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Friday, November 28, 2008

City budgets vs. services

Here we go again, with the question of who will provide services if not the government. I always say that private groups of individuals acting together can provide services better than the government. Now that city budgets are having such a hard time in this economic downturn, it's easy to see how shortsighted and inefficient they are.

We all know what happens to city services when times are bad. They end up cutting services, from public swimming pools to police and fire. Either that or raise taxes. Governments know they don't have to provide efficient services because they can just take more money from the people with the excuse that they need it to function better.

The cold reality of it is that extra money might as well go into a sinkhole. The excuse is used time and time again for public schools. We need to keep throwing more money at the problem and it will somehow be fixed. Then they take the liberty of putting the same taxes on their ballots over and over until people finally give up and pass it.

They even screw up things as simple as trash collection. They have to resort to alternating trash and recycling days in order to make ends meet. Toledo already has a trash fee, $7 for people who recycle and less for people who do. It will eventually be raised to $10 in the year 2010. I'm not saying you wouldn't have to pay fees for trash collection in a free market. Just they they would be much more efficient and cost effective.

From what I can tell, history has shown that as products and services get more and more efficient, prices for them will gradually drop. This happened with Standard Oil's prices, until the free market for energy was taken away. It happens with the relatively unregulated markets of computer and electronics today. Not so with governments, holds true right down to the smallest of city services.

5 comments:

Matt said...

Hmm... interesting. All conjecture and no fact. Instead of waxing the abstract, why not give facts and emperical data?

Here's a fact: Oil has never been a "free market" in recent history. It relies heavily on subsidies in the form of tax breaks and the waiving of residuals on leasing public land for drilling.

Furthermore, spinning off public services has resulted not in a true free market, but rather a monopoly of services. For instance, power that was once owned my municipalities are owned by a single entity--there is no competition in the power generation space: Do you have a choice in who provides your power? No, so there's no real competition. Unlike computer companies, where there is a choice of providers: Dell, HP, Lenovo, Acer, etc.

I would be more than happy to buy the argument of privatizing public services IF there was an example in which it really worked; where competition DID exist and there wasn't a single provider of those services for a given region.

It would be far better to make government more efficient by trimming the bureaucracy and applying just-in-time principles than to privatize everything.

After all, do you really want to pay a toll for every road on which you drive when that's privatized?

hallfarm said...

Ah ha you are a libertarian. Good for you. I'm finding out that almost all of my friends are libertarian. I agree with you wholeheartedly.

hallfarm said...

OK, so "Matt" thinks your argument isn't good because you don't have statistics. As a doctoral student I've learned that statistics rarely have much bearing unless they are done correctly. And "facts" are hardly ever really "facts". So what if power has a monopoly, it has stayed extremely cheap over the years and when I was in hurricane Katrina I was impressed with how quickly they responded to the power outages. Compared to FEMA has no competition and just throws around millions of dollars and gets nothing accomplished except keep law-abiding citizens at bay who had their legally purchased guns stolen from them at gun point, set up flimsy trailors on the same beaches where the hurricane hit, and basically get in everyone's way. If private businesses had been hired to do what FEMA was supposed to do then perhaps New Orleans and the Gulf coast in general would actually already be recovered just like all the power lines that were back in place within a few weeks.

And I'm confused at your argument Matt, why would a monopoly by the government be better than a monopoly by private businesses? My parents both worked for the government and they can attest to the excessive waste! Private businesses cannot afford to waste and they are always trying to improve things, not just appear to be improving things. Otherwise they quickly lose their status as the monopoly. When the government stops keeping up with things because it has a monopoly it just stops working. Speaking of which, have you ever tried to work with the government health services already available. While in school my wife used medicaid and WIC and it was a nightmare. We rarely talked to a human being, just left messages that weren't answered. We got letters every couple of weeks demanding pay stubbs and bank statements and other things that they already had on record, they seemed to just be trying to make us do something, because they sure let us know if they didn't have the same information, by constantly threatening to cut us off from insurance. If you like being able to walk in a hospital and talk to someone, enjoy it, because it probably won't last long when the government becomes the sole health care provider.

darjen said...

Thanks for the comments. It's not all conjecture and no fact. The simple fact is that government services suck. They are so laughably mismanaged that it's amazing people even bother to defend them anymore.

Read "The myth of the natural monopoly" by Thomas J DiLorenzo and you will see that the government is the one who created all the utility monopolies. Even Wikipedia admits that Ohio Edison was forcefully consolidated from over 200 power companies in that operating area alone.

As far as roads go, I would much rather have people who use them the most pay the most. There's absolutely no reason I should be forced to subsidize federal highways in Alaska. There actually used to be lots of road companies before the government took those over as well. The article "FREE MARKET TRANSPORTATION: DENATIONALIZING THE ROADS" by Walter Block pretty much puts to bed the miserable assumption that only the government should build roads.

Both of these articles are available online if you google the titles. I would highly recommend you take a look at them. Thanks for reading. :)

darjen said...

Here, I'll even make it easy for you and provide the links.

Free market roads

The myth of the natural monopoly