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Public and private suppliers keeping each other in check?

  • 30-10-2013 9:36am
    #1
    Registered Users, Registered Users 2 Posts: 13,104 ✭✭✭✭


    I've just come across this comment on bbc.co.uk, posted in response to a story about energy price rises in the UK:
    All essentials such as utilities and banks should have both public and private suppliers to keep each other in check.

    Private efficiencies will improve the public supplier, and public focus on not-for-profit will keep the private suppliers honest.

    Having only one or the other has been clearly shown not to work.
    http://www.bbc.co.uk/news/business-24730122?postId=117760157#comment_117760157

    Seems like a reasonable idea in theory, so long as the state doesn't manipulate the market to favour it's own enterprises?


Comments

  • Registered Users, Registered Users 2 Posts: 24,367 ✭✭✭✭Sleepy


    We kind of have this in the Health Insurance sector in Ireland.

    It may not be directly comparable due to the imbalance of the demographics but the impression I've gotten is that the private companies get saddled with levies to help cover the VHI's public sector inefficiencies...


  • Registered Users, Registered Users 2 Posts: 14,039 ✭✭✭✭Geuze


    Sleepy wrote: »
    We kind of have this in the Health Insurance sector in Ireland.

    It may not be directly comparable due to the imbalance of the demographics but the impression I've gotten is that the private companies get saddled with levies to help cover the VHI's public sector inefficiencies...

    Note that AFAIK, the VHI's internal mgt costs are reasonable, compared to benchmarks.

    Why they are in fin trouble is an ageing customer base, relative to the other health insurers.

    I don't think it's due to operational inefficiency.


  • Registered Users, Registered Users 2 Posts: 7,476 ✭✭✭ardmacha


    It may not be directly comparable due to the imbalance of the demographics but the impression I've gotten is that the private companies get saddled with levies to help cover the VHI's public sector inefficiencies..

    You obviously haven't been paying attention or else your perceptions are formed through a particular predjudice without reference to the facts. The VHI may, or may not, be inefficient. But their main problem is one of the age profile of their customers. As health insurance premiums do not vary by age then a company with young people is coining it while the company with the older profile is in difficulty. These levies are needed to level the playing field.


  • Registered Users, Registered Users 2 Posts: 24,367 ✭✭✭✭Sleepy


    I'm aware of their aging demographic (and referenced it in my first post) but I do remember hearing a rep from one of the private providers on Newstalk claiming that the levies were excessive for the stated purpose.

    Perhaps I'm wrong and the VHI are a beacon of light in an otherwise inefficient public sector but tbh, I can't see it being in any way true. The public sector simply isn't as efficient as private sector and never can be due to their excessively powerful unions and out-dated working practices.


  • Registered Users, Registered Users 2 Posts: 27,644 ✭✭✭✭nesf


    djpbarry wrote: »
    I've just come across this comment on bbc.co.uk, posted in response to a story about energy price rises in the UK:
    http://www.bbc.co.uk/news/business-24730122?postId=117760157#comment_117760157

    Seems like a reasonable idea in theory, so long as the state doesn't manipulate the market to favour it's own enterprises?

    It actually has serious problems. I mean, really, if you're risk averse do you put your money in the State bank or the Private one? You get a skewed market, the public bank able to offer low interest rates on deposits and a greater spread on loans whilst private banks need to offer higher deposit rates to attract customers and can then be easily undercut by the State bank. So the State bank's hands need to be tied to make the market fair and the result is floors on interest rates being set and similar which screw with the market.


    I mean really. Just think about it for a few moments and you can see it just cannot work for banking. Mixed markets like this tend to be very distorted. I mean this in that I'm finding it hard to see much benefit for all the extra hassle over just having a publicly controlled banking sector.


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  • Registered Users, Registered Users 2 Posts: 24,537 ✭✭✭✭Cookie_Monster


    we have it in the transport sector already and it's a disaster. The public companies provide a terrible service at high cost and are protected by the NTAs continual fare rises and its blocking of opening the market further. Those private companies that do make a living in certain areas cannot compete on even terms


  • Registered Users, Registered Users 2 Posts: 7,157 ✭✭✭srsly78


    nesf wrote: »
    It actually has serious problems. I mean, really, if you're risk averse do you put your money in the State bank or the Private one? You get a skewed market, the public bank able to offer low interest rates on deposits and a greater spread on loans whilst private banks need to offer higher deposit rates to attract customers and can then be easily undercut by the State bank. So the State bank's hands need to be tied to make the market fair and the result is floors on interest rates being set and similar which screw with the market.


    I mean really. Just think about it for a few moments and you can see it just cannot work for banking. Mixed markets like this tend to be very distorted. I mean this in that I'm finding it hard to see much benefit for all the extra hassle over just having a publicly controlled banking sector.

    This already happens. The state saving products give the best interest, and don't even play by the same rules (no dirt).

    A better question is what happens when the entire european banking market gets opened up? Who is gonna stay with an Irish bank when you can use a German one?


  • Registered Users, Registered Users 2 Posts: 8,295 ✭✭✭n97 mini


    If the public side is subsidised, as it usually is, then there isn't a level playing field.


  • Banned (with Prison Access) Posts: 3,214 ✭✭✭chopper6


    Sleepy wrote: »
    . The public sector simply isn't as efficient as private sector and never can be due to their excessively powerful unions and out-dated working practices.


    Christ not this again...:rolleyes:


  • Banned (with Prison Access) Posts: 3,214 ✭✭✭chopper6


    we have it in the transport sector already and it's a disaster. The public companies provide a terrible service at high cost and are protected by the NTAs continual fare rises and its blocking of opening the market further. Those private companies that do make a living in certain areas cannot compete on even terms


    How much does a journey through one of the Tolled Roads cost?


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  • Registered Users, Registered Users 2 Posts: 27,644 ✭✭✭✭nesf


    srsly78 wrote: »
    This already happens. The state saving products give the best interest, and don't even play by the same rules (no dirt).

    A better question is what happens when the entire european banking market gets opened up? Who is gonna stay with an Irish bank when you can use a German one?

    No, we don't have full state sponsored banking services, just some fixed term deposit stuff. Imagine the same thing going on across the board, credit cards with no stamp duty etc. :S


  • Registered Users, Registered Users 2 Posts: 24,537 ✭✭✭✭Cookie_Monster


    chopper6 wrote: »
    How much does a journey through one of the Tolled Roads cost?

    while on a bus? nothing.


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