Privatization

[collegestudent22]

Strangely, the Democrat administration appointed Deficit Reduction Committee heard testimony from a CATO Institute representative, the manager of the Downsizing Government website. Stranger still, his testimony used Canada (privatized ATC system - NavCanada - and no federal education control), New Zealand (elimination of farm subsidies in a heavily agricultural country resulted in improved farm system), Germany/Netherlands (privatized postal service) and Chile/Australia (privatized Social Security). He also pointed to unsubsidized major airports in major cities such as Amsterdam, Auckland, Frankfurt, London, Melbourne, Sydney, and Vienna, as an argument for eliminating airport subsidies.

And yet, the government, instead of privatizing these systems as others have done, is ADDING to the bureaucratic mess that is government-run programs with healthcare, financial reform, and, potentially, cap-and-tax. Why? Oh, right. Because Obama continues to think debt isn't a problem, despite it causing the USSR to go bankrupt, the Weimar Republic to fall under Hitler, Europe to be in the perilous position it is currently in, and all of the other leaders of the free world (and some of the not-so-free world) telling him he's wrong. And the debt climbs to above 90% of GDP, now....

Call it Communism, socialism, Keynesian economics, whatever. The point is: government spending, in any form, should be as limited as possible to avoid such a drain that the economy collapses under the weight of the debt - ideally, there should be a surplus returned to the people each year. The Republican Congress managed to do that for a few years in the 1990s, but it needs to be continuous throughout history....

[adciv]

We'll see how it turns out. WSJ had an article on the tax trap that seems to have been put in place. Can someone tell me the last time a government program was ended?

[Martin Blank]

Privatization is not always a panacea. The Los Angeles Department of Water and Power provides said services to the people of the City of Los Angeles (and some suburbs) for lower than the price of nearby companies such as Edison, and also provides tens or hundreds of millions of dollars annually to the city budget as profits are partially diverted to the city. I pay the city of Anaheim a power bill that has slightly lower rates than I paid Edison in Fullerton just a few years ago.

Privatizing Social Security is not an easy thing to do. While its long-term stability is in doubt, it has a defined gain measured by the bonds that it purchases. Changing it to the mercurial situations involved in the stock market is dicey; consider if someone had paid in tens or hundreds of thousands of dollars to such a plan, and retired a month before the downturn of 2008.

Also, the US Postal Service pays its own bills (though is not taxed on its profits), and so could be considered quasi-private. I don't know that the German postal service has been totally privatized, since this article from January 2010 refers to the Deutsche Post as a "state-run postal service," and refers to competition with the private sector.

[collegestudent22]

Privatization is not always a panacea. The Los Angeles Department of Water and Power provides said services to the people of the City of Los Angeles (and some suburbs) for lower than the price of nearby companies such as Edison, and also provides tens or hundreds of millions of dollars annually to the city budget as profits are partially diverted to the city. I pay the city of Anaheim a power bill that has slightly lower rates than I paid Edison in Fullerton just a few years ago.

Municipally owned utilities do not need to get profits as a main motivation. Yes, government can, under certain circumstances (generally locally), do some complicated things as well as a private corporation. The chance of the federal government pulling anything like that off is almost 0. They have failed at the USPS, Amtrak, etc...

Privatizing Social Security is not an easy thing to do. While its long-term stability is in doubt, it has a defined gain measured by the bonds that it purchases. Changing it to the mercurial situations involved in the stock market is dicey; consider if someone had paid in tens or hundreds of thousands of dollars to such a plan, and retired a month before the downturn of 2008.

Why not just replace the giant black hole of "money that doesn't exist" with IRAs for each individual?

Also, the US Postal Service pays its own bills (though is not taxed on its profits), and so could be considered quasi-private. I don't know that the German postal service has been totally privatized, since this article from January 2010 refers to the Deutsche Post as a "state-run postal service," and refers to competition with the private sector.

Well, the state bank has a 30% share in the company, but it is run by a private corporation. Also, USPS may pay its own bills, but only after borrowing billions every year from the Treasury and not paying it back - effectively, it is still subsidized.

Without serious reform it's set to lose $7 billion this year and $238 billion over the next 10 years, and a new report from the Government Accountability Office says the Post Office's business model is "not viable" given current business conditions. The report makes the Post Office sound like a government version of General Motors, if General Motors itself weren't already a government version of General Motors.

Source

[Martin Blank]

Municipally owned utilities do not need to get profits as a main motivation. Yes, government can, under certain circumstances (generally locally), do some complicated things as well as a private corporation. The chance of the federal government pulling anything like that off is almost 0. They have failed at the USPS, Amtrak, etc...

The USPS has only recently had financial problems. Its only subsidy has been that it doesn't pay income taxes, but it has generally run a profit for a very long time. It is only recently that it's run into problems,

But there's a reason for this. The USPS is not allowed to stop service to those residents who are difficult (and thus money-losing) to reach. Every person in the US, no matter where they live, must be served by the USPS. It may not be to-the-porch delivery, but it still has to happen. At some point, the USPS almost certainly will become subsidized, but that's one part that I don't really have a problem with. You won't find UPS or FedEx picking up the slack because they would have to provide service to highly unprofitable locations.

Privatizing Social Security is not an easy thing to do. While its long-term stability is in doubt, it has a defined gain measured by the bonds that it purchases. Changing it to the mercurial situations involved in the stock market is dicey; consider if someone had paid in tens or hundreds of thousands of dollars to such a plan, and retired a month before the downturn of 2008.

Why not just replace the giant black hole of "money that doesn't exist" with IRAs for each individual?

Because that changes it to a mercurial situation involving the stock market.

Look, I would switch if I could. That's adopting a risk I know about and there's time to mitigate losses. But someone who is older than me, in their 50s, would have problems with it. And what do you do with people who have zero clue of investing? Even the people whose very job it is to handle the market sometimes don't know how the transactions they conduct actually work.

[Deacon]

You won't find UPS or FedEx picking up the slack because they would have to provide service to highly unprofitable locations.

Which addresses are you aware of that neither UPS nor FedEx will deliver a package to, exactly? I ask because I've had some stuff shipped to some pretty damn rural areas...

[Deacon]

We'll see how it turns out. WSJ had an article on the tax trap that seems to have been put in place. Can someone tell me the last time a government program was ended?

Every time people try to convince me that Obama's just ignorant, that he doesn't realize what he's doing, that he really believes it's the right thing, I despair even further. It's one thing to have an malevolent force running the country. It's quite another to successfully convince the suburban sheep that he's not a bad wolf, he just really thinks mutton's the way to go, and wool is just so much more comfortable.

[collegestudent22]

The USPS has only recently had financial problems. Its only subsidy has been that it doesn't pay income taxes, but it has generally run a profit for a very long time. It is only recently that it's run into problems,

As the quantity of mail delivered, as well as the problems involved in having an organization both government-controlled and a monopoly, has resulted in money losses for the last two decades - financial troubles mostly offset by jacking up postage prices to double what they were when the organization was made "independent" in the 80s.

The USPS is not allowed to stop service to those residents who are difficult (and thus money-losing) to reach. Every person in the US, no matter where they live, must be served by the USPS. It may not be to-the-porch delivery, but it still has to happen. At some point, the USPS almost certainly will become subsidized, but that's one part that I don't really have a problem with. You won't find UPS or FedEx picking up the slack because they would have to provide service to highly unprofitable locations.

What are these "highly unprofitable locations", exactly? Because, I have never heard of an area where UPS or FedEx won't ship to. And if they will ship packages there, I have trouble believing that were they able, they wouldn't

Privatizing Social Security is not an easy thing to do. While its long-term stability is in doubt, it has a defined gain measured by the bonds that it purchases. Changing it to the mercurial situations involved in the stock market is dicey; consider if someone had paid in tens or hundreds of thousands of dollars to such a plan, and retired a month before the downturn of 2008.

Why not just replace the giant black hole of "money that doesn't exist" with IRAs for each individual?

Because that changes it to a mercurial situation involving the stock market.

What about a standard retirement savings account? Would that not work? Or a private company that buys bonds? Look, investment always has some risk, and right now, I'm paying for something I will never get.

[adciv]

Privatizing Social Security is not an easy thing to do. While its long-term stability is in doubt, it has a defined gain measured by the bonds that it purchases. Changing it to the mercurial situations involved in the stock market is dicey; consider if someone had paid in tens or hundreds of thousands of dollars to such a plan, and retired a month before the downturn of 2008.

Alternative for privatizing that still avoids the stock market: FDIC insured Certificates of Deposit. They pay better, are just as good as treasuries and can be made inheritable. Or, see what these guys did.

[Martin Blank]

You won't find UPS or FedEx picking up the slack because they would have to provide service to highly unprofitable locations.

Which addresses are you aware of that neither UPS nor FedEx will deliver a package to, exactly? I ask because I've had some stuff shipped to some pretty damn rural areas...

There aren't many that they won't deliver to at all, and most of them are places like distant towns in Alaska. Such places have to get them brought in by plane (much like their other goods) after being delivered to where stores are picked up.

But I wasn't referring to packages, really. The USPS must provide for the delivery of letters, postcards, and various junk mail to places where the number of places the postman visits each day could be measured in the dozens. Trying to convince UPS or FedEx to do that at 43 cents each (and often much less in the case of postcards and even junk mail) just isn't going to work.

[Deacon]

As compared to $0.43 for the major urban areas that cost a tiny fraction of that? It all just depends, doesn't it?

[Martin Blank]

They may not have a problem with that in such areas. Or maybe they will -- the USPS doesn't have to pay much in the way of taxes (I think they pay sales tax) whereas UPS/FedEx do -- since mail volumes are declining and sending the per-piece costs higher. But sending to Wainwright, AK, might not be doable for such low prices, or even for much higher prices.

[adciv]

I believe one of the statements made by a politician pushing this is something along the lines of "People should have to pay the costs associated with where they live." It may be a higher cost, but it's still there choice to live that far out. Besides, once thing that could be done is have the mail at certain various locations and have it picked up periodically for delivery. A PO Box at a longer distance for instance.

[morningsun]

I'm from Europe and after a few years of experience, I'm convinced that privatization is NOT the ultimate cure to a state's debt problem. It may ease the problem for a certain period of time but in the end it will even exacerbate it. An example would be the electric power supply in many towns in Britain. Actually Obama's plans for a public health insurance made me think of possibly apply for a green card, for I have relatives in California and always wanted to live in America but the problem of health insurance was one of the things that restrained these considerations.

[collegestudent22]

I believe one of the statements made by a politician pushing this is something along the lines of "People should have to pay the costs associated with where they live." It may be a higher cost, but it's still there choice to live that far out. Besides, once thing that could be done is have the mail at certain various locations and have it picked up periodically for delivery. A PO Box at a longer distance for instance.

Or... they can use the "magic of the internet" to pay their bills online and use email instead of "snail mail". And, yeah, even in places that are extremely far out (say, like, Barrow, AK) can get some form of broadband internet in this day and age.

I'm from Europe and after a few years of experience, I'm convinced that privatization is NOT the ultimate cure to a state's debt problem. It may ease the problem for a certain period of time but in the end it will even exacerbate it.

Given that European countries rarely, if ever, completely privatize anything, I am skeptical of your "years of experience". And to clarify a misunderstanding that I think you may have, "privatization" in this discussion is not "the government pays a company to do X instead of doing it itself". It is, "the government allows private companies to do X, charge for it, and stop paying for it themselves". This means the government is not involved at all in the process.

For example, with mail, this would have FedEx and UPS (and other shipping companies in the US) being able to deliver regular letters (they aren't allowed to currently). USPS would be eliminated as a government agency and turned into an ordinary shipping company. Thus, all of the costs associated with the shipping of mail is removed from the government - saving billions every year. According to the Washington Post, USPS faces a $238 billion deficit (cumulative) between now and 2020.

An example would be the electric power supply in many towns in Britain.

You are going to explain quite a few things with that example. For instance, how exactly is the power utility structured in these areas? What is the problem with that structure (as you see it)?

Actually Obama's plans for a public health insurance made me think of possibly apply for a green card, for I have relatives in California and always wanted to live in America but the problem of health insurance was one of the things that restrained these considerations.

But, again, who pays for it? Not you, obviously, because if you could pay for your healthcare, it wouldn't have prevented you from applying for that green card. So, really, I'm paying for it. RLF is paying for it. Everyone that already has health insurance without this plan, is paying for it.

And emergency care for the uninsured is already covered by the hospitals. Health insurance is really more of a luxury. Being able to afford going to the doctor for a cold, or earache, or something minor is nice, don't get me wrong, but it isn't necessary to live.

"Free" healthcare is just one of the myriad reasons Greece is going under. And while it does, people that have an entitled attitude (somewhat like what seems to be coming across in your post) demand more and more from the government, despite its financial insolvency. And that's a country that has barely any population growth. The US has a MUCH higher growth rate, with the US Census Bureau predicting that we will grow by 46% between 2007 and 2050. That's 10x the average growth rate of Greece. That rate is going to cause financial insolvency much sooner if we institute similar policies. Yet, we continue to do so.