There are many complex issues to consider when choosing between public vs private provision of a good or service. But one issue seems to me to clearly favor the private option: rights. If you want to make rights-enforcing rules that are actually followed, you are better off having courts or regulators enforcing rules on a competitive private industry.
I’d add that it’s not obvious that it’s privatization in the traditional sense of farming out work to privately owned companies under contract that offers the benefits. Rather it’s harnessing the power of incentives and competition to evolve the best solutions and we can avoid many of the risks of undesired optimization by offering that inside a public model.
For instance, rather than letting a private natural monopoly offer internet service or contracting with fully private companies to lay and repair cable for the state we might instead imagine a public system where each regional manager is given substantial leeway to buy their own supplies, choose employees and compensation levels etc and given substantial monetary/status incentives to outperform rivals. But not only could you smooth out the bumps of corporate failure by simply slowly letting the best performers swallow up more of their competitors but you could also minimize cost of entry and maximize dissemination of know-how
I’m suggesting that if we can’t create incentives that are appropriately tailored to discourage the bad behavior (eg because we aren’t willing to approve of the rules explicitly or just because enforcement if hard) like abuse of criminals or incentives for false reports (say if the system is highly restitution leaning) and there are serious potential harms then we should expect as a matter of general experience that there will be highly undesirable incentive maximizing solutions.
Given that possibility the very efficiency of private organizations in responding to those incentives becomes a danger not a bonus. If we can count on being able to see the danger materialize we should experiment but when the concern is that we don’t know how to detect and punish those outcomes it’s a big risk.
This post is about enforcing rights; I explicitly said there are other considerations in choosing public vs. private. I don't think it obvious that public indirect incentives work well at those other things, but that's another topic.
Also, I'd add that your own blog posts make a very compelling story about the importance of not making the incentive structure too transparent and finne-grained and in turn making it vulnerable to signalling pressures on voters. Better to leave a largely opaque government policing system which voters can only roughly evaluate as overall too harsh/merciful.
I mean we already see this problem as a consequence of creating statutorily defined sentences. For instance, I strongly suspect the child-porn and sex offender laws are so harsh as a consequence of the greater incentive people have to signal they aren't one of those perverts.
Yes, private agents are more responsive to direct incentives (money, fines, personal punishments etc..). This is an asset when we can align such direct incentives and the desired behavior but a detriment when we can't.
For instance, I'd suggest that when it comes to running a prison almost any system which attempts to monitor private prison companies and directly incentivize them tend to encourage corrupt suppression of complaints, deliberate cooperation between guards and prison gangs etc..
In some circumstances the best we can do is limit how effectively the direct incentives like reducing costs, limiting work etc.. are allowed to modify behavior and rely on indirect incentives (people's internalized desire to behave in the ways society sees as compassionate or honorable). In those cases these same factors favor public solutions.
That doesn't refute my theory though. Given that we have regulations that apply to both government and private, we expect that private will adhere to the regulations more closely, as the data shows. But we also expect that the overall regulations will be less if an industry is more privatized because that industry will lobby to make it so. And there's no denying that private industries have extensively lobbied to keep pollution regulations as low as possible.
This is an excellent point that I hadn't thought about before. On the other hand though, private organizations also have greater ability to lobby congress in order to get favorable regulations, and I think that outweighs the fact that it's easier to enforce the regulations that are put on them.
Actually things work differently then I thought I'm dumb. At least for federal employees.https://www.opm.gov/healthc...There are some empirical questions about how funding is decided by congress, but mostly they seem to get health care costs covered as a percentage of total salary.Whatever it is, it isn't what I thought.
I know somebody whose work involves disabled public sector workers. From what I've heard, there appears to be a significant selection effect where the public sector is willing to hire high-risk people with pre-existing conditions.
It's a good thing we don't get all the government we pay for. (Will Rogers)
I’d add that it’s not obvious that it’s privatization in the traditional sense of farming out work to privately owned companies under contract that offers the benefits. Rather it’s harnessing the power of incentives and competition to evolve the best solutions and we can avoid many of the risks of undesired optimization by offering that inside a public model.
For instance, rather than letting a private natural monopoly offer internet service or contracting with fully private companies to lay and repair cable for the state we might instead imagine a public system where each regional manager is given substantial leeway to buy their own supplies, choose employees and compensation levels etc and given substantial monetary/status incentives to outperform rivals. But not only could you smooth out the bumps of corporate failure by simply slowly letting the best performers swallow up more of their competitors but you could also minimize cost of entry and maximize dissemination of know-how
I’m suggesting that if we can’t create incentives that are appropriately tailored to discourage the bad behavior (eg because we aren’t willing to approve of the rules explicitly or just because enforcement if hard) like abuse of criminals or incentives for false reports (say if the system is highly restitution leaning) and there are serious potential harms then we should expect as a matter of general experience that there will be highly undesirable incentive maximizing solutions.
Given that possibility the very efficiency of private organizations in responding to those incentives becomes a danger not a bonus. If we can count on being able to see the danger materialize we should experiment but when the concern is that we don’t know how to detect and punish those outcomes it’s a big risk.
It isn't remotely obvious to me that hidden motive considerations should make us prefer direct govt provision of goods & services.
This post is about enforcing rights; I explicitly said there are other considerations in choosing public vs. private. I don't think it obvious that public indirect incentives work well at those other things, but that's another topic.
Also, I'd add that your own blog posts make a very compelling story about the importance of not making the incentive structure too transparent and finne-grained and in turn making it vulnerable to signalling pressures on voters. Better to leave a largely opaque government policing system which voters can only roughly evaluate as overall too harsh/merciful.
I mean we already see this problem as a consequence of creating statutorily defined sentences. For instance, I strongly suspect the child-porn and sex offender laws are so harsh as a consequence of the greater incentive people have to signal they aren't one of those perverts.
Yes, private agents are more responsive to direct incentives (money, fines, personal punishments etc..). This is an asset when we can align such direct incentives and the desired behavior but a detriment when we can't.
For instance, I'd suggest that when it comes to running a prison almost any system which attempts to monitor private prison companies and directly incentivize them tend to encourage corrupt suppression of complaints, deliberate cooperation between guards and prison gangs etc..
In some circumstances the best we can do is limit how effectively the direct incentives like reducing costs, limiting work etc.. are allowed to modify behavior and rely on indirect incentives (people's internalized desire to behave in the ways society sees as compassionate or honorable). In those cases these same factors favor public solutions.
Government agencies can and do also lobby to get favorable regulations on them.
That doesn't refute my theory though. Given that we have regulations that apply to both government and private, we expect that private will adhere to the regulations more closely, as the data shows. But we also expect that the overall regulations will be less if an industry is more privatized because that industry will lobby to make it so. And there's no denying that private industries have extensively lobbied to keep pollution regulations as low as possible.
You are ignoring the data presented. If you theory were correct, then in that data private would pollute more. But they do not.
This is an excellent point that I hadn't thought about before. On the other hand though, private organizations also have greater ability to lobby congress in order to get favorable regulations, and I think that outweighs the fact that it's easier to enforce the regulations that are put on them.
Actually things work differently then I thought I'm dumb. At least for federal employees.https://www.opm.gov/healthc...There are some empirical questions about how funding is decided by congress, but mostly they seem to get health care costs covered as a percentage of total salary.Whatever it is, it isn't what I thought.
Please explain. Is that an American peculiarity?
It helps when you aren't required to pay the insurance premiums.
I know somebody whose work involves disabled public sector workers. From what I've heard, there appears to be a significant selection effect where the public sector is willing to hire high-risk people with pre-existing conditions.