Skip to main content

View Diary: How frickin' typical. Rotten right-wing idea—prisons for profit—costs more (177 comments)

Comment Preferences

  •  Saving money by privatization is a logical falacy (6+ / 0-)

    The only relative argument in any and all cases is that is impossible to save money by privatization. It's very simple: any endeavor entails operating costs. No matter what the product or service you are providing, you can only reduce costs to a certain finite point. When you have reached the pint of maximum efficiency, you can only further lower costs by undesirable means: using inferior materials, inferior design, worker exploitation, etc. Excluding these options for the moment, a the theoretical point of minimum cost/maximum efficiency is exactly the same for a private or public entity. The only difference is that the private version must ALWAYS add an extra cost which is profit. Therefore, it is logically impossible that privatization can ever reduce the cost of any product or service.

    Historically, privatization has sometimes reduced cost and/or improved service. However, this is almost always due to built-in inefficiency of the public entity, such a mandatory pay increases, vacation time, sick leave, etc. Such "fat in the system" may be true fat or may just be socially responsible aspects. Private companies are often not required to follow the same regulations, and therefore the can "trim" to create a false appearance of "lowering cost". However, if the public-run entity is properly-run, or if the private-run entity is required by law to accept the same social responsibilities, the theoretical minimum production cost will be exactly the same.

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site