hehehe... wait didn't you put me on ignore?
So, what is the end game with this never-ending U.S. public debt?
- Thread starter Saltynuts
- Start date
hehehe... wait didn't you put me on ignore?
I have very few current posters on ignore. I just skip over the posts of those that too often post nonsense, or simply repeat nonsense they have picked up on the web but don't realize it is garbage. I will read your posts occasionally, so please keep them clean.
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I have very few current posters on ignore. I just skip over the posts of those that too often post nonsense, like jem, poindexter and yourself. I will read your posts occasionally, so please keep them clean.
kidding aside, so you are saying gov is more efficient than private? sounds like we are starting a journey deep down a rabbit hole.
In general, any statement with "always" or "never" is going to be suspect. Often times private industry is more efficient, but it won't always be nor as I demonstrated is it always workable.
Let me give you an example though, of where private industry could do something but may not be more efficient. Let's say you need test pilots to fly test flights on aircraft after they undergo maintenance. These pilots have to have a significant number of hours in type doing maintenance test flights in order to be able to perform this job, so by definition there is a very limited universe of people qualified for it. The work sometimes occurs predominantly INCONUS, however sometimes it almost all occurs OCONUS and there's no way to predict the geopolitical situation that will influence the mix over the term of a 4 year contract. Let's look at this from the perspective of your options.
Option 1. The government assigns 10 O-4 active duty pilots to this duty. They pay them each a salary of roughly $100K, plus an additional $100K to fully load the costs of various allowances benefits and overhead (this is a pretty accurate accounting of total costs, BTW), so $200K a year per person, or $2M. These pilots go where they're told when they're told with no questions asked with zero advanced notice and cost the same regardless of where they are. They'll live in a tent in Kandahar as easily as at home.
Option 2. A private contractor looks at this with a goal to do it for less than $2M. First, they need to make a profit, let's say that needs to be 10%. So they have $1.8M available for salary and overhead. They need to hire pilots, so what do they need to pay to attract them? Well first off, the pilots have very little job security with the contractor, by definition the contract is going to be rebid after 4 years so they can expect to have to switch employers every 4 years. Let's say they demand a 20% premium for that uncertainty, so you're up to $1.2M. Now you know that they may stay nice and comfy INCONUS the whole time, or spend the majority of their time in the sandbox. Huge risk for you as a contractor, you have to price that into your contract even if it doesn't happen. You're going to have to pay a minimum 50% premium up to 100%, to get a contractor pilot to drop everything and head to the desert for an indeterminate amount of time. So let's split the difference and say an additional $75K for that risk. So now we're up to $1.95M in potential costs per pilot and $1.8M available to pay for it. Before a dime in overhead. I run a business (and I was a military pilot), I wouldn't take that business in a million years and neither would any other private company!
Obviously you can quibble with the numbers all day, but I can tell you from experience with contracts exactly like this one that at the end of the day often times the risk premium plus profit requirement means that a private company just can't do something for less than govt. Like I said, janitorial services for a base, absolutely should be private and has been for years. Every single function? Not necessarily the case when you actually are on brass tacks working one of these contracts, and the risk piece is often the reason why. Which is why we worked a lot to understand how the private sector priced risk and tried to de-risk and shift risk as much as possible. My last government job I literally had a team of folks with masters and PhDs in ops research working on nothing but this. So smart people are working hard on the problem. It's just a hard, in many ways probabilistic problem that doesn't yield to sound bite solutions and simplistic "always" and "never" pronouncements from armchair warriors who know nothing about the problem set.
no, you are mistaken. I have never made a blanket statement like that, nor would I. Anyone familiar with both the U.S. private and government sectors will recognize that some things are best done in the private sector and others in the government sector. Failure to recognize this in milieu of ideologically driven politics has resulted in extremely serious and costly errors; errors that if not eventually corrected have the potential to take down the republic. I'll leave it as an exercise for you to come up with a few good examples. There are plenty.
We actually used some pretty sophisticated statistical analysis software that the private sector has come up with for probabilistic supply chain optimization, as well as doing our own analysis in SAS. You need the smart folks to program your problem set in though, and know which tools are appropriate. Plus real world is always a lot messier than chess.
The picture was purposely made in too low a resolution to see the date of this issue of the Economist, 1988. From the article:
"THIRTY years from now, Americans, Japanese, Europeans, and people in many other rich countries, and some relatively poor ones will probably be paying for their shopping with the same currency. Prices will be quoted not in dollars, yen or D-marks but in, let’s say, the phoenix. The phoenix will be favoured by companies and shoppers because it will be more convenient than today’s national currencies, which by then will seem a quaint cause of much disruption to economic life in the last twentieth century."
For those of you math challenged, 30 years from 1988 is this year. Not sure much in the article turned out to be accurate.