Anti-Capitalist Sentiment (with some morality)

[wufwugy]

To my knowledge people in government earn wages too, which would suggest government employees have the same profit incentives as the private sector.

Employees. The institutions have very different incentives.

If we're using Ong's point, which I think is good here, then public employees having the same incentive as private ones does not make a strong case for government institutions being a good idea.

[CoccoBill]

Employees. The institutions have very different incentives.

How do the incentives for the boards and upper management of private institutions differ from those of the public ones? Stock options in the private sector come to mind, in contrast to just shared national ownership in the public sector, but can't think of much else.

If we're using Ong's point, which I think is good here, then public employees having the same incentive as private ones does not make a strong case for government institutions being a good idea.

If by Ong's point you mean workers owning the means of production, I would argue social ownership, whether employee-owned large businesses or top-to-bottom stock option programs, are not too popular since those share the profits to a wider audience, and who'd want that if you can get it all to yourself.

[wufwugy]

How do the incentives for the boards and upper management of private institutions differ from those of the public ones? Stock options in the private sector come to mind, in contrast to just shared national ownership in the public sector, but can't think of much else.

Private institutions have to turn a profit in order to remain viable. Public institutions don't. Public institutions receive tax revenues regardless of whether or not they turn a profit.

This is one of the base elements for why so many government programs and institutions get poor results yet keep on trucking along. Private institutions that get poor results go bankrupt and are replaced by others that are more productive. The amount of waste in the private sector is dwarfed by the amount of waste in the public sector, and it is mostly because of the differentiation of the profit incentive between the two types of institutions.

If by Ong's point you mean workers owning the means of production, I would argue social ownership, whether employee-owned large businesses or top-to-bottom stock option programs, are not too popular since those share the profits to a wider audience, and who'd want that if you can get it all to yourself.

If social ownership was more productive, a whole lot of companies would move towards it because the current equity holders would make more money having a smaller share of a much larger pie.

[CoccoBill]

Private institutions have to turn a profit in order to remain viable. Public institutions don't. Public institutions receive tax revenues regardless of whether or not they turn a profit.

Yes, I didn't ask about that though.

If social ownership was more productive, a whole lot of companies would move towards it because the current equity holders would make more money having a smaller share of a much larger pie.

That's ridiculous. Let's assume a small company of 100 people. Let's assume social ownership creates a huge advantage with a 20% rise in profits. X denotes profits. Would you rather get 100% of x or 1% of 1.2x?

[wufwugy]

Yes, I didn't ask about that though.

Did you ask how upper management incentives differ from private to government? Doesn't the need to turn a profit answer that?

That's ridiculous. Let's assume a small company of 100 people. Let's assume social ownership creates a huge advantage with a 20% rise in profits. X denotes profits. Would you rather get 100% of x or 1% of 1.2x?

In that situation, sure. Some other situations would have shareholders making more.

I have no idea what you're saying.

You mentioned that you think the economist thing is to ignore some externality and pay attention to money things. I responded with the economist thing is handling externality in terms of money. It would be bad news if economics ignored relevant factors. Economists tend to do their best to denote what they can in terms of money, because it allows an objective measurement.

[CoccoBill]

Did you ask how upper management incentives differ from private to government? Doesn't the need to turn a profit answer that?

I did. Government agencies do all sorts of things and operate under various financing and operating budget models. Typically, even when they create goods or services they aim for a neutral operating budget, that is, they don't aim for a profit. This doesn't mean their performance isn't monitored and audited, and that they're not penalized for poor performance. The profit incentives are, while not to the same extent as in the private sector, still there.

That was looking at things from a organizational perspective. When looking at personal level, the directors, their performance is quite identical to a corporation's director, and their incentives and motivations are largely exactly the same. At the very least, saying that profit incentives only apply to private sector is simply untrue.

In that situation, sure. Some other situations would have shareholders making more.

Then you'll surely have no problem coming up with one that sounds even remotely viable. The only one I can come up with is that if you're self-employed, it would make sense to give half of the company to someone provided that it would more than double the profits. The more people you add to the mix, the less likely it is that a shared ownership is more profitable.

You mentioned that you think the economist thing is to ignore some externality and pay attention to money things. I responded with the economist thing is handling externality in terms of money. It would be bad news if economics ignored relevant factors. Economists tend to do their best to denote what they can in terms of money, because it allows an objective measurement.

Exactly, and ignore everything they can't. Or is there a typical monetary value that economists tend to attach to eg. personal development and self-respect?

[wufwugy]

I did. Government agencies do all sorts of things and operate under various financing and operating budget models. Typically, even when they create goods or services they aim for a neutral operating budget, that is, they don't aim for a profit. This doesn't mean their performance isn't monitored and audited, and that they're not penalized for poor performance. The profit incentives are, while not to the same extent as in the private sector, still there.

That was looking at things from a organizational perspective. When looking at personal level, the directors, their performance is quite identical to a corporation's director, and their incentives and motivations are largely exactly the same. At the very least, saying that profit incentives only apply to private sector is simply untrue.

The profit motive is not primary on the institutional level in government. It is, however, primary in private business.

Then you'll surely have no problem coming up with one that sounds even remotely viable. The only one I can come up with is that if you're self-employed, it would make sense to give half of the company to someone provided that it would more than double the profits. The more people you add to the mix, the less likely it is that a shared ownership is more profitable.

Employee stock options. This is equity holders selling their equity to employees because they believe it will be more profitable.

Exactly, and ignore everything they can't. Or is there a typical monetary value that economists tend to attach to eg. personal development and self-respect?

My economics professors have spent a good deal of time teaching us to think things like this: "He values his self-respect more than the $40 he's being offered to do this thing that will hurt his self-respect. However, he'll part with his self-respect for $100." In that case, his willingness to lose that specific iteration of self-respect is equivalent to his desire to gain $100.

[wufwugy]

How do the incentives for the boards and upper management of private institutions differ from those of the public ones? Stock options in the private sector come to mind, in contrast to just shared national ownership in the public sector, but can't think of much else.



If by Ong's point you mean workers owning the means of production, I would argue social ownership, whether employee-owned large businesses or top-to-bottom stock option programs, are not too popular since those share the profits to a wider audience, and who'd want that if you can get it all to yourself.

I forgot to add that "Ong's point" that I mentioned was about employees not having that amazing of incentive to do good work. There is a lot of truth to that. It can be unpacked and better understood, for sure, but the point I was making was that if this is true of all employees, then it would be true of public employees.

It is common for people to romanticize about public service (not saying you do it). Some may think that people who work in public service do better jobs than people who work in private. I mean, the euphemism is in the name, isn't it? Public servant. I think the truth is that government employees are just as shitty (or as great) as private employees.