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Thread: Running government like a business

  1. #26
    Super Moderator kjel's avatar
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    Quote Originally posted by Maister View post
    12) two words: "tech" and "support"
    13) Decipher your cell phone bill, especially if you have a family plan. (I once had both lines charged as the primary line at full charge, try explaining that to the customer service rep!)
    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

  2. #27
    Cyburbian Tide's avatar
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    I think most people think business = huge corporation and indeed it could, but if government was run like a small business or local chain type business that is where business owners still care about customer service and equity and giving back to the community. If government was run like a "small business" vs. a "large corporation" does that change the equation?
    @GigCityPlanner

  3. #28
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    Quote Originally posted by Dan View post
    Forward to 7:44 for a counterpoint - government shouldn't be run like a business. Excellent speech by Erie County (NY) Executive Mark Poloncarz.

    Exactly. Running government like a business is a sure fire way to have government fail. Look at Stockton, CA. Most businesses fail. Why would we base our government on that model?

    I think what people are saying when they suggest that government be run like a business is that government should be constantly searching for ways to improve processes and run more efficiently. But that doesn't necessary work. A city's (municipality) function is ultimately to provide for everyone within it's jurisdiction. That, in and of itself, is prone to inefficiencies.

  4. #29
    Cyburbian
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    The most successful businesses are the ones who are able to lock down their respective markets. Once that happens, those businesses start exhibiting the same traits as government. They're still racking in the money because of the market advantage they created for themselves but they're no where near as efficient as they once were because there's no need to be. At that point, the only difference is that business is willing to do anything to generate short term profits for their shareholders while government doesn't need to do anything.

  5. #30
    Cyburbian wahday's avatar
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    Quote Originally posted by Tide View post
    If government was run like a "small business" vs. a "large corporation" does that change the equation?
    To some degree. It addresses the issue of accountability anyway, because the scale and that the business makes it more directly beholden to its customers. But a big difference many have identified here is that whereas a business – big or small – targets a particular market to sell their goods or provide services, the government must serve ALL citizens, even those who “can’t pay” so to speak. These folks might just be ignored by the business (which is fine, I’m not saying businesses should serve people who can’t afford what they offer) and therefore remain unserved. What about things like disaster relief? How many Katrina victims were in a position to pay for the services they needed for example? There are some things where the government just has to step in and do what is right regardless of the profitability of it.

    Similarly, government has the ability and often financial means to take the very long road on a scale a business likely could not. Building an interstate system or railroad network or other large infrastructures probably would never happen were it left to the private sector. The kind of capital, land acquisition rights, and so many more issues needed to pull something like that off requires a vision that can think in generations at times. Most businesses are not in a position to float their costs for that long before seeing a return on investment. Running a transit program is one thing for the private sector, but building the system and also running it is quite another. And is probably not profitable enough for a private interest to take it on. IMHO.

    As to the efficiency, I do recognize that the profit making incentive is a strong driver toward more efficient delivery of goods and services and that at times and in particular arenas, the government may be less than stellar in this regard. But there is a great territory of government function that cannot turn a profit and should not be viewed under the same principles as business.

    I see the Scranton thing as political posturing to force City Council to pass the Mayor’s budget (which they failed to do despite warnings of the dire situation). He said outright that if they had passed his proposed budget, there would be money in the coffers and they wouldn’t be in this situation (I’m not endorsing his budget – I have no idea what he was proposing). Now they are paying everyone minimum wage which will ripple through the community and devastate it if allowed to stand. Foreclosures, people moving away, lawsuits, taxes not being paid, utility bills remaining unpaid, and so on. I’m sure the mayor is fully aware of this. I think he is just trying to force action on the budget. An extreme way to go about it, perhaps, but may work in the long run.
    The purpose of life is a life of purpose

  6. #31
    Cyburbian michaelskis's avatar
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    “The purpose of government is to enable the people of a nation to live in safety and happiness. Government exists for the interests of the governed, not for the governors.”
    ― Thomas Jefferson
    The purpose of a business is to make money. Sad part is both require money to remain in existence and to fulfill their purpose. Increased services require increased funding.

    This was something that I struggled with for a long time but came to the conclusion that government tries to do business operations all too often and that is where I believe the conflict comes into play. Somethings are best left to the private sector but other things that are part of the private sector need to once again become part of the government.
    Not my monkey, not my circus. - Old Polish Proverb

  7. #32
    Cyburbian Tide's avatar
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    Quote Originally posted by michaelskis View post
    Somethings are best left to the private sector but other things that are part of the private sector need to once again become part of the government.
    Such as?
    @GigCityPlanner

  8. #33
    Cyburbian michaelskis's avatar
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    Quote Originally posted by Tide View post
    Such as?
    The one thing that the government does not do that it needs to is the creation of money. They need to take it away from the cartel of private banks.
    As for things that could be private, it is a case by case situation, and what works one place may not work another place. Off Street public parking and trash removal are two come to mind, but still have ordinances to regulate the how, where, when.
    Not my monkey, not my circus. - Old Polish Proverb

  9. #34
    OH....IO Hink's avatar
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    Quote Originally posted by michaelskis View post
    The one thing that the government does not do that it needs to is the creation of money. They need to take it away from the cartel of private banks.
    As for things that could be private, it is a case by case situation, and what works one place may not work another place. Off Street public parking and trash removal are two come to mind, but still have ordinances to regulate the how, where, when.
    I am a defender of government generally, but there are a couple things I think need to be more businesslike.

    - Billing. I think that governments should stay out of billing. Private companies can do it faster, and more efficiently for a lower cost.
    - Golf Courses. Let private clubs have the burden of maintaining grounds and pushing for membership. They shouldn't be propped up by governments.
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

  10. #35
    Chairman of the bored Maister's avatar
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    and here I thought all this time the Federal Reserve created money.
    People will miss that it once meant something to be Southern or Midwestern. It doesn't mean much now, except for the climate. The question, “Where are you from?” doesn't lead to anything odd or interesting. They live somewhere near a Gap store, and what else do you need to know? - Garrison Keillor

  11. #36
    Cyburbian ofos's avatar
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    It has always seemed to me that what government does best is hire two classes of people; first, idealists who will work for less than private sector wages for a cause and, second, those who would have difficulty finding employment in the private sector because of societal or physical differences.
    “Death comes when memories of the past exceed the vision for the future.”

  12. #37
    Cyburbian michaelskis's avatar
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    Quote Originally posted by Maister View post
    and here I thought all this time the Federal Reserve created money.
    It does... and the federal reserve is as federal as federal express.

    Here is a 30 minute cartoon on it...
    Not my monkey, not my circus. - Old Polish Proverb

  13. #38
    Chairman of the bored Maister's avatar
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    Quote Originally posted by michaelskis View post
    It does... and the federal reserve is as federal as federal express.
    Even relying on just the information from factcheck it's pretty clear the fed functions much like other central banks in the world.... . When you say the government should get into the business of creating money - as opposed to the Federal Reserve (and yes it was created through an act of Congress) - are you suggesting elected officials should determine monetary policy? Can you elaborate?
    People will miss that it once meant something to be Southern or Midwestern. It doesn't mean much now, except for the climate. The question, “Where are you from?” doesn't lead to anything odd or interesting. They live somewhere near a Gap store, and what else do you need to know? - Garrison Keillor

  14. #39
    Cyburbian wahday's avatar
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    I’m a little confused about the suggestion that the Federal Reserve is not part of the government. Below is from Wikipedia:

    According to the Board of Governors, the Federal Reserve is independent within government in that "its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government." Its authority is derived from statutes enacted by the U.S. Congress and the System is subject to congressional oversight. The members of the Board of Governors, including its chairman and vice-chairman, are chosen by the President and confirmed by the Senate. The government also exercises some control over the Federal Reserve by appointing and setting the salaries of the system's highest-level employees. Thus the Federal Reserve has both private and public aspects.
    Personally I am not that comfortable with the possibility that the Fed would be MORE accountable to elected officials and therefore potentially manipulated by political games. I like the separations just fine the way they are. I might equate it to the Supreme Court which is part of the government, has members appointed by sitting presidents and approved by congress but is otherwise independent of the legislative and executive branches. The Fed has to take the long view with respect to the economy (as does the court with respect to the law) and not flap with the winds of political trends.

    But maybe there are other examples of private sector responsibilities that would be better served if under the responsibilities of government. Personally I am having a hard time thinking of any, but there must be some. Anyone?
    The purpose of life is a life of purpose

  15. #40
    Cyburbian beach_bum's avatar
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    Quote Originally posted by wahday View post
    But maybe there are other examples of private sector responsibilities that would be better served if under the responsibilities of government. Personally I am having a hard time thinking of any, but there must be some. Anyone?
    Anything that has turned into a monopoly-phone, internet and cable service come to mind. When you lose competition on a service, the level of service tends to suffer. What incentive does a private cable company have to improve service if its the only game in town. You only have one provider because of transmission lines and infrastructure. I think some utilities that are privately handled tend to do better as a government function.
    "Never invest in any idea you can't illustrate with a crayon." ~Peter Lynch

  16. #41
    OH....IO Hink's avatar
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    Quote Originally posted by beach_bum View post
    Anything that has turned into a monopoly-phone, internet and cable service come to mind. When you lose competition on a service, the level of service tends to suffer. What incentive does a private cable company have to improve service if its the only game in town. You only have one provider because of transmission lines and infrastructure. I think some utilities that are privately handled tend to do better as a government function.
    I think it would be amazing if the power grid was controlled by the government. Forcing buried wires, upgrades to the system, and other improvements to better serve, instead of raising rates when a storm breaks the system that was put in place in 1930.
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

  17. #42
    Cyburbian michaelskis's avatar
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    Quote Originally posted by Maister View post
    Even relying on just the information from factcheck it's pretty clear the fed functions much like other central banks in the world.... . When you say the government should get into the business of creating money - as opposed to the Federal Reserve (and yes it was created through an act of Congress) - are you suggesting elected officials should determine monetary policy? Can you elaborate?
    Ummm, no. If you go back and look at my original post, I said create money. According the Section 8 of the constitution, they are to 'coin money'. As for monetary policy, as was referenced in another post, economists argue among themselves regarding what is right and wrong. I agree that we need someone who knows what they are doing to oversee monetary policy, but we need to make sure that person works for the federal government and a collection of foreign banks.

    Sources say that the following banks own the federal reserve: (You can just google these for yourself)
    1. Rothschild's of London and Berlin
    2. Lazard Brothers of Paris
    3. Israel Moses Seaf of Italy
    4. Kuhn, Loeb & Co. of Germany and New York
    5. Warburg & Company of Hamburg, Germany
    6. Lehman Brothers of New York
    7. Goldman, Sachs of New York
    8. Rockefeller Brothers of New York

    Interesting that there are a few names on that list that 'Are too big to fail' and were bailed out and several others are foreign banks.

    Seriously, look more into who owns and controls the money in the US. It is not congress even though they make laws and spend money. Heck even JFK wanted to do away with the fed.
    Not my monkey, not my circus. - Old Polish Proverb

  18. #43
    Cyburbian wahday's avatar
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    Quote Originally posted by michaelskis View post
    Ummm, no. If you go back and look at my original post, I said create money. According the Section 8 of the constitution, they are to 'coin money'. As for monetary policy, as was referenced in another post, economists argue among themselves regarding what is right and wrong. I agree that we need someone who knows what they are doing to oversee monetary policy, but we need to make sure that person works for the federal government and a collection of foreign banks.

    Sources say that the following banks own the federal reserve: (You can just google these for yourself)
    1. Rothschild's of London and Berlin
    2. Lazard Brothers of Paris
    3. Israel Moses Seaf of Italy
    4. Kuhn, Loeb & Co. of Germany and New York
    5. Warburg & Company of Hamburg, Germany
    6. Lehman Brothers of New York
    7. Goldman, Sachs of New York
    8. Rockefeller Brothers of New York

    Interesting that there are a few names on that list that 'Are too big to fail' and were bailed out and several others are foreign banks.

    Seriously, look more into who owns and controls the money in the US. It is not congress even though they make laws and spend money. Heck even JFK wanted to do away with the fed.
    I don't think that is all quite correct. Money creation is the process by which the "money supply" of an economy is changed, to use economics speak and you are correct that this is not the same as printing more money. The central banks of most modernized countries are the entities responsible for expanding he money supply and they accomplish it via a number of complex mechanisms that constitute a monetary policy. . Again, from Wikipedia:

    In economics, money creation is the process by which the money supply of a country or a monetary region (such as the Eurozone) is changed.
    ...
    Within almost all modern nations, special institutions exist (such as the Federal Reserve System in the United States, the European Central Bank (ECB), and the People's Bank of China) which have the task of executing the monetary policy and often acting independently of the executive. In general, these institutions are called central banks and often have other responsibilities such as supervising the smooth operation of the financial system. There are several monetary policy tools available to a central bank to expand the money supply of a country: decreasing interest rates by fiat; increasing the monetary base; and decreasing reserve requirements. All have the effect of expanding the money supply.
    As to the question of who "owns" the Fed, this is from the Federal Reserve website:

    Who owns the Federal Reserve?

    The Federal Reserve System fulfills its public mission as an independent entity within government. It is not "owned" by anyone and is not a private, profit-making institution.

    As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.

    However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve's activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as "independent within the government" rather than "independent of government."

    The 12 regional Federal Reserve Banks, which were established by the Congress as the operating arms of the nation's central banking system, are organized similarly to private corporations--possibly leading to some confusion about "ownership." For example, the Reserve Banks issue shares of stock to member banks. However, owning Reserve Bank stock is quite different from owning stock in a private company. The Reserve Banks are not operated for profit, and ownership of a certain amount of stock is, by law, a condition of membership in the System. The stock may not be sold, traded, or pledged as security for a loan; dividends are, by law, 6 percent per year.
    The purpose of life is a life of purpose

  19. #44
    Cyburbian michaelskis's avatar
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    Quote Originally posted by wahday View post
    As to the question of who "owns" the Fed, this is from the Federal Reserve website:
    Can you find who those member banks are? I am also confused how 6% dividends are not a profit.
    Not my monkey, not my circus. - Old Polish Proverb

  20. #45
    Cyburbian wahday's avatar
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    Quote Originally posted by michaelskis View post
    Can you find who those member banks are? I am also confused how 6% dividends are not a profit.
    The Federal Reserve’s Member Banks are not banks like Bank of America. They are all called Federal Reserve Banks and each is assigned a region of the country. Follow this link to see the regions and from there you can jump to the contact info for each individual bank. They are just called things like The Federal Reserve Bank of Boston (which, for example, is responsible for the district of New England)

    What you may be thinking of is what are called the “Primary Dealers” From Wikipedia again:

    A primary dealer is a bank or securities broker-dealer that may trade directly with the Federal Reserve System of the United States.[33] They are required to make bids or offers when the Fed conducts open market operations, provide information to the Fed's open market trading desk, and to participate actively in U.S. Treasury securities auctions.[34] They consult with both the U.S. Treasury and the Fed about funding the budget deficit and implementing monetary policy. Many former employees of primary dealers work at the Treasury, because of their expertise in the government debt markets, though the Fed avoids a similar revolving door policy.[35][36]
    Between them, these dealers purchase the vast majority of the U.S. Treasury securities (T-bills, T-notes, and T-bonds) sold at auction, and resell them to the public. Their activities extend well beyond the Treasury market, for example, according to the Wall Street Journal Europe (2/9/06 p. 20), all of the top ten dealers in the foreign exchange market are also primary dealers, and between them account for almost 73% of forex trading volume. Arguably, this group's members are the most influential and powerful non-governmental institutions in world financial markets.
    The primary dealers form a worldwide network that distributes new U.S. government debt. For example, Daiwa Securities and Mizuho Securities distribute the debt to Japanese buyers. BNP Paribas, Barclays, Deutsche Bank, and RBS Greenwich Capital (a division of the Royal Bank of Scotland) distribute the debt to European buyers. Goldman Sachs, and Citigroup account for many American buyers. Nevertheless, most of these firms compete internationally and in all major financial centers.
    This is a list of the current Primary Dealers:
    • BNP Paribas Securities Corp.
    • Banc of America Securities LLC
    • Barclays Capital Inc.
    • Cantor Fitzgerald & Co.
    • Citigroup Global Markets Inc.
    • Credit Suisse Securities (U.S.A.) LLC
    • Daiwa Securities America Inc.
    • Deutsche Bank Securities Inc.
    • Goldman, Sachs & Co.
    • HSBC Securities (U.S.A.) Inc.
    • Jefferies & Company, Inc.
    • J. P. Morgan Securities Inc.
    • Mizuho Securities U.S.A. Inc.
    • Morgan Stanley & Co. Incorporated
    • Nomura Securities International, Inc.
    • RBC Capital Markets Corporation
    • RBS Securities Inc.
    • UBS Securities LLC.


    I am certainly not an expert on the Federal Reserve system (although my cousin, an economist, does work for one of the Member Banks), so I don’t know if I can accurately answer the question about the 6%. However, my guess is that this is how they pay their staff. This terminology of “profit” can be a little confusing to me, personally. For example, we talk about “non-profits” which, of course, must make some money or they (we) wouldn’t be able to pay our staffs or any program costs (let alone rent and utilities on our offices). In some cases, non-profits actually turn a profit and put money in the bank, depending on the nature of their activities. I really don’t know if this is the case with the Fed, though.

    There is a ton of information in the FAQ section at the Federal Reserve’s site which you can link to here. I actually found it to be very informative with questions like “Is the Fed Ever Audited?” and “Is the Fed Accountable to Anyone?”
    The purpose of life is a life of purpose

  21. #46
    Cyburbian mgk920's avatar
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    Quote Originally posted by WSU MUP Student View post
    One of my senators is ranked as the 101st wealthiest with a "maximum net worth" of -$15,001... how is that even possible for a senator? My congressman is right in the middle of the pack with a maximum net worth of about $2.5 million, which really isn't that much considering some of the neighborhoods his district covers.
    Our outgoing 'Class I' USSenator (Herb Kohl, a Democrat) used his share of his family's retailing fortune to essentially buy his seat when he made his first run at it and has had little opposition ever since).

    Mike

  22. #47
    Cyburbian Planit's avatar
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    We have a congressman form our area (Rep. Patrick McHenry - R) who has never held a real job, opened up a bogus real estate office in the district (but the phone and power was never connected) and now has three homes (1 on the big lake valued @ $1 mil). I mean come on, how do you do that with the mere salary of a congressman?
    "Whatever beer I'm drinking, is better than the one I'm not." DMLW
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  23. #48
    Cyburbian mgk920's avatar
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    Quote Originally posted by beach_bum View post
    Anything that has turned into a monopoly-phone, internet and cable service come to mind. When you lose competition on a service, the level of service tends to suffer. What incentive does a private cable company have to improve service if its the only game in town. You only have one provider because of transmission lines and infrastructure. I think some utilities that are privately handled tend to do better as a government function.
    The high-energy transmission lines in eastern Wisconsin are all owned by a consortium of all of the local utilities in the area (American Transmission), set up in 2001. Their lines operate on an 'open access' basis for all of its owner utilities and they have been massively upgrading their system ever since their startup. Before then, the individual utilities owned their lines with a complex web of interconnects and falling reliability. These guys are investing HUNDREDS of MILLIONS of dollars per year to upgrade their facilities, too.

    Quote Originally posted by Hink View post
    I think it would be amazing if the power grid was controlled by the government. Forcing buried wires, upgrades to the system, and other improvements to better serve, instead of raising rates when a storm breaks the system that was put in place in 1930.
    How much more do you want to pay to bury the lines?

    Mike

  24. #49
    Cyburbian Plus Whose Yur Planner's avatar
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    Quote Originally posted by mgk920 View post
    The high-energy transmission lines in eastern Wisconsin are all owned by a consortium of all of the local utilities in the area (American Transmission), set up in 2001. Their lines operate on an 'open access' basis for all of its owner utilities and they have been massively upgrading their system ever since their startup. Before then, the individual utilities owned their lines with a complex web of interconnects and falling reliability. These guys are investing HUNDREDS of MILLIONS of dollars per year to upgrade their facilities, too.


    How much more do you want to pay to bury the lines?

    Mike
    How long to you want to go without power because of fill-in-the-blank natural disaster? How about a power outage because of a storm in January?
    When did I go from Luke Skywalker to Obi-Wan Kenobi?

  25. #50
    OH....IO Hink's avatar
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    Quote Originally posted by mgk920 View post
    The high-energy transmission lines in eastern Wisconsin are all owned by a consortium of all of the local utilities in the area (American Transmission), set up in 2001. Their lines operate on an 'open access' basis for all of its owner utilities and they have been massively upgrading their system ever since their startup. Before then, the individual utilities owned their lines with a complex web of interconnects and falling reliability. These guys are investing HUNDREDS of MILLIONS of dollars per year to upgrade their facilities, too.


    How much more do you want to pay to bury the lines?

    Mike
    Zero. I want every penny that gets spent fixing the overhead lines and hiring extra crews when we have a storm to go towards burying lines. I want them to plan a capital budget to make it happen. I want to see a requirement that a portion of the profit or a tax on the profit goes to improve the grid.

    Honestly they should be doing this. But instead of doing what is right, the Public Utilities fight the "good" fight to assure that they make more money while providing worse service for more money. Oh and when they mess up - my rates do get raised....
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

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