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0 pointshnbad2y ago0 comments

This is a pet peeve when market maximalists talk about how public services are "inefficient". Efficiency in economics refers to profitability. If a public service isn't profitable, that actually makes it efficient in a practical sense because a public service being profitable would mean it is overfunded (i.e. it's receiving more funding than it needs to operate).

In practice this often means politicians will squawk about how a given public service that is inherently a cost center is "inefficient" (which is true in the economic sense because it is designed to use its entire budget and thus doesn't extract a profit), impose austerity by cutting its "bloated" budget (which is justified by also cutting the workforce and other cost factors) and then repeating this process until the public service is inoperable and its failure is seen as a demonstration why it must deseperately be privatised and sold to the highest bidder (who can now get the monopoly position at a fraction of its potential value). Potential extra steps along the way involve creating a (government-owned) corporation to make it easier to complain about its bad business performance.

On a related note, there is an independent "tax payers' association" in my country that makes a big deal about "tax waste" by highlighting (usually fairly small) public works that most often have legitimate uses/explanations but may seem absurd/wasteful at first glance but largely prefers to stay silent when it comes to business subsidies and such. They have a clear ideological bias and while the media seems to be somewhat aware of this, it's always interesting to see journalist report on inadequate welfare programs in the same breath as mentioning (and using b-roll of) the public "national debt clock"[1] installed by this association.

[1] The most recent example was a segment on youth debt stemming from welfare overpayments their parents received (which under the legal system at the time was partially imposed on underage children in the same household even if they didn't have any money - the law was recently changed so they could only be held liable for the amount of money they owned at their birthday when reaching the age of maturity). Ironically this debt was the direct result of the kind of legislation to cut "tax waste" (in this case: welfare overpayments) the association generally advocates for. The hook was something like "the government can be billions in debt but for a young person a much smaller amount can be life-ruining" but the lack of reflection was astonishing.

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red-iron-pine2y ago

> This is a pet peeve when market maximalists talk about how public services are "inefficient". Efficiency in economics refers to profitability. If a public service isn't profitable, that actually makes it efficient in a practical sense because a public service being profitable would mean it is overfunded (i.e. it's receiving more funding than it needs to operate).

Ehhhh... nah. There is still a cost vs. return.

Postal Services, for example. $10 ships 1.1 packages on average, or they get efficient and $10 ships 1.9 packages, etc.

You absolutely see this in things like Medicare where $100 worth of spending doesn't get you 90-100 generic aspirin, but more like 20 pills, and the rest of it goes to pay middle men.

hnbadOP2y ago

Yes, but economic efficiency measures profit, not "number of packages shipped per dollar". Also that metric may not even be meaningful in isolation and optimizing for it may lead to worse (social) outcomes.

The problem with Medicare in the US isn't that Medicare is inefficient. The problem with Medicare in the US is that the US has a private healthcare system and Medicare exists on top of it. A universal public healthcare system wouldn't perform the same way in terms of bang for the buck because the dynamics would be very different.

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