jay pettitt on 17/7/2012 at 12:20
Did you see what I did there!?!
Anyhow - it's a big, public event and big public events need security. Hence a big contract with G4S - the world's premiere private security firm thingie. They're huge. And probably evil. Oh, but it's all a terrible shambles because the world's premiere security firm forgot to recruit enough people and the people they did recruit haven't turned up. 300 G4S Staff were supposed to be at the Olympic Park in Surrey, England today. 20 showed.
It's all okay, because public services like the army, and navy, and airforce, the police, bus drivers and nurses and mayors can fill in. But some important people are rightly cross at G4S and they've been sent to see the headmaster to answer some difficult questions about the meaning of life.
But here's the thing that I'm thinking.
Isn't that what private companies do.
Like, isn't that the whole point of capitalism.
We like to think that 'efficiency' is nice and cuddly and about better light bulbs or reducing waste and working smarter, not harder or something. But really it's about aggressively cutting costs. And the low hanging fruit if you want efficiency to cut costs are staff. You cut staff, and then, if you've any left, you cut their wages, pensions, benefits, holidays, health care, anything about them that's costy.
(obviously when I say staff, I don't mean the directors, they still get lots and lots ~ Mr G4S will get a £20million bonus just for getting the sack, but that's different)
So when you've got a business that depends on people - perhaps you need to supply lots of them (not directors, nobody could afford that) with security bibs on to a public event - but you're not prepared to look after them properly (pay them enough to secure their interest, tell them whether or not they've got work or when and generally not treat them like decent human beings)...
Is it really such a big surprise if it doesn't go entirely well.
Still, looking forward to private firms bringing 'efficiency' in all sorts new and exciting ways to other parts of public life - like health provision and policing. What could possibly go wrong?y
--edit--
ps. If you have been hired by G4S (damn that 4 is the same key as $) for the Olympics then damn it get to work already. Mr G4S says you'll now get an extra £1 on top of minimum wage to be paid as a special bonus for turning up. To be paid at the end. Perhaps. £1. Woo!
demagogue on 17/7/2012 at 12:48
Security is a public good. Public goods are not always best maximized by the market.
Quote Posted by wiki
Public goods provide a very important example of market failure, in which market-like behavior of individual gain-seeking does not produce efficient results. The production of public goods results in positive externalities which are not remunerated. If private organizations don't reap all the benefits of a public good which they have produced, their incentives to produce it voluntarily might be insufficient. Consumers can take advantage of public goods without contributing sufficiently to their creation. This is called the free rider problem, or occasionally, the "easy rider problem" (because consumers' contributions will be small but non-zero). If too many consumers decide to 'free-ride', private costs exceed private benefits and the incentive to provide the good or service through the market disappears. The market thus fails to provide a good or service for which there is a need.
N'Al on 17/7/2012 at 13:18
Nice knee-jerk there, jay.
Way to link one company's mismanagement and incompetence (and that's what this is) with the 'evils of capitalism'. Where does it actually say that these problems with G4S were caused by staff cuts?
jay pettitt on 17/7/2012 at 14:01
My pleasure.
There's no it. I'm saying. Because, ultimately, when you're balancing the company books that's what efficiency ~the holy grail of private capital~ means. Reducing staff costs.
Actual real efficiencies - doing something better - are hard to do and don't return nearly as well. Staff costs are the low hanging fruit for doing something for less. Always. Staff are mighty expensive things.
That's why G4S Olympic Security bods are paid minimal wages, are paid piecemeal, aren't being retained on contracts to assure availability and so on and so forth.
So I'm
wondering knee jerking. Is it incompetence. Or is it systemic.
--edity edit--
Also, who said G4S was evil Mr Knee-Jerk yourself.
Well obviously I did, but that's because they're a giant security mega corp who probably experiment with bio-technology. In fact, that might be your alternative explanation for where all the Cheap Labour that didn't turn up for work today really are. Turned into parts for mutant cyborg assassins probably.
But I don't think capitalism is evil. Well maybe a little bit. But I don't think it's as evil as, say, Adam Smith, did. Actually, yes I do.
Quote:
“The man whose whole life is spent in performing a few simple operations, of which the effects, too, are perhaps always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention. He naturally loses, therefore, the habit of such exertion and generally becomes as stupid and as ignorant as it is possible for a human creature to become. The torpor of his mind renders him not only incapable of relishing or bearing any part in rational conversation, but of conceiving any generous, noble or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life. Of the great and extensive interests in his country he is altogether incapable of judging; and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war. The uniformity of his life naturally corrupts the courage of his mind.
But in every improved and civilized society, this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it.”Adam Smith. The Wealth of Nations.
Sometimes I wonder if anyone from the Adam Smith Institute actually made it more than half way through TWoN.
Thirith on 17/7/2012 at 14:18
I think it's fair to say that capitalism runs a risk of "doing more for less" (which usually means doing less for less), i.e. offering the cheapest service and ignoring that services suffer - because the all-powerful god of the Free Market is supposed to regulate for quality somehow. Doesn't mean that other systems don't have their own flaws that might lead to the same results - but there's definitely a tendency in capitalism towards favouring cheaper and cheaper while forgetting that quality also tends to suffer.
jay pettitt on 17/7/2012 at 14:43
Private companies aren't really more efficient at cleaning hospitals. They just don't give their cleaners a pension to speak of.
N'Al on 17/7/2012 at 14:44
Quote Posted by Thirith
I think it's fair to say that capitalism runs a risk of "doing more for less" (which usually means doing less for less.
Oh, no doubt.
But just 'saying' - like jay is doing - doesn't mean that it is necessarily the case here. An 'efficient' G4S would have:
* been able to provide sufficient well-trained security staff to cover all the security needs during the Olympics,
* at an appropriate salary level for each employee that means they turn up when they need to,
* i.e. to fullfil their
contractual obligations.
The fact that we have the exact opposite happening here pretty much means that G4S is highly 'inefficient', if nothing else.
demagogue on 17/7/2012 at 15:04
You don't have to speak in such glittering generalities. Just boil it down. Public goods involve positive externalities where market forces don't work like they're supposed to.
That is, if they already got the contract, there's no incentive for this company to do any more work than it has to to keep the contract. But more importantly there's no extra incentive to add any extra benefit to the actual consumer. The unit of trade isn't a unit of money for a unit of security that the protected person pays for, it's a lump payment (paid out of taxes) for a non-excludable (everybody gets it if they pay or not) non-rivalrous (giving it to one person doesn't stop another person from getting it too) service. When you diffuse the supply & demand forces that much and don't have some mechanism to check it, this happens like clockwork.
It's not the fault of "capitalism" when it's a well-known market failure that people have known since forever capitalism has trouble with. It's why government-like spending has always been inefficient... security, defense, electricity, sewage, roads, parks...
Also, dude, you keep saying the root problem here is the "lust for efficiency" inherent in capitalism. What you mean is this is wildly inefficient because it doesn't follow the rules of capitalism because of the market failure. They're spending all this money and consumers are not getting the service they desire. This is much closer to the problem with socialism, not capitalism... but because it's a public good, as mentioned before, you can't easily fix it the classic way. [/undergrad econ]
jay pettitt on 17/7/2012 at 15:22
Quote:
The fact that we have the exact opposite happening here pretty much means that G4S is highly 'inefficient', if nothing else.
Different definitions of efficient. Finance is not economics.
My point is that I think it's important to understand the difference - because sleight of hand may be afoot. Efficiency in the financial affairs of a private company (effectively lowering staff costs to a minimum) is not always the same thing as what you or I might think when we hear mention of efficient - achieving additional value by doing something better.
jay pettitt on 17/7/2012 at 15:42
Quote Posted by demagogue
It's not the fault of "capitalism" when it's a well-known market failure that people have known since forever capitalism has trouble with. It's why government-like spending has always been inefficient... security, defense, electricity, sewage, roads, parks...
Also, dude, you keep saying the root problem here is the "lust for efficiency" inherent in capitalism. What you mean is this is wildly
inefficient because it doesn't follow the rules of capitalism because of the market failure. They're spending all this money and consumers are not getting the service they desire. This is much closer to the problem with socialism, not capitalism... but because it's a public good, as mentioned before, you can't easily fix it the classic way. [/undergrad econ]
It's the fault of somebody when the fashion of the day is to outsource 'inefficient' public spends to 'efficient' private companies. That's my ideological rub here. It's not really about the Olympics, or capitalism. I'm an occasional capitalist (if not an olympian) myself. It's about policing, youth health care and other important public goods 'n' services that are demonised rhetorically as inefficient and contracted to the efficient private sector expecting them to be somehow made of magic value dust.
I'm not sure that is what I mean at all. It might be, I never did undergrad economics, but I don't think so. I think spend on sewage infrastructure is likely a very efficient use of money. Granted, it's hard to see there being a kind of rapid turnover of novelty goods market thing going on, but that's surely not a very good definition of efficient.
