They say there is nothing new under the sun. I don't know if that's accurate, but nevertheless, much of what was discussed today can also be found in past discussions. Recently, a memory was brought up in my brain that reminded me of EconTalk. podcast In my 2008 article, I touched on two themes that I posted over the last month.The guest on that episode was Mike Munger (because of course It was Mike Munger), and the subject was the bus system in Santiago, Chile.
In this episode, Munger and Russ Roberts discuss how Santiago once had a completely privately operated bus system. And, as Munger pointed out early on, the bus system operated at a profit, with industry-wide profits of about $60 million a year. Munger explains:
There were no public subsidies of any kind. Every day, thousands of people traveled from where they were to where they wanted to go, and no one had to pay except those who took the trip.
Later, the New Left government outlawed private buses and introduced a government-run bus system. And as a result of this reform, the total number of travelers using buses for transportation decreased, the average travel time tripled from 40 minutes to 2 hours, and the new system operated at an annual loss of $600 million. I did. exactly. He was losing ten times as much money each year as the previous system was making, but it was taking him three times as long to transport fewer people.
The entire episode is worth listening to, but there are some themes that came up in the discussion that are also reflected in some of my recent posts. For example, while unpacking some of Alexander Field's work; this In this post, I argue that one of the reasons wartime planners so often made such inefficient and wasteful choices was because they lacked some kind of feedback mechanism for the decisions they made. We talked about something. Munger points out that public transit systems have the same problem.
At some point, Russ brought up the idea of comparing the routes in the new system to the routes the old system was using to serve. Munger explains that the new system “eliminated almost all the routes” previously used in order to replace the organic cultivation system with a rationally planned system. So Munger says:
They didn't use that information. The previous system had a lot of information. So, Russ, since you read Hayek and know about markets, your first thought was, “Let's look at the map of the old system.” That wasn't their first thought. they said. should What does the map look like? ” And they painted it in terms of planning, not in terms of meeting commuter demand.
And using a planning perspective separates you from two of the best things the market can offer.
The market offers two things. One is information about demand and costs, and the other is incentives to do things a certain way rather than another. So we're going to take these two things out. Currently, there is no information about where and when people want to go. And it's hard for planners to say, “Let's set up a route here.” good, why?Why is it there and not elsewhere?? “Let's decide on a route at this point.” How do we know? Without a competition to decide who is better, we would never know.
Additional themes touched on in this podcast appeared in my article Recent A discussion of Nathaniel Robinson's rather strange views on the education system. For example, Robinson assured readers that, as a good leftist, he considered profits to be a “dirty word.” Munger points out that this mindset was also present in the new government implementing the reforms. The idea that the bus system could be run profitably may seem like a good thing to some people, but to a left-wing government, the very fact that someone was making a profit from it , which means the system is inherently flawed,” Munger said.
Robinson's argument also reflects similar flaws in the judgment that motivated these reforms. To understand that, let's briefly revisit the concerns Robinson expresses about private schools subsidized by vouchers. He said, “If our district consisted of a total of three for-profit elementary schools, all of which failed to educate our children while simply pocketing most of the vouchers, parents would It doesn't matter what “choice” you make between schools. , cannot improve the quality of schools. One might expect new operators to enter the market, but if the only way to actually make money from children is to ignore them, then new operators will outperform old ones. It's not that it's better either. ”
One may wonder why Mr. Robinson does not generalize this concern to public schools. After all, what if instead of him having three elementary schools to choose from, he was only assigned one based on his zip code? And if the district's administrators “simply pocketed most of the schools.” [tax] If we don't pay to educate our children, there will be no education. option For most parents, there is no way to send their children to a better school, and there is no opportunity for new operators to “enter the market” and try to offer better options. This possibility seems even worse than what Robinson described. So why doesn't he consider it?
It seems that Robinson, like the reformers of Santiago's bus system, believes that if you take something out of the market and take away profits, what Munger calls “a kind of human materialization” will occur. That's why. They would be different, and they would just work for public service. ”
Robinson does not seriously consider the alternative scenario I described above. Because in his mind, people only act as civilians trying to make a profit. But when teachers and administrators are public servants run by unprofitable enterprises, they simply “see children as an end,” just as they do when acting as agents of the state, so he's right. You will only do what you think.lining money for personal gain at the expense of others is just an act civil servant will do I never have Do – Only those who are profiting from it would do such a thing. And since government agencies are freed from the need to operate profitably, Mr. Robinson sees no reason to consider the possibility I mentioned, and can rule it out a priori. .
Munger points out the flaws in this thinking with an example of how bus drivers' behavior changed when buses were no longer operating in a market. In the previous system, bus drivers wanted to make as much money as possible and did so by transporting as many people as possible from their current location to their destination. The more people you help, the more money you can make. The new system changed incentives and drivers were no longer paid based on the number of passengers they transported. They were paid according to how closely they followed the schedule. As a result, a bus driver may arrive at a bus stop where 50 people are waiting with a nearly empty bus, but if he is three minutes late than scheduled, he will simply leave the stop without picking up anyone. You may pass by. Since you aren't getting paid by the tourists anyway, leaving them at the bus stop won't cost you anything. Picking people up actually costs money because the time it takes to get people onto the bus is even later than planned. So why does he stop?
Munger argues that if we fail to understand the role that markets play in generating information and driving responses to that information, and if we fail to understand that human nature cannot be changed by government decisions, what does that do to people's thinking? I'm summarizing all of this by pointing out what happens. Lacking this insight, when people see a public system that appears to be failing in every conceivable way, the only solutions they can think of are to spend more money or pass some kind of reform. . Are local public schools doing poorly? Instead of responding by giving people the ability to pursue other options, solve the problem by making reforms that improve the quality of all public schools. This results in a situation where public programs become more costly year after year, and new reforms and regulations are frequently imposed without addressing the underlying problems or improving outcomes.
Unfortunately, this seems like a pretty accurate description of how the political process actually works.