One thing is true an aristocracy of cash does not care about efficiency but peer standing in opulence and glory (normally in war, but pillaging companies also works)
Spot on. The larger the business the more inefficient. The problem is no one in a business questions whether doing something different rather than the norm may save them millions. They've done what they've always done. Not willing to change.
The private sector businesses ARE more effective than the state for the simple reason that the bad private sector ones go bust while the state organisations don't and instead claim poor performance is due to lack of resources. When you knock out the bottom 10% every year the average performance goes up I'd also add that the private sector tends to be more customer focussed while many of the state sector are internally focussed (but this is more of a tendency)
We're told this. It's largely untrue. Yes, there are some situations where the stars align and the profit motive creates a competitive incentive to drive better quality at lower price, but the constant drive is toward monopoly, and monopolies do not face that pressure and can extract more-or-less what they want until intervention happens, and there is nothing stopping state enterprises from doing the same things those private companies do without the additional extraction of profit.
@@tehwilsonat0r yes monopolies and cartels are bad as they don't face pressure to keep prices down and service levels up, HOWEVER, what are governments / state enterprises but normally monopolies in their country / locality. Why should we expect better results from a state sector monopoly than a private sector one. At least in the private sector there is a pressure to improve from potential new entrants
@@Mike-lb1hx The people who actually do the work making things, and making things better, don't actually get the benefit of a profit motive (or, rather, get an ever-vanishing fraction of it). Most of that goes to the people whose main contribution is having a name on a piece of paper. Monopolies aren't automatically bad. They just exist, and economies of scale combined with inherent physical limitations mean that they always will. The solution to monopoly isn't to forbid them, it's to put monopolies under public control and transmit the value they create to the society at large, rather than to a small group of private owners.
@@Mike-lb1hx We should expect better results from state sector monopolies because, historically, they have given better results. The times when they appear not to have, it's usually because private entities are using their economic leverage to justify privatizing public goods. That doesn't mean the resulting privatized service gets magically better, though: Look at power grid deregulation in the US State of California for a prime example, or Russia's "Shock Therapy" in the 90s, or today's UK fight over the NIH.
@@Mike-lb1hxback in 1990s we were preached by the west how private business is superior to state owned. No ones preaching it now, because we went to the west , to the UK and compared state owned railway in Poland to private UK railway companies.. there is no comparison. Only loonies talk about need of privatisation.
The difference is, those 650,000 businesses failed, ceased to exist, because they weren't run properly. When a public service isn't run properly and the people running it don't know what they're doing, the public service doesn't cease to exist because it has unlimited money being pumped into it.
@@stephfoxwell4620 -- Not sure they had departments like we do now? I suspect that there were only two. But anyway the state & empire was ruled with perhaps 40k including a large directly employed military-industrial sector (blog.nationalarchives.gov.uk/uk-government-did-we-rule-the-empire-with-4000-civil-servants/) Now we have vastly more people and ever more departments that each employ more than the entire public sector from a century ago. The failed public sector 'departments' that get closed down seem to be mainly industrial - Ordnance, Car Workers, Ship Workers, Miners that were generally subsidised to produce stuff that nobody wanted from the public sector; waste that was ever more difficult cover-up. The real bureaucracy just expands for ever more.
@@stephfoxwell4620 - My first reply seems to have disappeared, so basically: There were a couple of departments running the entire empire back then maybe maxing out at 40k staff -- now there are dozens of departments many with far more than the entire staff back in-the-day. The public sector diverts ever greater resources to itself with no efficiency tests -- and the only departments that see redundancy are unable to hide their waste -- nationalised industry producing stuff that nobody wants being the obvious example.
All (significant) production is socialized, and has been for centuries. The mechanics of socialized production, of organizing workers to make things, don't change significantly between the public and private sector. The important thing that _does_ change is simply where the value in excess of the cost of production ("profit") goes. The more widely people understand this fundamental fact of our economy, the better off we will be as a society.
In a private concern, profit can be distributed as dividends to investors; in governmental business, profit is expended in paying interest to bondholders.
@@Pinkdam It can be, if the endeavor is financed by bonds. It's not necessary to do that for any entity with currency sovereignty, though, as anyone who's been following this account should already fully know.
@@tehwilsonat0r I actually agree. Partly. The risks are angering your customers if you subsides beyond normal western levels. The USA has its massive military spending which crosses over with consumer research. German spending before WW2 saw many new technologies as it did for the allies. Directed government funding of R&D can be useful. Lots of R and D projects fail so private industry is more risk averse. Wrote a lot, probably not answered questions. ;-)
I've been saying precisely this for years. While government can be and often is psychotically inefficient, I never understand why anti-government types let large corporations completely off the hook in this regard. I once worked for mid sized publisher that discovered that for many months it had been paying more for bookstores to return books to them than it cost the bookstores to receive them. Free money for bookstores. YOu cannot get stuppider than that.
Perhaps the Prof. should read about some Public Choice Theory. The Public sector suffers little consequence from doing things badly -- in fact Thos. Sowell & others point out they generally reward themselves for failure. The public sector also corrupts the private sector by creating crony corporations - banking etc etc. If a 'real' trading private company doesn't convince it's customers that they value its output it will decompose and it's capital will be redistributed -- the public body will infest society for generations mainly benefitting its ofice-holders/employees. This is not an argument for public/private partnerships which are mostly crony projects - because politicians/bureaucrats are truly awful micro-managers, and know they are untouchable.
Fantastic. It's one of those capitalist catchphrases that gets repeated adfinitum. What compounds the problem is some humans think they have expertise or skills they clearly don't. Sadly these people are drawn toward politics, and due to British politeness and deference are not hooked off that stage.
Inefficient companies going out of business IS efficiency! The idea is that the land, labour and capital they were sitting on has a chance to be used for some better activity by better people. The private sector is better than the government because mistakes have consequences and there are stronger incentives to get things right. The reason things go so wrong when the government gets involved is because there are no consequences when civil servants get things wrong, You keep talking about mistakes but if nothing negative happens to someone how do you even define a mistake? The idea that everyone is just trying to do their best is bullshit, people are creatures of incentives and the only incentive in the public sector is get as many people under you as possible to justify your inflated salary! There are no public sector recessions or shareholders demanding profits or hostile takeovers so the bloated inefficiency goes on.
Yep - except in the real world when companies in the private sector become monopolies which are 'too-big-to-fail' and then form a partnership with the government resulting in subsidies and bail-outs. So take your tired tech-bro libertarian ivory tower free-market horse shite and ram it up your arse.
Efficiency is simply the ratio of what is being sacrificed for what is obtained in return. Obviously a business which, say, sacrifices electricity and steel blocks to create screws has a certain level of efficiency, and this is an efficiency that is quite separate from the people who work in it. Bar a few handfuls for the odd DIYer, none of them want screws, or particularly care about the loss of the steel blocks. The only efficiency *they* are concerned with is that of their manhours for pounds sterling. In short, the title of this video is wrong. Some of what is in it is wrong, too, though much is right: the government is, beyond those few individuals willing to move to another country, not a competitive endeavour; it also cannot bear any mistakes on its own back, but distributes them to us all, though not necessarily evenly. These are obvious ways in which it makes mistakes in a different way - and in a sense, at different rates - to the private concern.
Abdication of responsibility by politicians due to lack of knowledge, experience and understanding; ie ignorance. Not all politicians though but the good ones are now pilloried.
I'm not sure that the British are bothered that much about efficiency. They tend to think of a Scandinavian or German model of efficiency as boring. Arguably they prefer the drama, the unpredicatbility and the flirtation with chaos that bumbling inefficiency is inclined to create.
So many micromanagers insisting on reinventing the wheel in order to help them fail upwards. It really is bizarre to see such behaviours enthusiasticalky imported from the private sector into the public sector - and in some cases, back again.
Very informative, thank you. Not that we don’t already know this as you know. But the higher Up you are in the corporate ladder. The less you see on a daily basis. you’re not expected to you relying on senior management and middle management to inform you. But this is most cases does not go on.. and in most cases, directors and shareholders don’t want to know about general information which is relevant to running business. this seems obnoxious but it’s sad in this day and age. Bye for now. Take care of your friends and family and thank you keep the videos coming. They’re very informative. Take care.
Money for the economy can only come into being via govt crediting someone's account in order to create a product or service. This makes govt the biggest job creator
no business ever created a job it was the consumer that created the job ,if you want to be obtuse . regardless how does you claiming "No government ever created a single job" even if correct prove "Businesses are far more efficient than governments"
A lot of truth to this. But you didn't consider motivations. If I am talented qualified and skilled, you won't get me delivering anything for a civil servants salary. I want a million pound of profit on the table to get me engaged. The people who work in the public sector are people who want a steady easy income for as little effort as possible. I know this because I am one of those people.
According to Dominic Cummings all the young, motivated, talented and energetic civil servants leave before they are 35 because promotion is based on HR checkboxes rather than ability.
Multinationals are extremely inefficient. Try spreading departments across the world to people who have no skills and see har far that get. They win on cost once manufacturing finally starts by being in the 1/3 world, not paying tax ect. Oooh but claim your tax credits in the UK
There are so many inefficient businesses that it is unbelievable.
That's fine as they are only losing their own money. Socialism would have us lose taxpayers money if business was in the public sector
Managers don’t understand their shop floors anymore.
Thank you. This is EXACTLY why we should never run a country like a business 😐
One thing is true an aristocracy of cash does not care about efficiency but peer standing in opulence and glory (normally in war, but pillaging companies also works)
Spot on. The larger the business the more inefficient. The problem is no one in a business questions whether doing something different rather than the norm may save them millions. They've done what they've always done. Not willing to change.
The private sector businesses ARE more effective than the state for the simple reason that the bad private sector ones go bust while the state organisations don't and instead claim poor performance is due to lack of resources. When you knock out the bottom 10% every year the average performance goes up
I'd also add that the private sector tends to be more customer focussed while many of the state sector are internally focussed (but this is more of a tendency)
We're told this. It's largely untrue. Yes, there are some situations where the stars align and the profit motive creates a competitive incentive to drive better quality at lower price, but the constant drive is toward monopoly, and monopolies do not face that pressure and can extract more-or-less what they want until intervention happens, and there is nothing stopping state enterprises from doing the same things those private companies do without the additional extraction of profit.
@@tehwilsonat0r yes monopolies and cartels are bad as they don't face pressure to keep prices down and service levels up, HOWEVER, what are governments / state enterprises but normally monopolies in their country / locality. Why should we expect better results from a state sector monopoly than a private sector one. At least in the private sector there is a pressure to improve from potential new entrants
@@Mike-lb1hx The people who actually do the work making things, and making things better, don't actually get the benefit of a profit motive (or, rather, get an ever-vanishing fraction of it). Most of that goes to the people whose main contribution is having a name on a piece of paper.
Monopolies aren't automatically bad. They just exist, and economies of scale combined with inherent physical limitations mean that they always will. The solution to monopoly isn't to forbid them, it's to put monopolies under public control and transmit the value they create to the society at large, rather than to a small group of private owners.
@@Mike-lb1hx We should expect better results from state sector monopolies because, historically, they have given better results. The times when they appear not to have, it's usually because private entities are using their economic leverage to justify privatizing public goods. That doesn't mean the resulting privatized service gets magically better, though: Look at power grid deregulation in the US State of California for a prime example, or Russia's "Shock Therapy" in the 90s, or today's UK fight over the NIH.
@@Mike-lb1hxback in 1990s we were preached by the west how private business is superior to state owned. No ones preaching it now, because we went to the west , to the UK and compared state owned railway in Poland to private UK railway companies.. there is no comparison. Only loonies talk about need of privatisation.
The difference is, those 650,000 businesses failed, ceased to exist, because they weren't run properly. When a public service isn't run properly and the people running it don't know what they're doing, the public service doesn't cease to exist because it has unlimited money being pumped into it.
None of the members of the FTSE 100 in 1930 survives today
Which proves that the market sweeps away failure - where as the failed public sector just diverts more reources into its coffers.
@@andyinsuffolk None of the Government Departments from 100 years ago ,except the Treasury, still exists.
@@stephfoxwell4620 -- Not sure they had departments like we do now? I suspect that there were only two. But anyway the state & empire was ruled with perhaps 40k including a large directly employed military-industrial sector (blog.nationalarchives.gov.uk/uk-government-did-we-rule-the-empire-with-4000-civil-servants/) Now we have vastly more people and ever more departments that each employ more than the entire public sector from a century ago. The failed public sector 'departments' that get closed down seem to be mainly industrial - Ordnance, Car Workers, Ship Workers, Miners that were generally subsidised to produce stuff that nobody wanted from the public sector; waste that was ever more difficult cover-up. The real bureaucracy just expands for ever more.
@@stephfoxwell4620 - My first reply seems to have disappeared, so basically: There were a couple of departments running the entire empire back then maybe maxing out at 40k staff -- now there are dozens of departments many with far more than the entire staff back in-the-day. The public sector diverts ever greater resources to itself with no efficiency tests -- and the only departments that see redundancy are unable to hide their waste -- nationalised industry producing stuff that nobody wants being the obvious example.
All (significant) production is socialized, and has been for centuries. The mechanics of socialized production, of organizing workers to make things, don't change significantly between the public and private sector. The important thing that _does_ change is simply where the value in excess of the cost of production ("profit") goes. The more widely people understand this fundamental fact of our economy, the better off we will be as a society.
In a private concern, profit can be distributed as dividends to investors; in governmental business, profit is expended in paying interest to bondholders.
@@Pinkdam It can be, if the endeavor is financed by bonds. It's not necessary to do that for any entity with currency sovereignty, though, as anyone who's been following this account should already fully know.
Most production is in China.
Apply your thoughts there
China's doing that well enough on its own. It's us who should be taking lessons from their successes and applying them to our own context.
@@tehwilsonat0r I actually agree. Partly.
The risks are angering your customers if you subsides beyond normal western levels.
The USA has its massive military spending which crosses over with consumer research. German spending before WW2 saw many new technologies as it did for the allies. Directed government funding of R&D can be useful. Lots of R and D projects fail so private industry is more risk averse.
Wrote a lot, probably not answered questions. ;-)
I've been saying precisely this for years. While government can be and often is psychotically inefficient, I never understand why anti-government types let large corporations completely off the hook in this regard. I once worked for mid sized publisher that discovered that for many months it had been paying more for bookstores to return books to them than it cost the bookstores to receive them. Free money for bookstores. YOu cannot get stuppider than that.
Perhaps the Prof. should read about some Public Choice Theory. The Public sector suffers little consequence from doing things badly -- in fact Thos. Sowell & others point out they generally reward themselves for failure. The public sector also corrupts the private sector by creating crony corporations - banking etc etc. If a 'real' trading private company doesn't convince it's customers that they value its output it will decompose and it's capital will be redistributed -- the public body will infest society for generations mainly benefitting its ofice-holders/employees. This is not an argument for public/private partnerships which are mostly crony projects - because politicians/bureaucrats are truly awful micro-managers, and know they are untouchable.
100% agree. This guy is blind to it, because he's a Marxist.
Why should Richard waste his time reading Libertarian wank-material?
Fantastic. It's one of those capitalist catchphrases that gets repeated adfinitum. What compounds the problem is some humans think they have expertise or skills they clearly don't. Sadly these people are drawn toward politics, and due to British politeness and deference are not hooked off that stage.
Inefficient companies going out of business IS efficiency! The idea is that the land, labour and capital they were sitting on has a chance to be used for some better activity by better people. The private sector is better than the government because mistakes have consequences and there are stronger incentives to get things right. The reason things go so wrong when the government gets involved is because there are no consequences when civil servants get things wrong, You keep talking about mistakes but if nothing negative happens to someone how do you even define a mistake? The idea that everyone is just trying to do their best is bullshit, people are creatures of incentives and the only incentive in the public sector is get as many people under you as possible to justify your inflated salary! There are no public sector recessions or shareholders demanding profits or hostile takeovers so the bloated inefficiency goes on.
Correct of course 👍 as inevitable as gravity 🤷♂️
Yep - except in the real world when companies in the private sector become monopolies which are 'too-big-to-fail' and then form a partnership with the government resulting in subsidies and bail-outs. So take your tired tech-bro libertarian ivory tower free-market horse shite and ram it up your arse.
Efficiency is simply the ratio of what is being sacrificed for what is obtained in return. Obviously a business which, say, sacrifices electricity and steel blocks to create screws has a certain level of efficiency, and this is an efficiency that is quite separate from the people who work in it. Bar a few handfuls for the odd DIYer, none of them want screws, or particularly care about the loss of the steel blocks. The only efficiency *they* are concerned with is that of their manhours for pounds sterling. In short, the title of this video is wrong. Some of what is in it is wrong, too, though much is right: the government is, beyond those few individuals willing to move to another country, not a competitive endeavour; it also cannot bear any mistakes on its own back, but distributes them to us all, though not necessarily evenly. These are obvious ways in which it makes mistakes in a different way - and in a sense, at different rates - to the private concern.
I am going to show my age and mention Sir John Harvey Jones and the Troubleshooter series. If only he was running the country 😕
I was talking about Troubleshooter - and Sir John - only half an hour ago!
Abdication of responsibility by politicians due to lack of knowledge, experience and understanding; ie ignorance.
Not all politicians though but the good ones are now pilloried.
Maximum Efficiency = Maximum Output for Minimum Expenditure.
Public or Private is immaterial.
A lot of the problems in the business sector is down to the fact that they have to operate within markets which drives inefficiency.
I'm not sure that the British are bothered that much about efficiency. They tend to think of a Scandinavian or German model of efficiency as boring. Arguably they prefer the drama, the unpredicatbility and the flirtation with chaos that bumbling inefficiency is inclined to create.
So many micromanagers insisting on reinventing the wheel in order to help them fail upwards. It really is bizarre to see such behaviours enthusiasticalky imported from the private sector into the public sector - and in some cases, back again.
Very informative, thank you. Not that we don’t already know this as you know. But the higher Up you are in the corporate ladder. The less you see on a daily basis. you’re not expected to you relying on senior management and middle management to inform you. But this is most cases does not go on.. and in most cases, directors and shareholders don’t want to know about general information which is relevant to running business. this seems obnoxious but it’s sad in this day and age. Bye for now. Take care of your friends and family and thank you keep the videos coming. They’re very informative. Take care.
Obviously has forgotten British Rail
So you're just going to spout blatant falsehoods now? Statements without evidence?
If you have ever worked in a business or owned one….😊
Businesses are far more efficient than governments. No government ever created a single job.
Money for the economy can only come into being via govt crediting someone's account in order to create a product or service. This makes govt the biggest job creator
There is no work without the social contract; governance creates all jobs.
Incorrect. Its a timing issue. The government only creates jobs after the businessman created them first.
no business ever created a job it was the consumer that created the job ,if you want to be obtuse .
regardless how does you claiming "No government ever created a single job" even if correct prove "Businesses are far more efficient than governments"
I think that all of the millions of public sector employees would disagree with you.
ANyone who thinks the private sector is efficient have no clue.
A lot of truth to this. But you didn't consider motivations. If I am talented qualified and skilled, you won't get me delivering anything for a civil servants salary. I want a million pound of profit on the table to get me engaged. The people who work in the public sector are people who want a steady easy income for as little effort as possible. I know this because I am one of those people.
According to Dominic Cummings all the young, motivated, talented and energetic civil servants leave before they are 35 because promotion is based on HR checkboxes rather than ability.
I think one of the best manager is the boss of timpsons the workers full in a happiness form , looks after his staff , all have a equal share .
Multinationals are extremely inefficient. Try spreading departments across the world to people who have no skills and see har far that get. They win on cost once manufacturing finally starts by being in the 1/3 world, not paying tax ect. Oooh but claim your tax credits in the UK