tag:blogger.com,1999:blog-30875219.post3675825318690436178..comments2023-10-19T11:27:53.931-03:00Comments on true dough: The sensitivity of industries to labour regulationstrue doughhttp://www.blogger.com/profile/14528611736159255452noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-30875219.post-40590841138669181232007-02-05T22:02:00.000-04:002007-02-05T22:02:00.000-04:00Thank you. And thanks for your comments!Thank you. And thanks for your comments!true doughhttps://www.blogger.com/profile/14528611736159255452noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-88577850768576696972007-02-02T23:29:00.000-04:002007-02-02T23:29:00.000-04:00Yes, it sounds naïve to think that pressure from t...Yes, it sounds naïve to think that pressure from the opposition, voters, et al is sufficient enough to cause the government to make the same kind of purchasing and pricing decisions as a firm would.<br /><br />I'm not implying that governments don't have good intentions; however, I believe that there are things that firms, “by nature,” can do better than the government. They have different priorities and objectives, and well they should.<br /><br />The chances that the government will overspend are much greater than the chances of a firm not wanting to keep its costs down by its own initiative. Again, do you really believe that voters, lobbyists, etc are going to pressure the government in power to, say, pay/hire road construction crews less if they’re being overpaid/overhired? Or to lay off workers in periods of poor growth?true doughhttps://www.blogger.com/profile/14528611736159255452noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-15202177377702515412007-02-01T21:33:00.000-04:002007-02-01T21:33:00.000-04:00I'm sure that the point you're trying to make is t...I'm sure that the point you're trying to make is that corruption can exist in both public and private sectors. I won't argue with that.<br /><br />But, in Becker's defence, he's talking specifically about corruption in pricing and purchasing decisions, which are more likely to occur in the private sector. In Enron's case, corruption was caused by accounting fraud. The difference is that governments can enforce rules on corporations to limit accounting fraud and such. Meanwhile, when the government is pressured into offering a certain wage, or making purchases from a certain region, etc, the situation is quite different. <br /><br />Who sets limits on the government? Those who lobby the government are more likely to lobby in favour of higher subsidies, higher wages, etc. Not to bring wages down from an inflated level, for example.true doughhttps://www.blogger.com/profile/14528611736159255452noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-85350659812594967032007-01-31T19:25:00.000-04:002007-01-31T19:25:00.000-04:00Oh, I’m clumsy. I meant to say "eg Posner: To an e...Oh, I’m clumsy. I meant to say "eg Posner: To an extent..." Perhaps you figured that out.<br /><br />Anyway, I’m glad you linked to both pieces. It made more sense that way, as you say.<br /><br />I haven’t read enough of Posner to form an opinion of him. Although, from the little that I have read, I find that Becker substantiates his claims better. Or, perhaps Becker is just a better "teacher." I don’t know.true doughhttps://www.blogger.com/profile/14528611736159255452noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-62158053164771688062007-01-31T18:16:00.000-04:002007-01-31T18:16:00.000-04:00I'm not the biggest Posner fan, but Gary Becker se...I'm not the biggest Posner fan, but Gary Becker seems to like him, so I let his bias overcome mine. ;)<br /><br />The main reason I included his posts though was Becker's main post doesn't really make sense without Posner's post which outlined some details.<br /><br />I too usually try to stay away from debates about natural monopolies. I prefer to spend my energies on things more obviously wrong, or obvious right as the case may be.happyjuggler0https://www.blogger.com/profile/06546894212910327392noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-16829979173084947842007-01-31T17:19:00.000-04:002007-01-31T17:19:00.000-04:00I hesitate to post three times in a row, but it is...I hesitate to post three times in a row, but it is my blog….<br /><br />I mentioned before about costs decreasing if maintenance was privatized. Posner has something to add to this that didn’t occur to me earlier:<br />“…their pricing and purchasing decisions, including decisions regarding wages and labor relations, are not distorted by political pressures and corruption.” <br />Think of all those flaggers standing, bored as heck, getting paid a fairly nice wage...considering.true doughhttps://www.blogger.com/profile/14528611736159255452noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-2189507894810110002007-01-31T17:15:00.000-04:002007-01-31T17:15:00.000-04:00Okay, and now I’ll return to “running with it”…
D...Okay, and now I’ll return to “running with it”…<br /><br />Dingus: <br /><br />Why does quality have to be impaired? Firms will compete for the renewal of their contract. (Of course, it would be most efficient if the government remained with the same firm.) <br /><br />To pull a quote from Becker: “…other companies are more likely to find ways to compete against private monopolies than against government ones….The main challenge arises when it is more difficult to stimulate competition for the privatized company because of so-called "natural monopoly" conditions in the industry….but controls could be imposed on the prices and other conditions that can be levied imposed on consumers by the privately owned road.”<br /><br />(That’s from juggler’s second link.)<br /><br /> If we accept this, as I do, quality is more likely to suffer under a government monopoly. Who holds the government accountable?<br /><br />Anecdotal evidence: Looking at the bad state of northern Ontario’s highways (eg. 1/4 of a lane on a major trucking route outside of Timmins, having completely collapsed down a cliff, was merely pyloned off for more than 7 months), it’s hard to see how governments really are held accountable.<br /><br />Oh, FWIW, I should correct myself on a previous comment. Sweden did not entirely switch to private contracts for highway maintenance. Some work is still done in-house by the government.true doughhttps://www.blogger.com/profile/14528611736159255452noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-4104082036471818172007-01-31T17:01:00.000-04:002007-01-31T17:01:00.000-04:00I try to avoid the subject of natural monopolies b...I try to avoid the subject of natural monopolies because it’s such an easy target for groundless arguments based on one’s favourite ideology, or so it seems. Empirical evidence is lacking (and so is my knowledge on highway, telephone, etc. economics).<br /> <br />I’ll admit that Becker and Posner provide a nice framework for discussion, but they run into the same quagmire. Eg, Becker: “To an extent, the toll-road operator may be able to discourage substitution by price discrimination, but this is unlikely to be fully effective and indeed can actually increase the allocative inefficiency of the monopoly.” And then he just runs with it (much like I attempted to do in my argument, but Dingus wouldn’t allow it). I don’t dismiss Posner’s argument (nor do I agree), but I’d love to know where the hell he gets it from. (Yes, perhaps if I didn’t avoid this subject I’d know.)<br /><br />The only thing individuals can (usually) agree on with some certainty is that there often seems to be a trade-off between efficiency and revenues.<br /><br />Anyway, again, Becker and Posner provide a nice framework for discussion. Thanks for the links, happyjuggler0.true doughhttps://www.blogger.com/profile/14528611736159255452noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-42587310685463326142007-01-30T23:10:00.000-04:002007-01-30T23:10:00.000-04:00Becker and Posner covered the privatisation of Ind...Becker and Posner covered the privatisation of Indiana's toll road <a href="http://www.becker-posner-blog.com/archives/2006/06/privatizing_the.html#comments"> here</a> and <a href="http://www.becker-posner-blog.com/archives/2006/06/on_privatizing_1.html#comments"> here</a>. They also give a couple of responses to comments <a href="http://www.becker-posner-blog.com/archives/2006/06/privatizing_hig.html#comments"> here</a> and <a href="http://www.becker-posner-blog.com/archives/2006/06/response_on_pri_1.html#comments"> here</a>. <br /><br />The links start at the comments section, you have to scroll up to see the original posts. I can't figure out how to link to the top of the pages, sorry.<br /><br />Things that are sometimes called natural monopolies can be hard politically to privatise, and it may well be that without regulation to prevent abuse it would be a bad idea. But a good start is to privatise them anyway, with regulation, perhaps like Indiana did. <br /><br />Then perhaps, or perhaps not, over time when "everyone" is used to the idea of private ownership of these assets, it may be foreseeable to actually rationally end the regulation of at least some such assets. Or not. But I don't think "we can get there from here". We at the very least need a partial step first.happyjuggler0https://www.blogger.com/profile/06546894212910327392noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-40369645909412544732007-01-30T22:09:00.000-04:002007-01-30T22:09:00.000-04:00Well, I have to admit, the private ownership of hi...Well, I have to admit, the private ownership of highways was a thought I was entertaining, BUT, I stand by the argument that a system that is owned and operated by the government is not as strong as one that introduces competitive industry.<br /><br />What if all governments in Canada switched to a private contract scheme instead of maintaining highways themselves (as some already have)?<br /><br />I’m looking at it like this: When a firm vertically integrates (say it begins producing its own raw materials, thus eliminating the supplier), what incentive does it have to maintain the quality of its raw materials? Little, to a degree. When it purchased its raw materials from a seller, the seller has an incentive to maintain quality, else the purchaser would get its raw materials elsewhere.<br /><br />Perhaps there’s a parallel here to road infrastructure. If highways are owned and operated by the government, do they have as much incentive to keep them in good condition as a firm would if it were contracted to do the work? If the highways are privately contracted, quality would increase. As far as costs increasing, as I understand it, they did not increase in Sweden after switching to a private contract scheme. They decreased. Whether we can compare this to Canada, I don't know.true doughhttps://www.blogger.com/profile/14528611736159255452noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-10201852898301794552007-01-29T22:56:00.000-04:002007-01-29T22:56:00.000-04:00I think Nick is building on something.I think Nick is building on something.true doughhttps://www.blogger.com/profile/14528611736159255452noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-54515062852314438082007-01-29T22:54:00.000-04:002007-01-29T22:54:00.000-04:00I believe that there is a role for government to e...I believe that there is a role for government to ensure that nobody is doing another person harm (eg. I'd advocate for a very general law on maximum hours worked, but nothing that's too intrusive on the firm), but regulation by the government in most situations isn’t necessary. Actually, it’s often even ineffective, I believe. <br /><br />As to your example of truck drivers, I’m still thinking this over…but, if highways were privately owned, the owners would impose safety regulations on them to keep them operating smoothly. Truckers, and the companies they work for, would be made to comply to safety rules set by the firm in order to use the roads. Further, the owners of the roads would have an incentive to keep them well-maintained. <br /><br />Some people might argue that paying to use a road isn’t an attractive idea. But we pay now; we pay in taxes. And much of what we pay is not as wisely spent as it would be if the money were spent by a firm.true doughhttps://www.blogger.com/profile/14528611736159255452noreply@blogger.comtag:blogger.com,1999:blog-30875219.post-54798492288716515022007-01-27T12:49:00.000-04:002007-01-27T12:49:00.000-04:00wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwNickhttps://www.blogger.com/profile/17328698747474434335noreply@blogger.com