Efficiency and Innovation in State Owned vs. Private Companies

Cairenn

Senior Member.
Good find on the Teflon, I had heard that 'story' and never verified it.

Design is not always the problem. Some years ago, I was selling a lot of amber, and I was buying from a Russian dealer (he lived outside of Russia). He told us to avoid buying any jewelry made in Russia. The fact that folks could not be fired, meant that many of them did low quality work. They would not match stones on earrings for example.

How hard would you work, if you got paid even if your work was crappy? Some would, but many don't.
 

Adam

Member
Good find on the Teflon, I had heard that 'story' and never verified it.

Design is not always the problem. Some years ago, I was selling a lot of amber, and I was buying from a Russian dealer (he lived outside of Russia). He told us to avoid buying any jewelry made in Russia. The fact that folks could not be fired, meant that many of them did low quality work. They would not match stones on earrings for example.

How hard would you work, if you got paid even if your work was crappy? Some would, but many don't.

Now it seems you're switching horses mid-stream. First you asked, "Can you give us 3 major products that came from a state owned industry?" When people offered numerous examples of major products (and good ones at that) that came from state-owned industries, you changed the criteria and said that the products had to be "developed by the government".

So when you offer the Yugo GV as an example of the failures of state-owned industry when it comes to automobile manufacture, I pointed out that that car was built on a Fiat design. Now design doesn't matter, it's all about the workers.

You keep moving the goalposts.

And you're also making very sweeping generalisations about labour laws and workers' rights in socialist countries. Yugoslavia was not the same as the USSR and many mixed-market countries (not socialist, but places like Sweden and even the UK of the 1970s) had state-owned industries with expanded workers' rights but still turned out stellar products.

I know Mike C has joked about the reliability of his Triumph Stag - and I think by the 70s and 80s the British auto industry was certainly in a poor state. But there was once a time when British products were good - our railway still relies heavily on rolling stock built by British Rail, for example.

I'm not necessarily advocating for state-ownership of private enterprise (although I am an advocate of nationalisation of many things, such as the railway, for example). I am a socialist, but not that kind of socialist (that's a whole other discussion, but many on the left don't consider the USSR, etc to be socialist societies - we consider them to have been 'state capitalist' societies).

Anyway, some general points:

1) You keep moving the goalposts and redefining what you mean - whether by saying a product has to be developed by the state or then by discounting things like battle tanks. If you keep finding reasons to dismiss the examples given, then it is likely you will never be satisfied.

2) With the exception of the former Warsaw-pact nations, most state-owned industries operate in a mixed-market economy. And as such, they generally tend to be concentrated in certain sectors, such as infrastructure. You're not going to see exciting, flashy examples of things there. And today you're more likely to see public-private partnership (which half of the time is really just a way to loot the public coffers), where the state works in tandem with private capital (think SAS airlines in Scandinavia). Again, not too thrilling.

3) The industrial revolution was well up and running for a long time before there was anything close to a socialist government in power. However, it should be noted that nationalisation of industries or companies (for lack of a better word) has always taken place, even under non-socialist governments. But again, we're talking about the very non-glamorous things like canals and railways and coal or things like that. But the capitalist economies have had a very large head start - and they far outnumber the socialist ones (if there really are any). But in terms of the original question - the privately-owned companies far outnumber the state-owned companies and tend to be in very different fields. So it's not really a fair comparison.

4) Say what you will about the USSR, but their innovation, hard work and product development turned the tide against Nazi Germany. And maybe they never set the world alight with any of their consumer goods, but the AK-47 is an original design that is still with us, for better or for worse. And for the record, I think it's a real shame that we keep having to cite weapons as examples in this thread. And both the state and the private sector are to blame for that.

Just a few thoughts. I just realised this rambled on a lot longer than I intended. Sorry about that :)
 

Cairenn

Senior Member.
I am sorry I was not clear on my first post. Do you really think that the best way to develop an economy is to depend on military goods? I don't. We have too much production in the military sector in a free market economies.

The point I was trying to make is that innovation and advances come, primarily from private business, not from government. Several times I have commented that building and maintaining infrastructure is something that government can do well, but that products and the production of natural resources is what private business is best at.

When products are produced in a free market system, they have to compete with others. Take New Coke for an example, in a controlled market, folks would have had no choice, but to drink it, if they wanted a cola drink. Folks choose instead to make a choice other than New Coke ( I love Coke, but I drank Dr Pepper during that time). Consumers voted with their choice and Coke returned 'the Real Thing' to the market. In system where folks would have had to choose it, over time folks would have switched to tea or some other drink. Coke would have failed.

In a state owned industry, the profits are often funneled off into other projects or into short termed projects that will help make the voters happy. I am afraid that we are seeing the demand for profits now (because of the amount of money from IRAs) do the private version of the later, now.

I found this on a forum discussing airlines

Another problem that a state owned company has is that they often have to meet demands that are not good for business. A good example of that in the US is the Post Office. Both Sat delivery and having to deliver to all homes and businesses and the need to maintain small post offices are among the reasons that they can not break even. The lack of profits limit what a state owned company can spend on innovations.

Overall both the consumer and the state are hurt by state ownership of businesses
 

Oxymoron

Banned
Banned
R & D is an area where government can do a good job, turning that into a product is not. An excellent example is the development of vaccines. They are expensive to develop, risky and there is little chance of even being able to get the costs back in a reasonable time period. They need some type of government support.

I guess, like you, most peoples hearts bleed for Big Pharma. Obviously no money in their great work they do for humanity.

Perhaps if government paid all the R&D and if charities could also contribute to helping pharma... (send £3 per month to adopt a disease, free cuddly lab rat toy and all that), then all they would have to worry about is the patenting, packaging and marketing. They may then be able to endure.

Government could also help by increasing the forced medication of more people, or even all... we could have anti depressents and anti cancer and beta blockers all piped into our water system.

 
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Cairenn

Senior Member.
I would love to see you convince Congress to spend tens of millions on developing a vaccine for malaria, or many tropical diseases.

I really do not like the marketing of prescription medications (or of legal or medical services). As far as patenting them, someone needs to recoup .

 

Oxymoron

Banned
Banned
I would love to see you convince Congress to spend tens of millions on developing a vaccine for malaria, or many tropical diseases.

I really do not like the marketing of prescription medications (or of legal or medical services). As far as patenting them, someone needs to recoup .


Amazing... and yet they can swing into action at the drop of a hat and have millions of vials of vaccine for new disease variants like bird flu or swine flu, in absolutely no time at all... and again we get the attempted forced medication to go along with it AND full immunity :) for the companies from any 'damages claims' due to their vaccines killing or maiming people
 

Adam

Member
Cairenn - You know you love Coca Cola and so you knew you didn't like New Coke (or "Coke") when it was introduced. So you chose not to drink it. But I think your analogy fails, because although you may have a choice of tens or even hundreds of different sodas, what about the ones that you've never tried or have never been invented that you might possibly like?

That would be what it would be like if you lived in a state like, say, East Germany, where you had the option of only a handful of sodas that you could choose from.

It's one thing to have something you like taken away from you and substituted with something you don't like - it's another thing to never have tried something that has never existed and not know if you like it or not.

As it stands, there are plenty of options that have yet to be invented (and may never be invented), even in the very bountiful capitalist West. We have to realise that lots and lots of options are not necessarily a positive thing. Also, taste or opinion is completely subjective - Coca Cola, for example, is not necessarily any better than Club Cola (the cola of the GDR). It depends on what you grew up drinking and other factors.

Of course, I'm not going to argue that a Trabant is a superior automobile (though I'd love to get my hands on one, just for fun). It's different when it comes to the quality of goods, I suppose.

But I think the preoccupation with consumer goods is a bit facile - societies work in many ways. Having lots of fancy goods is not an end in itself. Nor is technological advancement, necessarily. It's nice to move forward, but at what cost? And to what end? There is no goal, really, so does it matter necessarily how fast we hurtle forward, especially as technological breakthroughs create new problems as they solve old ones?

Anyway, there is an interesting book that deals with the theory that too much choice in the marketplace is actually a bad thing. It's an interesting concept:

http://en.wikipedia.org/wiki/The_Paradox_of_Choice:_Why_More_Is_Less

And for the record, I think it's appalling that we seem to build our economies on military goods. The USA and Russia are two of the biggest offenders and it sickens me. It's part of the reason why we've pretty much had non-stop war since 1945. Many would argue it goes back farther than that, but I think it's fair to say that the modern phenomenon is pretty obvious.
 
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