A Good Corporate Citizen

[Axulus]

Large corporations have customers, so if a large corporation isn't best meeting the needs of these customers the customers stop paying them money and go elsewhere.

This is much less so when the government is the customer, which is exactly the point.

Okay I am late to the party here. Why can't the government change vendors? Or did you mean something else?

It can, but the question is whether the government, as a customer, has as good of incentives to be as vigilant as private customers are when determining what to purchase and who to purchase it from and how closely to monitor the quality of the product/service received.

No one claims that free markets achieve any kind of perfection but rather the threat of losing customers is what requires producers to remain disciplined/focus on satisfying those customers or they will lose too many and be in danger of going out of business all together.

When a government agency makes a dumb decision, it is not in any danger of going out of business. This prison is not under any threat of losing customers if it doesn't satisfy them, so making dumb decisions (in regards to what it purchases) or not making the purchasing decisions that provide the best value tend to have very little consequence.

 

[Nice Squirrel]

Okay I am late to the party here. Why can't the government change vendors? Or did you mean something else?

It can, but the question is whether the government, as a customer, has as good of incentives to be as vigilant as private customers are when determining what to purchase and who to purchase it from and how closely to monitor the quality of the product/service received.

Like all entities it, depends -- and I would say mostly on the individual decision makers. I've worked in both public and private sectors and seen both sides waste money or continue relationships with crappy vendors for irrational reasons.

No one claims that free markets achieve any kind of perfection but rather the threat of losing customers is what requires producers to remain disciplined/focus on satisfying those customers or they will lose too many and be in danger of going out of business all together.

In theory it is totally true, but in practice a great many companies do not pay attention to customer retention.

 

[Canard DuJour]

Is the mere presence of government enough to make a transaction not free market based?

Not necessarily, but when a function is entirely a government function that won't exist without the government - such as a prison -

- or a market economy -

then you have a pretty good clue that it isn't a free market based activity.

and a pretty good clue which ideology is nonsense.

 

[dismal]

I still don't see how a purchasing clerk at a large company is more picky or demanding than the same guy when he was working for a government department.

Did you ever see a government official get fired or demoted for a bad procurement job?

Look at the reaction we had here from government fans when it was suggested the government was responsible for poorly managing it's procurement of this service. White blood cells, activate and protect government from accountability.

 

[arkirk]

It can, but the question is whether the government, as a customer, has as good of incentives to be as vigilant as private customers are when determining what to purchase and who to purchase it from and how closely to monitor the quality of the product/service received.

Like all entities it, depends -- and I would say mostly on the individual decision makers. I've worked in both public and private sectors and seen both sides waste money or continue relationships with crappy vendors for irrational reasons.

No one claims that free markets achieve any kind of perfection but rather the threat of losing customers is what requires producers to remain disciplined/focus on satisfying those customers or they will lose too many and be in danger of going out of business all together.

In theory it is totally true, but in practice a great many companies do not pay attention to customer retention.

Can't anybody see what has happened here? Some company goes to the government and says, "Give us your rejects, your hardened criminals, your pot and crack users, those in need of punishment and we will do it for you. Why wouldn't that include any inhumanity they can get away with? The same range of horrors go on regularly in government prisons. The problem is we have a governmental faith in punitive measures for those who break our laws...even laws with very little merit. The only criminals that get good treatment are rich ones who can finance their incarceration in country club jails. These DO EXIST. Money fixes everything in America...for that matter in the world. We really should stop pretending to be civilized and busy ourselves becoming civilized.

 

[Nice Squirrel]

I still don't see how a purchasing clerk at a large company is more picky or demanding than the same guy when he was working for a government department.

Did you ever see a government official get fired or demoted for a bad procurement job?

Yes.

- - - Updated - - -

We really should stop pretending to be civilized and busy ourselves becoming civilized.

I like this quote.

 

[arkirk]

I still don't see how a purchasing clerk at a large company is more picky or demanding than the same guy when he was working for a government department.

Did you ever see a government official get fired or demoted for a bad procurement job?

The Commisary Officer at NAS Glynco, GA in the '60's went to the brig for feeding the troops crappy food and turning in the money he "saved." I was there and ate some of that crappy food. You don't have to be a prisoner to get that kind of service. Now that was quite awile ago, but he did go to jail in addition to getting fired.

 

[bilby]

I still don't see how a purchasing clerk at a large company is more picky or demanding than the same guy when he was working for a government department.

Did you ever see a government official get fired or demoted for a bad procurement job?

I've never seen anyone in either government or private industry get fired or demoted for a bad procurement job.

I've seen some shockingly bad procurement descisions - and I even quit one job (with a publicly traded corporation) because my boss wanted me to continue buying from an expensive, low quality supplier from whom he was getting illegal kick-backs.

In my experience, large corporations differ from governments very little when purchasing; insofar as there is a difference, it is mainly in that government departments have stronger oversight and more explicit controls to limit corruption.

 

[dismal]

Did you ever see a government official get fired or demoted for a bad procurement job?

I've never seen anyone in either government or private industry get fired or demoted for a bad procurement job.

I've seen some shockingly bad procurement descisions - and I even quit one job (with a publicly traded corporation) because my boss wanted me to continue buying from an expensive, low quality supplier from whom he was getting illegal kick-backs.

In my experience, large corporations differ from governments very little when purchasing; insofar as there is a difference, it is mainly in that government departments have stronger oversight and more explicit controls to limit corruption.

So, based on your experience the government officials in this case are probably doing a better job of managing their Aramark deal than private industry does with theirs?

If I ate in, say, the IBM's Aramark run cafeteria it would have less food, more rat's scurrying about the kitchen eating stuff, more stuff being fished out of trash cans to be served to IBM employees, etc?

And if IBM found out about it they'd promote the procurement team?

 

[bilby]

I've never seen anyone in either government or private industry get fired or demoted for a bad procurement job.

I've seen some shockingly bad procurement descisions - and I even quit one job (with a publicly traded corporation) because my boss wanted me to continue buying from an expensive, low quality supplier from whom he was getting illegal kick-backs.

In my experience, large corporations differ from governments very little when purchasing; insofar as there is a difference, it is mainly in that government departments have stronger oversight and more explicit controls to limit corruption.

So, based on your experience the government officials in this case are probably doing a better job of managing their Aramark deal than private industry does with theirs?

If I ate in, say, the IBM's Aramark run cafeteria it would have less food, more rat's scurrying about the kitchen eating stuff, more stuff being fished out of trash cans to be served to IBM employees, etc?

And if IBM found out about it they'd promote the procurement team?

My experience does not include Aramark, so based on that alone, I couldn't say; However if they are providing the level of service reported in the OP case, I would certainly hesitate to contract them for food services at any location.

As far as I am aware, IBM don't provide food to their employees as a company 'perk'; And if you eat at an IBM canteen, you do so by choice, and at your personal expense. While working for IBM may have some similarities to incarceration in a state penitentiary, I believe that one critical difference is the absence of locks on the doors to prevent employees from going elsewhere for their lunches.

That said, perhaps an investigation of the suspicious similarity between 'Aramark' and 'Armonk' warrants investigation

 

[Jason Harvestdancer]

Not necessarily, but when a function is entirely a government function that won't exist without the government - such as a prison -

- or a market economy -

And at that point you lost it.

Sorry, try again later.

 

[laughing dog]

For some reason, you think that "feeding" means something different for human inmates compare to humans who are not inmates.

For some reason I think "inmates" differentiates between whether the one doing the feeding is or isn't the government.

Which has nothing whatsoever with contracting with private firms to feed inmates or students.

 

[laughing dog]

That is one of the most damning indictments of the free market I have ever seen you make, because the outcome should not depend on whether the government is a customer or not.

Why shouldn't it? One of the necessary ingredients to achieve the benefits of a free market is picky customers that demand low price and high quality and who aggressively attempt to obtain compensation or refunds when the product/service is not to their standards, and who have better incentives to monitor quality and respond to lack thereof. They are fickle and take their business elsewhere when their needs and desires can be better met from a competitor.

I think you miss the point - you are tacitly acknowledging the incentives for skimping (or even cheating) on quality on the part of firms in the free market. It shouldn't matter who the customer is (as you implied).

Without that, you don't obtain as efficient of an outcome.

That is not true. There are plenty of possible efficient outcomes in a market economy.

 

[Canard DuJour]

I've never seen anyone in either government or private industry get fired or demoted for a bad procurement job.

I've seen some shockingly bad procurement descisions - and I even quit one job (with a publicly traded corporation) because my boss wanted me to continue buying from an expensive, low quality supplier from whom he was getting illegal kick-backs.

In my experience, large corporations differ from governments very little when purchasing; insofar as there is a difference, it is mainly in that government departments have stronger oversight and more explicit controls to limit corruption.

So, based on your experience the government officials in this case are probably doing a better job of managing their Aramark deal than private industry does with theirs?

If I ate in, say, the IBM's Aramark run cafeteria it would have less food, more rat's scurrying about the kitchen eating stuff, more stuff being fished out of trash cans to be served to IBM employees, etc?

And if IBM found out about it they'd promote the procurement team?

Not long ago, Aramark became one of the biggest caterers in the North Sea (still are AFAIK) - umpteen oil rigs and offshore installations where end consumers had pretty much the same choice as prisoners. Good food and 'flotel' service turned into rubbish food and service, including proven cases of food poisoning and rat infestation. The clients negotiating the contracts - not IBM, but Shell, BP et al - punished Aramark by awarding them more contracts and punished their procurers with bonuses. The same procurers in yer average gov't dept would have at least got a bollocking, possibly corruption charges.

 

[Canard DuJour]

- or a market economy -

And at that point you lost it.

Sorry, try again later.

Say goodnight, Jason.

 

[bilby]

There is a clear belief that a large corporation will do better at procurement than a government department; but other than repeated re-statement of this belief, there seems to be no backing for it.

Where is the evidence?

Large organisations suck. If anything, this suckiness is slightly ameliorated by having the a government minister in charge, rather than a board of directors. That people firmly believe the opposite to be true really means nothing; although it is possible that the belief that government is more corrupt has led to the controls that ensure that government is, in fact, slightly less corrupt.

At the end of the day, the individual staff making the decisions are fundamentally the same people - and given that there is no hard barrier between government and corporate career paths, often they are literally the same people.

Why they would suddenly become incompetent when they move into a government job, or suddenly become competent when hired by a multinational corporation, is beyond me.

 

[Axulus]

There is a clear belief that a large corporation will do better at procurement than a government department; but other than repeated re-statement of this belief, there seems to be no backing for it.

Where is the evidence?

Large organisations suck. If anything, this suckiness is slightly ameliorated by having the a government minister in charge, rather than a board of directors. That people firmly believe the opposite to be true really means nothing; although it is possible that the belief that government is more corrupt has led to the controls that ensure that government is, in fact, slightly less corrupt.

At the end of the day, the individual staff making the decisions are fundamentally the same people - and given that there is no hard barrier between government and corporate career paths, often they are literally the same people.

Why they would suddenly become incompetent when they move into a government job, or suddenly become competent when hired by a multinational corporation, is beyond me.

Here's just one example. Do we have anything similar in large private organizations?

The Project first gained wide attention in the mid-1980s uncovering Pentagon waste and fraud by publishing reports, provided by whistleblowers, exposing $640 toilet seats, $7,600 coffee makers, $436 hammers and other overpriced spare parts used by the military.

http://en.wikipedia.org/wiki/Project_On_Government_Oversight

The reason why it becomes different in a government job vs. multinational organization is often relating to the incentive structure - the multinational tends to have better incentives to hire people of better competence in key positions (it can pay them better, and thus attract better talent), and also tends to structure their compensation bonus based on performance, more closely aligned with reality. The large multinationals also tend to replace and get rid of incompetence more quickly than a government organization.

Love em or hate em, US corporations are extraordinarily efficient for such large organizations, which is the main reason why they make up such a significant factor of the US economy and US production.

 

[bilby]

Here's just one example. Do we have anything similar in large private organizations?

The Project first gained wide attention in the mid-1980s uncovering Pentagon waste and fraud by publishing reports, provided by whistleblowers, exposing $640 toilet seats, $7,600 coffee makers, $436 hammers and other overpriced spare parts used by the military.

http://en.wikipedia.org/wiki/Project_On_Government_Oversight

Of course we do. Hiding such waste from the shareholders is far easier than hiding it from the voters. There are all sorts of protections in place for government whistle blowers; few of these protections are available to those in the corporate world. But nonetheless, most multinationals have internal procedures intended to expose corruption.

They just are not as likely to publish the results of their activities; confidentiality and secrecy are easier to maintain for businesses, for exactly the reasons I mentioned above - people are less trusting of government, and the law reflects this.

How many corporations concern themselves about 'excessive secrecy that fails to consider the public interest'? That is a uniquely government concern - and it is a concern because people don't trust the government. They would do well to trust corporations just as little.

 

[SimpleDon]

dismal, how is this not a free market?

Two entities contracting services together sounds kind of free marketish.

Why does it matter that one entity is the government unless the government held a gun to Aramark's head and forced them to bid on the contract and take it?

There are elements that are free marketish and there are elements that aren't. The ones that aren't have already been noted in the thread, but if you missed them we can start with first principles.

Why do free market advocates believe free markets produce good outcomes for society? What elements are necessary?

This is easy. Free market advocates believe that the unregulated free market can operate with no government oversight, except for government adjudicating contracts, to provide the most efficient use of scare resources and to provide the maximum possible social justice.

The free market accomplishes these two objectives because,

• prices are set by supply and demand,
• prices are driven down by supply and demand to the marginal cost of producing the last possible item from each producer,
• so that the producer will have no control over the price that he receives for his production,
• and that he will be forced to maximize his production fully utilizing his production capacity,
• and his labor, both scarce resources.
• because the interest rate is the price of money,
• and because money in and of itself has no utility,
• interest rates will balance investment with savings,
• which will guarantee full employment when the interest rate is equal to the "natural" interest rate,
• this is the general equilibrium that the true™ free market is always moving towards,
• which guarantees that all aspects going into production are paid the full value of their individual contribution,
• including labor in wages and capital in profits,
• achieving the highest degree of social justice possible.

All that is needed for the economic nirvana of the self-regulating and self-organizing free market to spontaneously burst forth is for the government to quit interfering in the market, as previously mentioned, and for the market to achieve as near to perfect competition as possible.

Although the history of man's civilizations governments have interfered in the economy by writing needless laws and regulations, mainly to enrich themselves and their favored others. These laws and regulations are written ex ante to corrupt prices, the sole guide that investors have to base their investment decisions on. ?

Meaning that we will see a self-regulating and self-organizing free market pretty much when pigs fly.

Did I do well?

 

[ksen]

Here's just one example. Do we have anything similar in large private organizations?

The Project first gained wide attention in the mid-1980s uncovering Pentagon waste and fraud by publishing reports, provided by whistleblowers, exposing $640 toilet seats, $7,600 coffee makers, $436 hammers and other overpriced spare parts used by the military.

http://en.wikipedia.org/wiki/Project_On_Government_Oversight

The reason why it becomes different in a government job vs. multinational organization is often relating to the incentive structure - the multinational tends to have better incentives to hire people of better competence in key positions (it can pay them better, and thus attract better talent), and also tends to structure their compensation bonus based on performance, more closely aligned with reality. The large multinationals also tend to replace and get rid of incompetence more quickly than a government organization.

Love em or hate em, US corporations are extraordinarily efficient for such large organizations, which is the main reason why they make up such a significant factor of the US economy and US production.

Love 'em or hate 'em, US corporations are the ones that sold $640 toilet seats, $7,600 coffee makers, $436 hammers and other overpriced spare parts used by the military to the government.