings and live flowers (this is only called for in restaurants, for the ambiance and for personal investment firms, as they need to project an image of wealth to their clients), etc.

The fact is that as a monolithic whole, business is pretty bad on the efficiency scale. With half of all businesses failing in the first year, and with incompetency being the main reason, business AS A MONOLITHIC whole is at least as wasteful as government. Think of all the dot com sites that blew up despite 100s of millions of dollars of investment.

The big difference is that business is financed by people who voluntarily either invest, or buy the company's products or services, so that if/when that business fails it is not taking dollars with it that came from the average citizen that would never have financed any portion of the project. Also, that business can fail, thereby opening up a slot for another competitor to have an earnest go at it.

The government (almost) cannot be shut down now matter how poorly it does, and that is the problem. BUT we must keep in mind that their are businesses that we consider successful that were/ are saddled with (proportionally) as much debt as the government. Amazon was not profitable for 6 years, Facebook for the same. Tesla Motors for 10 years, etc. Then there are government projects that are/were efficient. One example would be Social Security, which was solvent for decades. Leaving aside the fact that it was an involuntary tax, leaving aside the many times that officials raided its coffers, the point is that Social Security was set up in a very efficient, well planned way. Was it sustainable in the very long run, no but neither was Montgomery Ward, Circuit City, Bear Stearns, hell even Apple went down hard in the 80s.

I think we could first look at each side of the coin as distinct parts and not as monolithic wholes and second when explaining the difference between the two, we should simply add a line or two and address the realities of the failures of business and the reason why it is still preferable to government. Again, as folks who value reason, we should be open and honest with the facts when presenting our case.

Thank you

ps. another statement about business in need of clarification to come

If a government is wasteful and inefficient the tax payer foots the bill. If a private company is wasteful and inefficient only its customers and stockholders suffer. So don't do business with that company and their waste will be no burden to you.

The only way to get out from under a government is to leave the country.

Ba'al Chatzaf

[dldelancey]

How much of the inefficiency in businesses is a direct result of government regulations? Healthcare comes to mind. There's a huge amount of waste in healthcare organizations, almost all of which can be traced back to some form of governmental regulation (the reams of it that already existed even before Obamacare). That's a nuance you missed.

Regarding fountains, pretty flowers, and such that's a matter of perspective, don't ya think? "Upgrades" like this, even if they aren't customer-facing, are an investment in labor. People tend to be more content (and thus, more productive) in comfortable environments.

[Brant Gaede]

There seems to be an implicit fallacy here that government produces goods and services. Government is 99% consumption.

--Brant

[BaalChatzaf]

There seems to be an implicit fallacy here that government produces goods and services. Government is 99% consumption.

--Brant

Amen! Governments produce mostly wars and lies.

Ba'al Chatzaf

[Derek McGowan]

There seems to be an implicit fallacy here that government produces goods and services. Government is 99% consumption.

--Brant

Yes, 99% is consumption but that doesnt effect my argument at all. You can create efficiently and you can consume efficiently. My post is only about a specific statement about efficiency that is bandied about and I just feel it needs to be clarified. It can and does give a mythical aura to business efficiency when that is not wholly the case.

[Derek McGowan]

How much of the inefficiency in businesses is a direct result of government regulations? Healthcare comes to mind. There's a huge amount of waste in healthcare organizations, almost all of which can be traced back to some form of governmental regulation (the reams of it that already existed even before Obamacare). That's a nuance you missed.

Regarding fountains, pretty flowers, and such that's a matter of perspective, don't ya think? "Upgrades" like this, even if they aren't customer-facing, are an investment in labor. People tend to be more content (and thus, more productive) in comfortable environments.

I did miss that at first but I've already responded to that idea and it still doesnt effect my argument because when the statement about efficiency is made, it is in regards to the current business environment with all the government rules, regulations, and cronyism that comes with it.

Healthcare is a big waste that is wrapped up in bureaucracy but when a company keeps there office lights on all night, that has nothing to do with government rules, its just wasteful. Decorations in most settings are wasteful WHEN we speak of high efficiency. When we speak of high efficiency, like the mythic kind that business gets the reputation of, most packaging is a waste, many third party (middle man) relationships are a waste. At this point, having cashier's is a waste, playing music over the pa system is a waste, most of what is thrown away should be reused therefore it is a waste as well. There are many employees who are friends or family and their salaries are a waste.

I'm not saying that business owners shouldn't make any decision they want, I'm just saying that in regards to the specific statement comparing government and business efficiency, it should be honestly stated that business could do better and just because it has survived doesn't mean it is efficient or effective. There are plenty of business that have low ratings and yet squeak by year after year. Especially in a environment where you can borrow borrow and borrow your way through another year

[Jonathan]

Decorations in most settings are wasteful WHEN we speak of high efficiency...

The thing is that statements like the above don't take into account that which is wasted when certain things are arbitrarily declared to be non-essential, unnecessary or "wasteful." They don't take into account the negative effects that removing all decorations, music, artisty, etc., have on people's lives and productivity. What you end up with is the dreary mindset of Soviet Gray. In the name of pinching a few pennies, all of the joy and satisfaction is drained out of existence, with the result of everyone's productivity being substantially lowered. Penny wise, pound foolish.

The "efficient" solution is then to crack down further and start punishing people for their lack of productivity. After all, if material efficiency is the only goal, and human comfort and happiness are not a part of the equation, then fear, and even violence, are great motivators in the name of "efficiency."

When we speak of high efficiency, like the mythic kind that business gets the reputation of, most packaging is a waste...

How have you determined that? You haven't identified the multiple roles that packaging plays, or how all of those roles could be fulfilled simultaneously by any alternate means. If you have a means of replacing current packaging methods which protects the product from tampering and contamination, informs the customer of all that he or she needs to know in order to make an informed purchasing decision, is portable, and complies with a variety of display and storage needs, let's hear it.

...many third party (middle man) relationships are a waste.

By what standard? You have to back up such claims with evidence. Middle men provide a service. They have information that both other parties lack. They put together deals and they unite parties and resources which otherwise would never come together. If you eliminate middle men from an equation, you have to keep in mind that the information or negotiation results that they brought to the situation would not exist.

At this point, having cashier's is a waste, playing music over the pa system is a waste, most of what is thrown away should be reused therefore it is a waste as well. There are many employees who are friends or family and their salaries are a waste.

It's a waste compared to what? What alternative is better? If you have a better alternative, prove it with your own time and money. Start a business without cashiers or music and which reuses everything.

That's the beauty of capitalism: If you believe that you've identified a problem, and you think you have a solution, then you should take the risk of implementing your solution with your own time and moeny. If you succeed, then you've made things better and more efficient and you'll be rewarded for it. If you fail, then everyone else doesn't have to pay for your ignorance and overconfidence in imposing your "solutions" on them.

I'm not saying that business owners shouldn't make any decision they want, I'm just saying that in regards to the specific statement comparing government and business efficiency, it should be honestly stated that business could do better and just because it has survived doesn't mean it is efficient or effective. There are plenty of business that have low ratings and yet squeak by year after year. Especially in a environment where you can borrow borrow and borrow your way through another year.

Again, prove it. Put your money and effort where your mouth is. If companies are being wasteful, then compete with them by creating a company which is more efficient. Demonstrate, with your own life, labor and treasure, that your solutions don't include any unforeseen consequences which will actually make things less efficient.

J

[Derek McGowan]

J,

I dont know exactly how to make separate quotes within the same post so I will identify your questions with numbers in sequence, but again allow me to restate that the point of my post is only to suggest that people who favor reason, logic, and who double check their premises (like Mrs Rand) should clarify their statements about certain things. People easily stereotype and especially in a comparison between what appears to be simple, black and white. It is too easy for the imagination to assume and broadly color their notions. We should say more and not just that business is efficient and government is not. This is merely a seeking out of double standards...

1. it really doesn't matter what is lost when we talk of decorations (and if you didn't know, I paint, so my business is decorations!) because when speaking of efficiency, anything that does not directly increase profits is unnecessary. Again, I would not want to live in a Soviet gray world but that has nothing to do with the fact that most decorations do nothing for sales. Also just to turn your statement into a positive one for government, getting rid of government programs because they are arbitrarily called wasteful doesn't take into account what is lost in respect to people lives who depend on such services : )

2. one real world example is water bottles. Did you noticed the change in the thickness of water bottles that occurred over the past 5-6 years? They are much thinner then they once were and the caps are smaller. The point is that the amount of plastic being used previously was wasted. Using more then what you need is wasteful from a monetary and a financial perspective. Now think about those plastic vacuum formed packages that you need tin snips or a utility knife to open. I REALLY dont think they need to be that robust. It doesn't protect the item from impact during shipping. Speaking of shipping (I work part time in retail) There are many many times that a huge box will come in with a single product inside no more then 25% the volume of the packing box. Why does ink cartridges have to come in cardboard boxes and then inside that cardboard is another metallic sealed liner? Why does it need both? I've seen stacks of plastic serving bowls that come with cardboard inserts between each to keep them from scraping each other. That's fine I guess but I've also seen plastic bags wrapped around those cardboard inserts!

3. First time I noticed this was on American Chopper. The first two seasons the guys used a third party (Justin) to paint their parts, then they moved on to another guy, then... they moved the work in house saving themselves a massive amount. Third parties charge a much higher rate than direct employees do. This is proved day in and day out in the real world. I needed my hall painted one day. The entrance hall to the house is about 30 feet long and the ceilings are 15 feet high. If I would have brought in a professional contractor, the job would have been 150-200 dollars. Instead I payed a friend's son 10 dollars an hour (a standard wage for an employee not for a contractor or a middle man) and he finished in three hours- 30 bucks! How much more does the government pay to outside contractors versus how much it would pay if the workers were on its payrolls. How much do businesses pay consultants versus either looking up the information themselves online or sending one of their own to classes to learn? On my retail job, we don't hire outside firms (such as REGIS) to do inventory, why, because the regular employees can do it on the same salary they been getting paid. The Obama care website costs 600 million because it was done by third party, if they a few guys on staff, the site could have been knocked out for much much MUCH less. Why do firms such as GE, Google and others acquire other firms? So that they can do the work in house for less of course. Even if you brought up the fact that they can then control patents, that still means they can do the work in house for less. The original Ford plant was extremely cost effective because they handled ALL portions of the car building process, from pouring the steel to blowing the glass in house. Standard Oil was so profitable because they owned 90% of the whole enterprise, from drilling to delivery. When the third party rail owners got too expensive, Rockefeller built the pipelines.

4. The fact that cashiers are a waste is being played out right now all across America. There are self check out lanes : ) Which one do you think is more efficient in the long run? A seventeen year old who doesn't show up for work 2 times a week or a machine that can operate 24 hours a day without lunch breaks and no complaints? I just listened to a finanacial radio program on the radio and they said that Bank of America is moving to a no teller system. You walk in and there are no desks, no counters, just a bunch of ATMs. They say it saves them on real estate costs as the new centers are 30 to 70% smaller then other centers. Email (and electronic and automatic system) has made the post office obsolete and a waste of money. Once cars can drive themselves, it will make all truck drivers obsolete and a waste of money. Oh and as far as the reusing of materials

5. I dont have any need to "put my money where my mouth is" because I DON'T EVEN WANT all of that automation or the Soviet gray. I like ambient music, I like talking to a teller. I haven't gone to a ATM in a year now, I'm 100% inside the branch. I like the fact that as a third party I can make my fair share for the work I have completed. I don't think it would be cool for everyone (many people I mean) to have to receive the standard wage from some penny pinching corporation. I was and still am upset with that case of the Bratz dolls where the creator couldn't sell his own creation because he made it while employed by Mattel so it is Mattel that inside makes millions, while the inventor gets his standard wage. My point is that it doesn't matter what I "like" or what anyone likes, the facts are the facts. And if money is used for something that doesn't increase profits, then from a business standpoint (and lets not forget, the purpose of a business is to make money) it is a waste. If the business has to continuously buy ball point pens because the employees lose them, then it is a waste.

Again, my only point is that as a monolithic whole, private business is very wasteful just as well as government is. The good news is that business has a higher (but not guaranteed) possibility of being shut down if waste, efficiency and effectiveness fall to far

[jts]

About government inefficiency:

In the 1970s or early 1980s, the Edmonton Sun or Edmonton Journal (I don't remember which) had a big article about shopping in Moscow. If you wanted to buy bread, you had to wait in a long lineup to pick the bread. Then you had to wait in a different long lineup to pay for the bread you picked. Then you had to wait in the first long lineup again to get the bread that you paid for. You had to wait in a long lineup 3 times to buy bread. If you wanted milk, you had to wait 3 times for milk, maybe in a different store. You had to wait 3 times for bread and 3 addition times for milk.

That is a level of inefficiency that only government is capable of.

[Derek McGowan]

About government inefficiency:

In the 1970s or early 1980s, the Edmonton Sun or Edmonton Journal (I don't remember which) had a big article about shopping in Moscow. If you wanted to buy bread, you had to wait in a long lineup to pick the bread. Then you had to wait in a different long lineup to pay for the bread you picked. Then you had to wait in the first long lineup again to get the bread that you paid for. You had to wait in a long lineup 3 times to buy bread. If you wanted milk, you had to wait 3 times for milk, maybe in a different store. You had to wait 3 times for bread and 3 addition times for milk.

That is a level of inefficiency that only government is capable of.

Agreed.

Edit.

Actually I wonder how waiting for hours for food compares to waiting 6-8 weeks for something that you buy off of an infomercial...

[Brant Gaede]

About government inefficiency:

In the 1970s or early 1980s, the Edmonton Sun or Edmonton Journal (I don't remember which) had a big article about shopping in Moscow. If you wanted to buy bread, you had to wait in a long lineup to pick the bread. Then you had to wait in a different long lineup to pay for the bread you picked. Then you had to wait in the first long lineup again to get the bread that you paid for. You had to wait in a long lineup 3 times to buy bread. If you wanted milk, you had to wait 3 times for milk, maybe in a different store. You had to wait 3 times for bread and 3 addition times for milk.

That is a level of inefficiency that only government is capable of.

Agreed.

Edit.

Actually I wonder how waiting for hours for food compares to waiting 6-8 weeks for something that you buy off of an infomercial...

Go stand inside of McDonald's for hours then order your food.

--Brant

still waiting for my Sham Wow

[dldelancey]

1. How do you quantify that which does not directly affect sales? How do you measure the impact of decorations on sales? What of jobs that have nothing to do with sales? My company sells stuff, but I don't personally sell anything. How do you measure my efficiency with decorations versus without?

2. If you don't like the packaging of those products, then you may choose not to purchase them.

3. My living room is in need of paint. I don't have a teenage neighbor. I've been painting it myself for months. Not efficient or effective.

My company outsources some technical work because we don't have the skillset in house (or even in our area) to handle it. It's mostly very specialized projects, a lot of which are short-term. It would not be efficient or effective to spend months recruiting for niche skills that we only need for one project.

4. I love self-checkout when I have only a few items that are easily handled and bagged. However, I do NOT want to use self-checkout when I have an overflowing basket or very large items.

5. I'm confused. You say you don't want these things, then why are you arguing them? I get your point about the double standard in arguments based on business being more efficient than government. However, I don't think there's anyone here who has ever argued that. Further, the entire point is moot to most of the people in these parts of the virtual world as we tend to believe that private businesses need not explain themselves to anyone but their stakeholders. If we don't approve of the way a business is being run, we can simply choose not to associate with them. If the business truly is inefficient, competition will weed it out.

[Jonathan]

We should say more and not just that business is efficient and government is not.

I agree that often more needs to be said. The one thing that I think is often missing from discussions about free markets versus government-provided services is that all of the complaints about bad or mistaken business practices are also true of government, but the difference is that citizens can't instantly opt out of dealing with bad government, where they can opt out of dealing with bad businesses.

1. it really doesn't matter what is lost when we talk of decorations (and if you didn't know, I paint, so my business is decorations!) because when speaking of efficiency, anything that does not directly increase profits is unnecessary. Again, I would not want to live in a Soviet gray world but that has nothing to do with the fact that most decorations do nothing for sales.

My point was that the absence of "decoration" does affect profits. It affects production.

Apple's massive success is due in very large part to "decoration." Jobs' business mindset was heavily focused on aesthetics. Apple's profits would not exist if the products had been stripped of the style.

Also just to turn your statement into a positive one for government, getting rid of government programs because they are arbitrarily called wasteful doesn't take into account what is lost in respect to people lives who depend on such services : )

The same argument could be used to support slavery: Abolishing slavery doesn't take into account what is lost in respect to the people who depend on such services.

2. one real world example is water bottles. Did you noticed the change in the thickness of water bottles that occurred over the past 5-6 years? They are much thinner then they once were and the caps are smaller. The point is that the amount of plastic being used previously was wasted. Using more then what you need is wasteful from a monetary and a financial perspective. Now think about those plastic vacuum formed packages that you need tin snips or a utility knife to open. I REALLY dont think they need to be that robust.

Do you know all of the requirements that a bottle must have, or if plastics technology from a few years ago could fulfill those requirements without the thickness that was being used?

Why does ink cartridges have to come in cardboard boxes and then inside that cardboard is another metallic sealed liner? Why does it need both?

Go into that business and discover why. The fact that you or I, or any other layman, might not be able to immediately come up with an answer, doesn't mean that everything that we don't like or understand is being done for no valid reason. Go into business and package a product in what you think is a sufficient/efficient carrier, and then when you start getting 30% damaged returns due to consumer snooping/tampering, I think you'll have your answer.

3. First time I noticed this was on American Chopper. The first two seasons the guys used a third party (Justin) to paint their parts, then they moved on to another guy, then... they moved the work in house saving themselves a massive amount. Third parties charge a much higher rate than direct employees do.

Indeed, third parties do charge higher rates. But then again, vertically integrating a business can be even more expensive and less efficient than hiring outside parties, depending on how much or how little of something one is producing. If one's company isn't producing enough bikes per year to keep a paint booth and technician busy and profitable, then it makes more sense -- it's more efficient -- to hire out the service.

The same is true of all parts and processes involved in production. For example, OCC also purchases its electrical wiring and components from other companies. Wouldn't it be more efficient for OCC to own and run its own mines, foundries, extrusion plants, etc., and make their own wiring and switches from scratch? Probably not. Depending on how much of something that one is producing, outsourcing is often cheaper and more efficient than owning the entire supply/production chain.

This is proved day in and day out in the real world. I needed my hall painted one day. The entrance hall to the house is about 30 feet long and the ceilings are 15 feet high. If I would have brought in a professional contractor, the job would have been 150-200 dollars. Instead I payed a friend's son 10 dollars an hour (a standard wage for an employee not for a contractor or a middle man) and he finished in three hours- 30 bucks!

I could also hire your friend's son to paint my portrait, instead of you, thus saving myself a lot of cash. That is, if I'm willing to risk settling for the lower quality that you were willing to risk settling for in your hallway.

How much more does the government pay to outside contractors versus how much it would pay if the workers were on its payrolls.

In the above you're not comparing free market inefficiency with government inefficiency, but government inefficiency with government inefficiency.

How much do businesses pay consultants versus either looking up the information themselves online or sending one of their own to classes to learn? On my retail job, we don't hire outside firms (such as REGIS) to do inventory, why, because the regular employees can do it on the same salary they been getting paid.

Do you use the postal service or other couriers? If so, why? You could drive the stuff yourself to its destination. Wouldn't that be more efficient according to your theory?

The original Ford plant was extremely cost effective because they handled ALL portions of the car building process, from pouring the steel to blowing the glass in house. Standard Oil was so profitable because they owned 90% of the whole enterprise, from drilling to delivery. When the third party rail owners got too expensive, Rockefeller built the pipelines.

So, then you, as an artist, should be mining your own pigments, distilling your own oils and binders, raising, harvesting and spinning your own cotton, and weaving your own canvases. But would that really be more efficient? Isn't it more efficient for you to pay paint-makers and canvas-makers to do what they do best rather than expending -- wasting -- your valuable time doing it poorly in comparison? Isn't your time used more efficiently if you focus on what you've become an impassioned, experienced specialist at rather than on learning new tasks for which you have no passion?

I was and still am upset with that case of the Bratz dolls where the creator couldn't sell his own creation because he made it while employed by Mattel so it is Mattel that inside makes millions, while the inventor gets his standard wage.

Did he have a contract that stipulated that he wouldn't be able to sell any creation that he had made while employed with Mattel? If so, then that was probably a pretty stupid contract to sign. The next time that he is faced with a contractual offer, he should consider it more carefully before signing, and then take responsibility for his decision even if he doesn't like the outcome later.

J

[Jonathan]

Third parties charge a much higher rate than direct employees do. This is proved day in and day out in the real world. I needed my hall painted one day. The entrance hall to the house is about 30 feet long and the ceilings are 15 feet high. If I would have brought in a professional contractor, the job would have been 150-200 dollars. Instead I payed a friend's son 10 dollars an hour (a standard wage for an employee not for a contractor or a middle man) and he finished in three hours- 30 bucks!

I was thinking today about Derek's example above in which he found the most efficient means of having his hallway painted in a free market system, and what would happen if government were involved in the service that he required.

First of all, Derek's desire to pay a friend's son a fraction of the wage that professionals earn would be considered exploitation of the weak, needy and/or naïve.

Government would make a law requiring Derek to inform the friend's son of the standard professional rate that is being paid so that the friend's son would have enough information to so as not to be negotiating from a position of ignorance.

Then Derek and his friend's son would have to do some paperwork and submit it for approval to various government agencies. They'd need certifications and permits. Derek would have to pay the fees for these.

Government agents would visit Derek's house to inspect it, at Derek's expense, and determine that it is an unsafe working environment for an untrained worker like Derek's friend's son, so the solution would be to tax Derek and his neighbors to fund a school which would properly train the son, and get him all certified, unionized and official.

Then the government would decide that the son still wasn't sufficiently protected from exploiters like Derek, so the entire profession of painting would be taken over by government. When the son finally showed up to paint Derek's hallway, he'd be accompanied by assistants as well as various supervisors, inspectors and union representatives

Long story short, the service would cost Derek $12,938, and Derek would end up in jail for half a year and would have to complete several sensitivity training courses.

J

[Derek McGowan]

Jonathan, I appreciate yours and ms dldelancey's remarks. Some of them were funny.. I feel though that I should not continue to argue the surface points about my statement when from both of your responses I can see that you not only understand the main point that I was trying to make but that you also agree with me.

The point being that business and government are wasteful and, as monolithic wholes, have incredible inefficiencies. Private business is still preferred because (and I've said this in all of my statements) of the opt-out nature of the market versus the "yo ass is mine now sucka" nature of governmental control. All I'm saying is that we should make mention of the fact that that is the reason that business is preferable and not the idealistic notion that government is wasteful and business is not.

ps. A few of your sticking points against me have no bearing on my point. There...I spoke last ha ha!

[dldelancey]

Jonathan, I appreciate yours and ms dldelancey's remarks. Some of them were funny.. I feel though that I should not continue to argue the surface points about my statement when from both of your responses I can see that you not only understand the main point that I was trying to make but that you also agree with me.

The point being that business and government are wasteful and, as monolithic wholes, have incredible inefficiencies. Private business is still preferred because (and I've said this in all of my statements) of the opt-out nature of the market versus the "yo ass is mine now sucka" nature of governmental control. All I'm saying is that we should make mention of the fact that that is the reason that business is preferable and not the idealistic notion that government is wasteful and business is not.

ps. A few of your sticking points against me have no bearing on my point. There...I spoke last ha ha!

Well, gosh, you're no fun. Ha! I spoke last! Jonathan, don't you dare try to out-last-word me!

But seriously, I actually don't agree with you, Derek. I think your underlying premise is faulty, and you have some issues with mis-identification. Therefore, the individual arguments you make do not support your main point. However, I get you. And I like your art. If I haven't said so already, welcome to OL. Good luck with your business venture (school children portraits).

[Jonathan]

Hi Derek,

I think I understand you better now. I think we agree that people are, by their nature, imperfect, lacking in knowledge of one thing or another, etc., and that they make mistakes on their way to learning to be more efficient and productive.

What's the old Will Rogers line, something like, "Good judgment comes from experience, and experience comes from lots of bad judgments"?

When people say that the free market is efficient, and that government is inefficient, they don't mean that no one in a free market ever makes a mistake or that the market can't become even more efficient. They just mean that, given the fact that humans are not omniscient, and they often have their own intellectual peculiarities, blindnesses and/or ulterior motives, 100% efficiency is not possible, but the invisible hand of the free market is always necessarily more efficient than the hand of a centralized controller. There are too many factors for the central planner to be aware of. Making good judgements about an entire state's or nation's economy would require more experience than any one person is able to gain in a lifetime. And, unlike participants in a free market, the central planner's bad judgments do not affect him directly, if at all, so he may have incentives to deny that his judgments and decisions were bad, rather than learn from them.

I won't respond to the following so that you can still technically have the last word:

ps. A few of your sticking points against me have no bearing on my point. There...I spoke last ha ha!

J

[Brant Gaede]

The LAST word.

--Brant

this way to the egress

[anthony]

Hi Derek,

I think I understand you better now. I think we agree that people are, by their nature, imperfect, lacking in knowledge of one thing or another, etc., and that they make mistakes on their way to learning to be more efficient and productive.

What's the old Will Rogers line, something like, "Good judgment comes from experience, and experience comes from lots of bad judgments"?

When people say that the free market is efficient, and that government is inefficient, they don't mean that no one in a free market ever makes a mistake or that the market can't become even more efficient. They just mean that, given the fact that humans are not omniscient, and they often have their own intellectual peculiarities, blindnesses and/or ulterior motives, 100% efficiency is not possible, but the invisible hand of the free market is always necessarily more efficient than the hand of a centralized controller. There are too many factors for the central planner to be aware of. Making good judgements about an entire state's or nation's economy would require more experience than any one person is able to gain in a lifetime. And, unlike participants in a free market, the central planner's bad judgments do not affect him directly, if at all, so he may have incentives to deny that his judgments and decisions were bad, rather than learn from them.

I won't respond to the following so that you can still technically have the last word:

ps. A few of your sticking points against me have no bearing on my point. There...I spoke last ha ha!

J

I think that pretty well nutshells it. This discussion -on waste and inefficiency- is really about error vis-à-vis human "perfection" - as you indicate. As a person has the 'right to be wrong' (necessarily and realistically) so has the free market. However, with each of them, there is continuous self-adjusting and redirecting iro reality. Derek, capitalism isn't the only moral system because it can't be 'wrong' at any single time or location - it is moral because it exactly reflects the nature of reality and men: individuals' rationality and self interest, their volition and aspirations.

The juggernaut of State is driven by ideology, altruism-collectivism, which means no money can suffice to implement immoral (unreal) ends (for the supposed common good). Then it throws good money after bad to force its way.

[Darrell Hougen]

Hi Derek,

There are reasons that governments are inefficient and this article in the Wall Street Journal does a pretty good job of explaining them.

I was searching for the history of how the U.S. government once ran a steel company, and this article starts with that example:

In 1913, for instance, thinking it was being overcharged by the steel companies for armor plate for warships, the federal government decided to build its own plant. It estimated that a plant with a 10,000-ton annual capacity could produce armor plate for only 70% of what the steel companies charged.

When the plant was finally finished, however -- three years after World War I had ended -- it was millions over budget and able to produce armor plate only at twice what the steel companies charged. It produced one batch and then shut down, never to reopen.

That example epitomizes the sorry record of the government when it comes to efficiently running anything.

I would suggest reading the entire article.

Darrell

[BaalChatzaf]

Hi Derek,

There are reasons that governments are inefficient and this article in the Wall Street Journal does a pretty good job of explaining them.

I was searching for the history of how the U.S. government once ran a steel company, and this article starts with that example:

In 1913, for instance, thinking it was being overcharged by the steel companies for armor plate for warships, the federal government decided to build its own plant. It estimated that a plant with a 10,000-ton annual capacity could produce armor plate for only 70% of what the steel companies charged.

When the plant was finally finished, however -- three years after World War I had ended -- it was millions over budget and able to produce armor plate only at twice what the steel companies charged. It produced one batch and then shut down, never to reopen.

That example epitomizes the sorry record of the government when it comes to efficiently running anything.

I would suggest reading the entire article.

Darrell

A very sensible article. Nothing he wrote is really ultra new or ultra surprising. Governments and the people who run and or manage them simply do not have the proper incentives to do business successfully. The big show stopper is operating with Other People's Money. No money is dearer than one's own or cheaper than Other People's Money.