It is EXACTLY THE SAME THING. They are functionally equivalent. A nominal £ of output by the public sector is exactly the same as a nominal £ of output by the private sector. The public sector isn't some blackhole where output never escapes; your entire notion is childish.
Again, I love your naive dogmatic approach to the private sector. I think we've seen enough times how bad privatisation has been for nearly every company that's been through it. You don't increase efficiency. You increase the money-making potential for a select group of shareholders with often very real decreases in utility for most of the public.
Nobody would argue that there isn't a space for the private sector - there is and I work in it - but the notion that the private sector is in any way capable of providing better utility for "serious" goods and services than the public sector is laughable.
Of course it isn't EXACTLY THE SAME. If they really were functionally equivalent (your words, not mine), why
would you support the existence of a private sector? Why would you say that nobody would argue that there isn't a space for the private sector? If spending is spending is spending, and they're functionally equivalent, why aren't you a communist? I say that not in a YouTube-comment style "What, you support OsamaCare?!? What are you, a commie??" way, i mean genuinely why would you simultaneously support the same private sector you declare is laughably inadequate to provide "serious" goods and services, if the same spending by the government is functionally identical?
The reason is that it
isn't functionally identical, and you know that, which is why you're not a communist. I think what you're confusing is that the fact that government spending feasibly
could have identical utility (ie, if the government had set up a small technology company in the 80's called Apple and made the exact same decisions as the Apple management made, there's no reason to think that Apple would currently not be in the same place, and you're right - the fact it's government money doesn't change what that money does) doesn't mean it ever is. It almost never is. Even in situations where a comparatively sized private sector company (ie an utterly massive one) could reap enormous savings via economies of scale, it doesn't happen.
There are all sorts of argued reasons for this, and of course people have written whole books about it, but that's the crux of my whole argument -
could money spend by the government be the same as that spent by the private sector? Technically, yes. In any practical way, is it? No, not really. The money isn't used efficiently at all, which is precisely why it's a) different and b) a problem, as per my previous post. My view on the main reasons why the state so rarely spends efficiently...
a) Information. The government doesn't have the information it needs to make decisions that make effective use of money. For a moment, let's consider the different approaches to schooling. If the state school system, how do you determine whether or not a school is offering good value for money. Outside of looking abroad, how do you know if spending, say, £3,000 per year per pupil at a school that averages C grades at GCSE (not for long lololol) is good value? Maybe that's terrible, and you'd expect much better grades for that money. Maybe it's fantastic and that school is an example for all others. But how do you know what is a 'good' amount to spend on a school that both provides a good education and doesn't put undue strain on the budget? Well, you can't. You have no market there. You have no "customers" who can choose to go elsewhere if they prefer another option or supplier. The metrics that customers use to determine what, where and at what price point they purchase a product are varied and complex, and no one understands them all, as everyone is different - but in a system where no one is even making a decision, ascertaining value for money is next to impossible.
However, if you're sending your kid to a £14k a term private school, you certainly
can tell if you're getting good value for money. The other private schools will proudly display their results, and their costs. You can make a (reasonably) informed judgement about where to put your money/children. Now please, don't mistake my meaning here - I'm not championing the abolition of state education or anything, this is just an example - without a market in which players compete, you can't ascertain value. This is what leads to the situation phisheep described with British Telecom - when you have no alternative, even if you
desperately want to provide the best service (and we'll come on to
that later), how do you know that getting a line quickly is important? You only have limited resources - hiring more people to get your line installed quicker might mean making sacrifices in service or price elsewhere. Do you do it? Do you leave it as it is? You have no idea. Because in a free market, if someone's fed up with having to wait 6 months for a line, they can go to someone else that doesn't. The market then learns, "Man, that company that installs lines by the end of the week is really sweeping up all the business! Maybe we should try and divert our resources into that!" And thus, the market provides what people want, not what the government thinks people want.
(At this point my PC crashed and I lost about 1,000 words. Forgive me if the following appears brief!)
b) It picks winners and loser. I think not even Keynsian's would argue with the idea that it's only when the government spends money with a private company that growth could theoretically occur. I'm a big fan of state education (though it needs drastic reform), so I don't expect schools to magically make money to justify their position, at all. However, we need to acknowledge that even keynsians can't believe that they 'generate growth'. Paying teachers doesn't generate growth, because they've not increased output, or improved production processes. And that's fine, because that's not what they're there to do. But When you do that, the government is just taking money from one person and giving it to another. The net efficiency of that depends entirely on what those people - Peter and Paul, let's call them- would have spent the money on anyway. There's no Way to know if Peter would have spent the money in a more or less efficient way than Paul (and to an extent, it doesn't matter - if it's spent freely in a market, it's supporting a business that Peter or Paul like and want to get their service, whether it's deemed 'efficient' or not. The market providing for people's desires is the very measure of an efficient market), but we know that the process of taking money from Peter and giving it to Paul isn't The tax code is enormous, specifically designed to not be understandable by anyone but a qualified professional, and with a complexity that actively encourages people to stash their money in the Caymans. I'm getting a bit Off topic here, but I'm seeking to cut off what I often see as being a response to the idea that only public spending on private companies can generate growth.
So the only time "growth" could theoretically occur from government spending (assurming they aren't going to try and set up their own companies - they do this sometimes, but that tends to be backed by the law as per the DVLA and has almost all the same problems for the customer as the British Telecom example) is if the government bought Frank's chair, or his shed, above Even then, it's not the government that generated the wealth - it was Frank, The government merely stimulated demand. There are a few problems here: 1) Does the government have use for the chairs? One would hope so, but given how frequently the government boast about how many jobs their latest scheme has created, it's easy to wonder if they're actually interested in chairs, or interested in jobs. This is closely related to point 2) that stimulating demand during a downturn often has negative repercussions for that industry in the medium to long term. For something like the Dept of Education or LEAs, they can single handedly keep a number of businesses in business with their purchases of health equipment, supplies, school supplies etc. And that's OK (* See point 3) - they're going to need to buy those things come hell or high water, and if there are a numberof companies out there competing to for that business., that's great - their businesses get custom, the government gets good value thanks to the competition, and everyone's happy.
The problem comes when the government thinks that stimulating a certain sector during a downturn is a good idea. The problem then is that you get companies and whole inclustries that are entirely relient on the government for their existence. A business that only exists because the government is buying products from it that it doesn't really want (if it did want them, it'd be buying them irrespective of whether or was a downturn LEA's don't only buy post-it notes when the post-it note industry has taken a dive). You end up with a situation as per the miners in the 70's, where their business became gradually more and more relient on government subsidies to the point where they were no longer a viable business at all. Their costs were too high, their yields too low. In a free market they'd have been allowed to slowly become less profitable, slowly shed their jobs etc. Thatcher came along, got rid of the subsidies and everyone lost their jobs. You had towns with 75% unemployment. This wasn't because Thatcher stopped the subsidies, it was because Labour started them towns with that high unemployment get utterly decimated. You can't find a new job in a town where 3/4s of people are unemployed and the few remaining businesses are struggling to remain solvent because their entire customer base is unemployed. If the same process had happened slowly over the course of a decade or more, I'm not saying it'd have all been roses, but they'd have been in a much better position by the mid-80's than they were under Thatcher! Subsidies (and, for the same reason, government spending purely to keep indsutries and businesses alive) is a horrible short-termist attitude. Which leads me onto...
3) The government picking winners. In the case of Frank, when the government decides to buy a chair from Frank, they're choosing to buy a chair from Frank and therefore not someone else. I mean, they could
also buy a chair from someone else, but when Frank gets a purchase from the government, that's a purchase no one else has got. See: ATOS, see BAE Systems, see G4S, see see see. Everytime the government offers a big contract to a private company, it does so at the behest of all the others. Now, this is unavoidable you can't always spread the workload out evenly. In fact, you almost never can, and it'd almost never be as efficient. But, quite aside from the fact that the government seemed to get bummed on a routine basis in their contracts, the reason this is a problem is that typically the government becomes a dominant force in whatever market they blunder uncontrollably into, or in some cases actively create industries (like ATOS) that government contracts can massively alter the market. And again, there's no way around this, but it's a problem because of....
c) The government's conflict of interest. Businesses have one goal earn as much money as possible. And this is fine it's not greedy or evil or malevolant, because in a free market, the company that gets the most custom is the one that most fulfils the customers needs or desires. They don't necessarily have to have the best products (see Tesco) or the cheapest prices (see Apple), but if they can carve out a niche (even a very large one) and make money, it's because people choose to part with their money and give it to this company, rather than going to a competitor or even doing it themselves (I bet Frank doesn't buy a chair from someone else!). The consumer, too, has a set of desires and wants that are more complicated than simply profit but are, nontheless, entirely present. Some might care more about price in certain aspects, but quality in others they might want to get a cheap flight and a fancy hotel, or a cheap hotel and a fancy flight. That's up to them. It is ultimately their own happiness (or that of the person they are buying the item or service for) they are fulfilling.
But what does the government want? Let's say they're buying a bunch of chairs from Frank to refit one of their Civil Service offices. Which of their many responsibilities are they meant to put first? They have a responsibility to Frank to give him a good price afterall, we wouldn't want the government bullying their way into an industry and forcing everyone to lower their prices in the same way supermarkets do in small towns, right? Plus, what about the delivery schedule what if Frank can't produce the required 10 a week, and can only provide 5 a week. Do you go elsewhere, leaving Frank out of pocket? Do you force him to work long hours into the night to get it done? For a business the answer would be obvious Frank obviously isn't the supplier for us. But for the government? They have a responsibility to Frank. What if all the other companies providing alternatives aren't from the UK? Should they hire Frank anyway, and put up with the delay?
What about the civil servants? They work for the government, they get little thanks (though a nice pension) and the government is their employer it has a responsibilit to ensure they're comfortable both for their health and because a happy, comfortable office procides better result. So how much do they spend? The civil service union will be lobbying for the best chair around, because their members are hard working and they deserve the best. And maybe they do.
But what about the tax payer, the guys that are funding all of this? They get neither a comfortable chair, nor a boost to their businesses (except the guy selling the wood to Frank), yet they're the ones stumping up the money. Doesn't the government have a responsibility to ensure their money is well spent the interests of the tax payers may well run contrarry to the interests of Frank and the civil service whose intersts may well run contrary to one another! Yet the government is expected to be responsible for all of those groups. Well, someone's got to lose. Often only one person wins, in fact. And that company that wins does so, not because of a result of the market deeming their product to be the best, but because of this complicated system of arbitration the government has to go through. It's why the government so rarely makes efficient decisions, because it has responsibilities beyond economic efficiency. When it does make decisions based upon that, such as when they bought the new trains from a German company rather than a British one, they get bollocked by everyone for sending jobs overseas.
So that's why I think government spending
isn't the same as private spending. It can never be as efficient, and often times is actively harmful to the economy. And to reiterate, I'm not talking about doctors and teachers and nurses here, I'm talking about the private sector rewarding businesses that do what they want, and the government distorting the market horribly.
Oh, and by the way, we do let the private sector take care of serious things. Food is pretty serious, and supermarkets are about the most perfect example of the free market working well. They offer an enormous range of choice for the consumer, with all price points well supplied and choice and competition within those price points. For your average consumer in the UK, a free market on food is unimaginably preferable to a state-sanctioned system. Likewise, most people are better off now they can choose whether to fly with Easy Jet or Virgin, go to o2 or Vodafone, Virgin Media of Sky broadband. All these things food, infrastructure are very serious, and they're all provided excellently by the private sector.
If you're going to post this kind of stuff at least have the courtesy to preface it with an "I don't know what the fuck I'm talking about".
Oops, I forgot about this. I just made you read a load of stuff, didn't I? Sorry. A suffix will have to do:
