Even if that is true, in some areas companies' interests strongly misalign with that of citizens. An insurance company earns more by rejecting customer declarations. An ISP earns more by giving customers less bandwidth for a higher price. A toll road company earns more by doing as little maintenance they can get away with, while keeping prices high.
Yes, in a perfect market, customers will flock to competitors that are better for them. However, in many cases a perfect market is not attainable for various reasons. E.g. because the cost of entry is too high (e.g. making a competing ISP would require you to put your own fiber in the ground) or because there are network effects that are nearly impossible to break.
This is why certain markets need strong regulation or government monopolies -- to protect people from pure profit seeking. Health care is a good example. Health care in Western Europe is much better, while less money is spent on health care. This is because health care is strongly regulated and insurance companies cannot f*ck over customers. The objective function of maximizing profits becomes a constrained optimization problem, which generally leads to other ways to increase profits, like pressuring pharmaceutical companies to lower prices of medicines.
The issue with healthcare is that providers have leverage over insurers, not that there is a lack of competition for insurance.
How is a discerning buyer supposed to choose insurance based on anything but price when that is the only information available?
Then there's the entire bureaucracy that is medical billing. You have to know which obscure codes for diagnosis can be used with which, similarly obscure, codes for treatment. None of those codes ever exactly match what is happening to the patient, so you have to choose one that is close enough and hope the insurance agrees.
You ever wonder why it takes 6+ months to get a medical bill? That's why. It has to be processed by the medical billing bureaucracy until it bears only the slightest resemblance to reality and then shuttled back and forth between the provider, the insurance filing system, and the insurance underwriter. Only once that is done can they send you a bill.
How much cheaper could providers offer service if they didn't have to pay dedicated staff to play some perverse game of telephone with the insurance company?
Capitalism just means private people control the capital, rather than the state. Beyond that and you’re in different forms of capitalism. There’s no requirement of competition.
Have we really already forgotten "Too big to fail"? It wasn't that long ago that those words were uttered and the US gov't bailed out failing private companies with taxpayer money.
And on the topic of profitability that pops up in these discussions, what about public transport? Healhcare? Power plants? Nuclear weapons maintenance? Should these be "profitable"? Is profit supposed to be the be-all-end-all state for everything? Because from where I'm standing, profit incentives make the world an actively worse place when it's free from oversight and regulation. If it were up to Nestle, the entire planet would be a giant reservoir only they could draw water from in order to produce soda. If it were up to Chiquita, all of South America would be a giant banana plantation to the point where they funded actual paramilitary organizations to achieve that goal.
The most profitable route for most companies is the route that is objectively worse for everyone involved minus the shareholders that reap the profits from their antisocial, short-term-minded destructive behaviors.
The entirety of the GP's post (other than the part you quoted) addresses that exact point.
Moreover, Eversource has their hands in any solar projects. They drag out the process to approve any installations and fight you tooth and nail to make sure you can’t install a big enough system because they are mandated to buy electricity at the same rate as they sell it. They fully captured the market and are essential to the state’s functioning so whenever there is an issue the government backs them. When there isn’t, they post billions in profits.
What part of that sounds correct to you?
Here's the important part. Regulatory capture and monopolies don't want or need things to be implemented well, because that leads to alternative options.
No, there are not. You can't have 15 different companies running 15 different cables over 15 different sets of electric poles into a house, each competing on delivery of electricity (or water, or sewage, or...).
Well, you can, but there's nothing good or efficient about it.
First you claim oversimplification and then you write a sentence that feels like a "but when implemented well".
Tell me how this is a market in a reasonably sized city, and how many parallel electric lines, water and sewer pipes you can run for the market to be well implemented?
Bonus question: how many competing power lines can be run from a single power plant? 1? 2? 10?
Of course a privately-owned one doesn't work either, because there's no competition.
Private companies are inefficient by definition when individuals are able to extract millions to billions of dollars from the market.
Yes, the participants of those markets are various degrees of willingness. No, I do not agree that makes them efficient.
It's especially ironic because if markets actually worked the way the "free market" dogma supposes they do, central planning would also work.
Spend a few mil on something of marginal utility, politicaly controversial, or funding a study for something that seems obvious? Congratulations! Fox News found it on USASpending.gov (maybe not now that 18F is dead), and is drumming up outrage. Now your fielding phone calls from senators who are looking to grandstand by reducing your budget.
Waste a few million on a Salesforce implementation that never works, never does what it promised and never gains adoption and is finally quietly abandoned? Doesn't even make the Shareholder meeting and the exec in question gets even more influence for his ability to lead large projects.
If your talking things like their "org chart"* maybe, sort of. There's nothing there that wasn't already available pretty easily via OPM, but one could argue it's a nicer interface. To the extent that it's actually revealed anything to anyone is argue that it has more to do with it being the trending news so people actually bother to look, rather than it being "hidden" before.
https://doge.gov/workforce?orgId=69ee18bc-9ac8-467e-84b0-106...
No, it was all publicly debated and passed by Congress, and openly available for anyone to see.
It just never served anyone's political agenda to nitpick and distort and publicize it until the current Administration.
The US healthcare system is evidence that this is an overly simplistic view.
In a not for profit healthcare insurance system, every dollar not spent on patient care is considered waste, and we work to decrease it.
In a for profit healthcare insurance system, every dollar not spent on patient care is considered shareholder value, and we work to increase it.
That’s cute. But the reality is often closer to this version:
In a not for profit healthcare insurance system, every dollar not spent on patient care is considered waste, so we give it to ourselves and find a way to call it patient care.
That's not hard...
US is the richest nation with poor healthcare. Think about that...
In Spain it is the privatization of the healthcare that is "given to themselves and call it patient care", making politician friends (and politicians themselves) richer and corrupt, and selling it as a way to "fix the healthcare" that they are breaking.
Can you share some significant real-world examples of this happening?
For example, in western Pennsylvania, there is UPMC. According to court documents, UPMC acquired 28 competitors between 1996 and 2018. According to the Pennsylvania Attorney General's office, in 2011 UPMC announced it would stop accepting patients insured by its competitor, Highmark. This prompted the PA government to "enter into consent decrees with both UPMC and Highmark to protect access to care." Which, again according to the Pennsylvania Attorney General's office, UPMC continued to violate. This has lead to, among other things, a recent antitrust lawsuit supported by the US Justice Dept. [1] [2]
[1] https://www.attorneygeneral.gov/upmc/
[2] https://www.wesa.fm/health-science-tech/2024-10-03/justice-d...
I wonder if there are examples of this type of thing happening in places outside the USA, like Western Europe for example.
Yes, that is corruption. However, it is being punished!
If a for profit insurance/hospital group does this in the USA, taking money from patient care to profit... there is no punishment. There is encouragement. Correct?
> Yes, that is corruption. However, it is being punished!
In the example I shared, the evidence suggests that the punishment, as you call it, has not been adequate to solve the problem. And that problem has been ongoing for a decade and a half. And still continues.
For profit: While company A keeps the profit, company B lowers its prices instead. Now customers are going to company B instead of A.
Im not saying that this is how it's done, but in the real world, things are not that simple.
Wouldn't the largest private health insurer just buy up all the smaller ones, and then how exactly would competition work?
I would argue that replacing a private company that performs a critical government function poorly is actually more difficult than eliminating and reforming an agency like USAID or ICE.
Google search is nothing but ads but the majority still use it.
A clue to why this dysfunctional market exists is all the tech CEOs pay homage to the Oval Office and shove monies into untraceable PACs thanks to Citizens United.
Only—and this is a critical detail—if the market is competitive.
Otherwise, a government entity answerable to elected officials at some level is more efficient.
Are either of those endeavors necessary? Are they profitable? Should they be profitable?
Like health care and higher education?
Canada and Mexico will be happy to buy some of your failed states.
All the new HOV lanes around DC are public-private partnerships with flex tolls that are paid by the mile. And have revenue protection for the private entity built in.
Unfortunately, there isn't enough competition for this to be true. In many markets the largest incumbents are able to build a moat to stop smaller, smarter companies from competing. Sometimes this is regulatory capture, but it can also be that the market is a natural winner-take-all market, and in that case well-thought-out regulation can be necessary to enforce competition.
Venture capitalists shy away from funding companies that want to compete in a well established market. They view it as a race to the bottom with no huge payout.
Once a company is large and well established, it can be as bloated and inefficient as any government, and it will extract rent with it's IP, real-estate, and means-of-production for decades before it has to worry about failure.
I usually see cronyism described through the lens of the market - the industrialist uses their market position to gain influence in the government.
But what happened this time appears to be the inverse. The government granted cronies market dominance by regulating away their competition. In exchange for this, there is an unspoken rule that when the government shows up with a “request” the cronies treat it as a demand.
We’ve seen this mechanism be used to launder away constitutional protections by having the stages of enforcement cross the private/public boundary. What the government hand can’t do, they rely on the market hand to do, and vice versa. Two hands, same system, but exploiting a bug in the system.
I call this crony totalitarianism. It’s not a capitalism or constitutional republic thing. It’s people who have found exploits in the system so that they can work around capitalism and the constitution.
However, if you are implying that only companies, and not nations, can fail and be replaced, I'd disagree. This has happened many times in the past.
I really liked this history video on the topic, which is rooted in how the founders of the USA were very familiar with a theory about how that happens called anacyclosis and they had originally designed the constitution to avoid that, where the theory proposes that democracies tend to dissolve when a populist demagogue takes over: https://www.youtube.com/watch?v=uqsBx58GxYY
James Madison and Alexander Hamilton both very much feared that allowing the public to vote for more than members of the House of Representatives would eventually lead to the "uninformed, overly emotional public" to elect a demagogue.
You can say this is due to corporatism, which is often true as well, but gov't regulation is required for natural monopolies.
This is to avoid issues like the early railroad boom where they hugely overbuilt, a lot of them went under and/or eventually coalesced into a few monopolies, which needed regulation to prevent them squeezing their customers to death.
The best markets are sensibly regulated. It's a balance, not a binary.
Maybe they can, but they just as often don't. How much 'waste and useless things' do you think is at Microsoft or Google, yet is financially insulated due to their outrageous success elsewhere.
Regulation is so pervasive it's become a "what the hell is water" situation. People don't even recognize that the dysfunctional companies are protected from failure by the government. Seemingly beneficial regulations create barriers to entry that prevent dysfunctional companies from being replaced. IP law, even copyright (in its current, out-of-control practically perpetual form) is regulation that protects large incumbents in media and tech and other sectors from competition.