I discussed some of the comments on added value ion the public sector with my wife last night. She has an opinion on this. She’s a GP. Technically she’s in the private sector, being self employed and being a partner in a practice run for profit. It so happens however that (like rather a lot of public sector enterprises) she is dependent upon the state for her revenues.
So, is she adding value by recording profit? Or is she, as one commentator (who got his facts wrong, but we’ll ignore that) put it part of the:
Public sector [that] pisses 50% of the wealth up the wall, having taken it from the public by force [?]
Now, I don’t deny GPs are well paid — but after 11.5 hours at work, with 20 minutes break during which she discussed patients with colleagues, and another 90 minutes then dedicated during the evening to researching a patients condition (of which they no doubt will always be wholly unaware), coupled with the low grade worry of having missed a diagnosis that is a perpetual part of a GP’s life — which is why it is one of the highest stress occupations in the country — so it should be. Having been a partner in a firm of accountants I’ll tell you who works harder with more stress — a GP, any day.
And she did that to add no value? To be a burden on society that needs to be cut? I’m sorry — those who write this stuff live in a land of fantasy.
And please don’t say that the market could provide this service instead. Rather unusually my wife has also been a private GP. And she has not a good word to say about it — it is hand holding for the worried well that will never be accessible by the majority of the sick. That is because in this country sickness is strongly correlated with poverty.
This is the reality she faces daily. It is the limitation on all she does. the sick poor are the source of greatest demand on her time. It is why she supports what I do. Only redistribution of wealth, decent housing, properly paid jobs, and the respect that flows from them can cure a lot of the real sickness she sees.
And the market has not supplied that, cannot supply that and has no intention or mechanism to supply that.
Yes we want and sometimes need what the market can supply — which is over half of our national wealth. And I’m fully supportive of that. But to argue that those who work in the public sector — whatever it may be given the porous boundaries it has — are a simple burden is about as far removed from reality as it is possible to get.
As even those with health insurance will notice the next time they are really sick.
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If the public sector take the place of what was done by the private sector, and becomes like so much Euro-dirigisme, a monopoly in the sector, or an overwhelmingly large chunk of it, then what do you have to compare it to? In that case it is -doing business- taking taxes and rationing out services. Whether it adds value is unknowable.
What I seem to think you are arguing for here is a salami-by-the-slice nationalization of sector after sector of the economy deemed (by someone) to be critical to social service in some way. Never mind the fact that ALL of it, (even the bubble-gum factory if you’re in the job-rescuing business) is critical to society.
Having lived in the DDR, I won’t make any secret about being inherently averse to the notion, since the risk of ‘evolving of powers’ to use the government devolution argument it too great. That dissolution of the separation of powers whose tension we depend on to keep government and business in check is far more critical to society than any ginned-up statistical efficiency that come through the state remandering of work and economy, even if we’re talking about medical care and housing.
Regulation, as you seem to suggest is the same as appropriation and control, is in fact the opposite side of the trend. The government would need to regulate others, not manage it’s own economic output. So here-ho, I’m all in favor of the correct regulation, but to imagine that it belongsa in the miasma of arguing: [i]It is in the private sector that we need cuts[/i], then someone needs to establish their priorities and seek majority public acceptance of them because they aren’t just about ‘efficiencies and productivity’, they are about the form government should take and who controls whom.
Please do not create a straw man
I did not say the state should replace the private sector
I argued the state produces value
Address the issue
There’s a dialectical relationship, as I like to say 🙂 . The public sector provides goods and services to the private sector and vice versa.
Joe assumes that there’s only private or state ownership…
I think we need a larger cooperative sector in finance, housing, utilities, manufacturing, etc. This, I believe, would empower working people whilst incentivising wealth-creation. Some services currently provided by the state could revert to cooperatives controlled by the workers and community – and the other way round, some private companies / sectors could revert to cooperative ownership (banks, railways, for example)
In the private sector the price mechanism works to ration scarce resources. This does not work in the public sector. The nearest surrogate is the polls, but this is not particularly effective – would be leaders promise the earth to gain power, and then forget their promises. Why do you think so many youngsters are ignoring the politicians, and why do you think the expenses scandal was so big?
If the state was subject to market forces it would now be bust. The government is now guilty of insolvent trading.
Gordon’s response to calls for him to call an election is “I’ve a job to do” – but he fails to see that the majority don’t want him to do it.
None of this is to reject your thesis that public sector adds value. But I think you are missing the bigger picture. Socialism always fails because it is not able to reconcile its owm world view with reality.
Alastair
Tosh! Pricing is clearly not efficient. If it was why did banks fail – and how did they price risk incorrectly?
You are a victim of dogma. Now get real – and see the world as it is
Richard
Oh come on Richard. The banks based their pricing on BBR, which was set by the Bank of England explicitly on Government instructions to ignore the house price bubble. A more obvious case of political meddling in the price mechanism is hard to imagine.
If you want to understand how prices work I would recommend you revisit some of the microeconomic texts from your A-Level days!
Alistair, that you finish your comments on pricing with an attack on socialism gives me some indication to your politics – I think therefore we’re going to have to agree to disagree on much of this.
The actions of the banks with regards speculation – that the prospect of a 1929-style crash wasn’t factored in – give some indication as to the govt’s share of the blame. No one was forcing the banks to invest in the US housing market, though obviously the govt failed to give the nod that it was a bit dodgy (perhaps because they never suspected?)
A good example of the inefficiency of pricing is pollution which traditionally hasn’t been factored into decision-making – rather irrational if you ask me.
Charlie, we could agree or disagree on the politics, but the economics is a different matter. Richard often makes the mistake of mixing the two things up. Economics as a science can be useful in understanding how the world (someimes) works. Economics as a policy tool for politicians is a different matter.
Alastair
Straight from the fantasists handbook
Economics is a human construct based on assumptions selected by human beings to suit human purpose
That is not objective: that is politics
All economics is politics. The claim that it is objective is just a political lie
Richard
It’s not for nothing that economics is referred to as “the dismal science”.
Google Steve Keen and Debunking Economics….