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    Questions - Mandates & Profit

    Filed Under capitalism, politics, questions 

    Maybe someone can explain to me how this makes any sense: the government decides something is mandatory, e.g. car insurance, child car-seats, health care insurance - and the only entities that can provide those services are privately owned.   Why should that be? If the government is going to require that I buy something, shouldn’t they be running that (or at least a competitive) operation? Why should some suit or investor someplace be getting richer because of Uncle Sam’s mandates? If it’s a government problem, shouldn’t it have a governmental solution?

    This is ridiculous. Not only that, but if these corporations weren’t for-profit, the costs to the consumer would undoubtedly be less.
    How do they manage to slip these things by us? Why hasn’t there been a class action lawsuit about this?

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    9 Responses to “Questions - Mandates & Profit”

    1. Chalicechick on February 28th, 2008 4:44 am

      Actually most things are much cheaper when private companies (who are competing aganst each other and can keep costs down) are involved rather than the Federal Government (which has no competition, can barely fire incompetent poeple, can ask for money endlessly, etc.)

      And everything on your list is about forcing people to protect other people. (E.g. Insurance to fix your car isn’t necessary in my state. Insurance to fix the car and to pay the medical bills of anyone you hit is what you actually have to have.)

      I like that we live in a world where companies are competing to make the best car seat at the most reasonable price so good parents can shop around. And I also like that we live in a world were bad parents are required to keep their babies in car seats.

      Is either situation really something you would want to change?

    2. Paul Wilczynski on February 28th, 2008 8:34 am

      The government has never been known for having the ability to provide goods and services at the lowest possibly price, simply because they don’t need to.

      For-profit companies, on the other hand, have motivation to do so (assuming they’re in a competitive situation) - if they don’t, someone else will get the business.

      You appear to be demonizing investors when, in fact, the vast majority of citizens are investors (virtually anyone who has a retirement account is an investor, for example). You might want to rethink that attitude about me (for example) and pretty much everyone I know.

    3. Stentor on February 28th, 2008 11:03 pm

      Why should some suit or investor someplace be getting richer because of Uncle Sam’s mandates?

      Because the whole point of Uncle Sam’s mandates is to help the suits get richer. Modern American politics is largely the art of disguising corporate welfare as social welfare.

    4. hafidha sofia on March 3rd, 2008 11:38 pm

      CC and Paul: I don’t believe in the myth that private corporations always do it better, for cheaper. If I did, I wouldn’t have written what I did. There’s also nothing wrong with holding governments responsible for their spending, which we tend to do a terrible job of.

      Stentor - Don’t get me started! I’m so sick of corporate welfare, bailouts, and other b.s. I’m supposed to be indignant about a woman on welfare getting $500 a month, and yet hand over millions and billions to corporations who use their employees as pawns (but will fire them as soon as it becomes economically expedient for them to do so)? Oh, the hypocrisy. Socialism for Corporations!

      Not.

    5. Chalicechick on March 4th, 2008 1:44 pm

      ((( I don’t believe in the myth that private corporations always do it better, for cheaper. If I did, I wouldn’t have written what I did)))

      What are you basing your statement that it’s a myth on? What motivation does a beuracracy have to produce a quality result at a low price?

    6. Chalicechick on March 4th, 2008 1:46 pm

      ((( I don’t believe in the myth that private corporations always do it better, for cheaper. If I did, I wouldn’t have written what I did)))

      What are you basing your statement that it’s a myth on? What motivation does a beuracracy have to produce a quality result at a low price?

      What motivation does the government have to put money into designing a better car seat?

      (Because it’s the right thing to do, yes, but you’ll notice that doesn’t cause much to happen in the government.)

    7. Brightmind on March 6th, 2008 10:53 pm

      Laws that require citizens to purchase specific services or products from the private sector create captive markets, which do not have the same incentives as open markets where consumers also have the option of not buying at all.

      There are cases where captive markets are useful for society, but in those cases the industries should be more tightly regulated to make sure that citizens are not being taken advantage of.

      The idea that all markets, even captive markets, always result in efficiency and quality, is a myth.

    8. hafidha sofia on March 12th, 2008 4:57 pm

      CC - I think we are talking about diff things. Corporations are better at making a profit. I won’t deny that. That is why they exist. But I cannot seriously accept that they are better at making a quality product because they are privately owned. Do you have any idea of the number of safety recalls on car seats alone? Hundreds. Thank goodness for us the government actually keeps track of these defects. No single human being could. The corporations very likely do a cost-benefit analysis. Is it cheaper to ship out an item that you’re going to have to recall later, or is it cheaper to fix it or build it right the first time? If it’s cheaper to ship it out, that’s what they’ll do. And that is what they do.

      Attempts at privatizing the welfare system were an abysmal failure for the end consumer. The companies hired to run them basically provided services until they could maximize their profit, and then stopped providing services. Medicare and Medicaid have administrative costs of 2-5%. That’s compared to 14-15% for privately run health care companies. (Here’s a decent blog post about this). HMOs, by the way, are doing great - their profits are GREAT! Whether the service they provide is also improving … well, the jury is still out on that one. But I don’t think it’s their purpose to improve service, so in that sense they are successful.

      I’m not saying that corporations can’t do it right, but they often don’t. And they suffer from bureaucracy, poor performance from crappy employees, and mismanagement, too. The consumers pay for all of this. Corporations would like us to believe that private power does it better, but really all they do better is make money. And when they can’t make enough money, they often lobby to have us keep them afloat (or in the air).

    9. Jess on March 13th, 2008 2:04 pm

      Muhammad Yunus, who won the Nobel Peace Prize for his work on micro lending in Bangladesh, has a pretty fascinating idea for social businesses — not non-profits that have to spend so much time fundraising, and not for-profits whose only goals are raising their stock prices for their investors, but business who reinvest their own profits exclusively into improving their own operations and cutting the costs of whatever product they’re making. He suggests that the American health care system could learn a lesson from this, though it would take quite the revolution to make it happen!

      Dannon yogurt went into business with Yunus, with the goal of getting a healthy snack into the hands of the poor at prices they can afford through a social business model. Initial investors are paid back without interest or dividend, local dairies are guaranteed a set price for their milk, local people are employed selling the product — and it’s wildly successful so far.

      Here’s an article that summarizes the idea, or you can check out his book “Creating a World Without Poverty” for the whole story.

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