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RE: Realism - not capitalism - is the reason behind the success of western democracies.

in #philosophy8 years ago

It is hard to say if we talk about the Finnish one which I don't know anything about ;)

But more important is to define what you see as efficiency (provide as many jobs as possible, which is unfortunately still the most important thing to 80%+ of people?) and second, do you rate efficiency as the top most priority? What about sustainability?

In my earlier example the USSR farmers where very efficient in slaughtering all their livestock for example ;)

Okay, lets take an example I know - the German Autobahn Highway system which just got reformed. I spare you the details.

The point here is that it was said that we need private sector money to build them, so it was proposed to make a Public Private Partnership.
Now, the financial control instance of the German Government had just a few month earlier released a study that PPP were always coming out more costlier then if the state acted alone (especially now that Germany got negative interest for 10-year loans).

It is simple to see why.
If Germany wants to build a piece of Autobahn, the publish it and companies make offers. The cheapest is taken.

Now comes the PPP.
In a PPP Germany wants to build a pice of Autobahn. They call the Private firm in the partnership - an insurance. That one then takes the offers and the cheapest gets taken.

Now there is no reason why a building firm should make a lower offer to the insurance company then to the state.
BUT the insurance company - since that is the goal of the PPP for it - wants to make money, so they put a few % on top of it.
Thus the price for the Autobahn gets more expensive.

In reality it's even way way worse because of compound interest.

Let's say the insurance company wants to make 4% yearly from what is effectively a loan to the state over a 30 year period (it's a road after all).
In the last years Germany got 30-year loans for 1%.
So the difference is 3% per year which means that it is somewhere roughly between 50% and 100% more costs for the state (depending if you make yearly payments or lump sum at end).

So what is more efficient here, the state or the private sector?
In the eyes of the state, the state.
In the eyes of the insurance, the insurance.
In the eyes of the average citizen the state if you are poor and the insurance if you are rich and profit from the insurance's products.

Recently there was a big outcry about the deleting of the following sentence from a governmental report:

Policy changes are more likely to be made when they profit the rich compared to when they profit the poor.