Monday, August 13, 2007

The Profit Motive

One of the certainties all fiscal conservatives believe in is that government is inefficient and that the private sector can do anything better than the government. And it doesn't matter how many times this is proven to be untrue, it remains a core belief of theirs. That's not to suggest that government is always more efficient, as that'd be wrong. But there can be no doubt that government can be better at things than private industry.

And why should the private sector be more efficient? The primary thing they cite is The Profit Motive. That greed will be enough to ensure that things are done better. But how is that? I know some companies are different, but I've never worked at a place where I got any share of the profits. I've never had any incentive to do a good job, except that I have high self-esteem and like to do well at everything I do. Plus, I didn't want to be fired. And when you've got bills to pay, that's really the main motivation anyway.

And I'm sure that's how it is with most people. Even places with profit sharing are probably unlikely to see huge boosts in efficiency due to the tiny share they're likely to get. Admittedly, I'm just pulling that out of my ass, but I haven't seen anything to show that it is a huge motivator for making employees work better. And as I've learned in my CPA audit courses, it's a HUGE motivation for management to cook the books. After all, it's far easier to cook the books than to make them better legitimately.

And in many cases, the owner of a company isn't even the person doing the main work; assuming they're doing any work at all. Even small businessmen often turn the day-to-day operations over to hired hands who know more about it. And for the big corporations, it's really the company's management who calls all the shots; not the owners. As we've seen too often, Boards of Directors often don't have a damn clue as to what management is really doing, and will agree to all kinds of crazy things.

So in all these cases, it isn't strictly profits that make people work harder. People work harder so they can keep their jobs, not be harassed, and hopefully be promoted. An owner or Board of Directors will fire the top management if they believe management isn't doing a good job. And top management will fire the lower people. And they'll promote the good ones. That's how this works.

And so how is this any different with the government? If a majority of the workers aren't getting profits in any case, how is this different? The only real difference is that the people at the top aren't using profits as their measure of whether they should fire someone. They have some other motivation. But to the peon down below, this makes no difference. Fired is fired. And it's the combined effort of the workers who really make this stuff work. Sure, you've got to have smart people up top, but if the little guys aren't working, nothing gets done.

For Profits

And curiously enough, the Profit Motive is one of the reasons why government can be more efficient than the private sector. Because for the government, providing the service is enough. They've got a job and they do it. And things cost what they cost. But with for-profit businesses, that's not enough. They also have to make a profit. On top of covering all their expenses and salaries, they're expected to make an extra 10% or more. And to do that, they have to charge more than what something really costs. Rather than being the grease on the wheels, dividends and distributions are just an extra expense; sucking precious funds away from the business.

And then there's the fact that governments usually have fairly strict rules about salaries. But with the private sector, the sky's the limit. And sure, that's one reason why the private sector can attract far better people. But oftentimes, there's only so much a person can do to make things better. And as we've seen, businesses often reward poorly performing CEO's with lavish salary packages that most of us could only dream about.

And then there's the fact that the private sector won't attempt something unless they can expect to get a healthy profit at it. Like fighting poverty. If there was good money to get out of the poor, they wouldn't be poor. But I guess to conservatives, that's reason enough to believe that something shouldn't be done. If it can't make a profit, it must not be beneficial. That's yet another of those "common-sense" logic points that you just can't get passed with them.

And let's not forget that conservatives have forbidden the government from competing with the private sector in some cases, solely because the government would be able to out-perform them. That's why you can't electronically file your taxes directly with the IRS. They're not allowed to provide that service. The best they can do is to provide you links to tax software companies who will file your return for you. Because if they provided that service, they'd completely undermine an entire segment of the accounting software business, and that would be bad because...I don't know. Just bad.

And I've spoken with conservatives who insist that the government should be forbidden from performing any service that the private sector wants to engage in. But why? Because the government can do more with its vast resources and doesn't require profits to be successful. But that isn't a reason to not let them out-do the private sector. That's the exact reason they should do it.

My Career

And let me just say, I've worked for the federal government, a large city government, a private university, as well as numerous private companies; and frankly, I see no big difference between them. They all sucked my soul. I briefly worked for a booming software company in the 90's which was fairly fun to work for, but even that wasn't so different. And after the initial glow dies off, they all become the same drudgery as all the others. The cool people are much more likely to leave than the lame people, and that makes the remaining cool people want to leave. So you get stuck with the lame people, until you leave. And that's how it is everywhere.

But in all these jobs, it wasn't profits that motivated me, as I didn't get any. And the federal government has a much better scheme for rising up the ranks than many of the places I've worked for. Hell, I've never actually gotten a promotion. I had to rise up the ranks the old fashioned way: Getting a new job somewhere else. Many companies just aren't big enough to have a ladder to climb up; especially not if you're limited to accounting jobs, as I was.

And so now I'm self-employed and work out of my house. But it wasn't for the money. I could get paid far better working for someone else. I did it because I was just sick of working for someone else. And so instead of going to bed too early so I could wake up too early, I'm going to bed really, really late. And that's what I like. Anyway, I'm tired and think I've said enough. This is my witty conclusion.

1 comment:

whig said...

This is my witty reply. I wrote a bunch more but deleted it.