Jacinda Ardern is CEO of Govt Inc?
September 17, 2018
Another article that tries to blithely wave away the PM incurring a not insubstantial cost in getting herself to Nauru for her photo op. In particular it takes the ludicrous position that the actions of the head of an organisation that exists as a monopoly agency of violent coercion, the very antithesis of the market, is equivalent to the CEO of a company operating in a competitive voluntary environment.
I’m sure it’s very easy for many to think of govt this way, it’s really just a big corporation except without that nasty greedy profit motive. Like capitalism minus all the nasty bits. Free hugs for all. And dammit she is just another hardworking parent CEO doing her job so leave her alone. The reality is far less prosaic.
Companies as organisations exist to extract value from the transformation of resources from lower to higher valued uses. In order to do so they must compete with other organisations or individuals who may require those same resources for their own purposes. If they cannot find a way to operate that produces enough value then they will suffer losses and will eventually be unable to operate further. Profit (and loss) provides an objective yardstick with which to gauge not only their own production efficiency but also whether they are putting their resources to the best possible use – i.e. providing what their customers actually demand.
Now while we can argue whether companies per-se would exist in a voluntary society, any such organisation relies ultimately on customers choosing to exchange resources with them rather than putting them to other, perhaps more appealing, uses. In other words the customer sets the prices the company can charge through their purchasing decisions. If the operational model of the organisation will not sustain the prices their customers are willing to pay then they either find ways to accommodate that or they cease operation.
Not so with the state. The state does not operate in a voluntary environment. It does not operate in a competitive environment (within its claimed area of dominion). Its production model is not based on customer demand but on politically expedient fiat. It does not need to compete for customers, rather it simply demands that everyone is a customer whether they like it or not and that they will pay for the product it provides regardless of whether they need it, want it, or in some cases can even have it. Concerns of price and quality are unrestricted by the discipline of the competitive marketplace, nor does the state suffer the risk of loss in the way market entities do as it will simply take what it needs to cover its cost from its victim customers. And all of this is backed up by the threat of physical force if the victim customers do not comply with its terms of service.
And even if, in a fit of pathological altruism, we ignore the grubby reality and assume that the state is doing things out of the goodness of its blessed little heart, it has no way to know whether it is doing a good job. Without competition there is no feedback mechanism to say whether this is the best that can be provided for the needs of the customer, or whether there is a better way, or indeed whether any of the market incentives towards efficiency and maximising customer satisfaction have any meaning whatsoever in such a scenario.
And so, according to the article, we have a corporate ‘CEO’ who is just doing her job yet shouldn’t concern herself with the minutiae of how much that actually costs. Furthermore, what kind of company worries about stupid things like cost of operation when all sorts of social virtues are clearly far more important than providing a service your customer actually wants at a price they’re willing to pay? A bankrupt one I would proffer.
Back in the real world it is customers who decide whether those things are of value to them or not and they will communicate that through their purchasing choices. When customers do not have such a choice the ‘company’ can convince itself that everything it does is good and that inconveniences like cost can simply be waved away as ‘necessary’, particularly as they cannot ask the essential question here: “compared to what?”. I would suggest that there are very few commercial companies that would so easily countenance the charter of a private jet for an international flight for a single employee under the same circumstances, and all with not only a lack of scrutiny but, apparently, unquestioning support from many customers.
Now of course this is not to say that such apparent excess doesn’t happen in the market – there are plenty of examples in the market of rock-star CEOs with their own corporate jets. But ultimately such costs are subject to rigorous testing in the market – testing that the state has exempted itself from under threat of force. Very convenient for the egos of those involved who can larp at being the great exemplars of socially responsible ‘corporations’, not so much for those forced to ‘buy’ their shoddy product regardless.
Post syndicated from https://anzcap.wordpress.com/2018/09/17/jacinda-ardern-is-ceo-of-govt-inc/.