Thursday, February 12, 2009

Things that should be Private Industry, Things that should be Public

Incentives. Everything is all about incentives. Why you wind up doing what you do.

For most of us, we work. Why? To get money. Why? To pay for lower base needs (house, food, health), and higher needs (education, entertainment, Twinkies - which really aren't food).

The incentive behinds things drives our behavior around it. Take energy. If I'm an energy plant, I have an incentive to get people to use as much energy as possible, because I make more money. That means the more energy saving appliances out there, the worse my business gets. Of course, as a consumer, I have an incentive to buy energy saving appliances - unless, of course, the cost of those appliances is more than what I'd save on electricity. Unless my incentive was to save the planet -

OK - we can go around like this forever. You get the point. So, the incentive behind something can drive behavior. Let's go back to our energy company. In California, they passed a law saying that energy companies not only get money for how much electricity they *sell*, but also how much energy their customers *conserve*. If they get customers to use less electricity, they get even *more* money then they would have from people using energy alone.

Now, the energy company has the same incentive (get more money), but there's a path to get even *more* money by encouraging good energy policy with its customers. Perhaps using the power of bulk buying to purchase efficient light bulbs for its customers and giving them out to their customers, or helping customers insulate their homes, and so on.

There are some people who would argue that *everything* should be private industry, because "that works best!" Sure - tell that to the banking, real estate, auto industry, and a few others. But the point isn't "some businesses have good managers and ideas, some don't", it's the *incentive* behind their drive.

Let's take the courts. If the incentive of the court is to make money - then they're going to seek things out that make more money. Imagine if you were arrested for a crime, and the judge sent you to jail. Not because you were guilty, but because "This trial is brought to you by Johnson Prisons - and they just paid me a great kickback to slap your ass in the pokey!"

I know - never going to happen. Until you read about a case where judges were getting kickbacks from "youth detention centers" in areas where teens were getting trials without lawyers and amazingly high incarceration rates.

There are reasons why we have laws against bribing, and why we have a government that provides services that provides those services regardless of your ability to pay them.

So just for fun, I've got a list of jobs that work best as a public service (aka - paid for by taxpayer dollars and run by neutral government agencies), and things that should be private.


Health Care (sorry, but if my leg stays broken because I don't have the funds to fix it, that's screwed up)
Energy (yes, energy. The incentive for energy companies is to sell more energy, regardless of whether it hurts the environment or the public or not.)


Grocery stores
Electronic gadget makers
Automobile manufacturers
You know what, probably everything I didn't list under "Public".

I'm pretty sure I missed some things. This is just a short list. I guess this is a backlash from me for all of the "Private industry is the best at *everything*!" Because there are some things I just don't find it so.

And privatized prison systems are probably #1 on the list. I can imagine few things more evil than people having a business to keep people locked up - when that provides every incentive in the world to lock up more people, rather than rehabilitating them. It creates incentives for trying to get more laws on the books to put people in jail, rather than fixing the ills of society.

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