I know, it's just crazy.
General CE Chat
- Thread starter Raoul
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Of course innovation is happening in the private sector, there is no public sector.
Having the defense of the state and the nation's citizens dependent on private industry is absolute bonkers and actually a threat to national security. It has nothing to do with capitalism or socialism.
Right, because the same people responsible for today's innovation would suddenly stop innovating if their employer was the state instead of company x. Makes sense.
That applies to so many things. Our taxes finance these innovations that are later exploited by private companies.
I get your sentiment but if the private sector pays more, wouldn't they work for the private sector instead? Perhaps in a different industry. This is how you have math wizards and rocket scientists working at Wall Street Banks. At some point, if the pay is just overwhelmingly better somewhere else, you'll always have a substantial amount of people choosing to switch careers.
I'm sceptical of a 100% nationalized defense industry though I'm open to arguments.
What's stopping the public sector paying them more? Looking at the military budget, it would be peanuts.
Precisely. You get more in FAANG or hedge funds than anywhere working for state. Most smartest people would choose the money. I assume the top engineers in Raytheon et al earn more than engineers that are in government companies.
You see a version of this now happening in Space where SpaceX is doing far better than NASA.
Your point on having governments build the dumb stuff might make sense though. But I guess you need the dumb stuff, which brings constant revenue to fund cool stuff which bring the edge. So while it might make some stuff cheaper it might make things worse long term. Or it might just make things better. But I wouldn’t expect governments to make the equivalent of B21.
Again, some solution should be mix solutions. Not everything needs to be 100% private or public and having 100% private as the military industry can jeopardize a country's security and as public corruption spreads out in Russia, private sector corrupts the public officials through bribery donations and lobbying. That is why US has the gun problem and the military complex is so geared to lobbying to provoke wars to generate benefits while the tax payers pays for the arms and converts public money in private money
This happens also in private medical care with the opioid crisis where the doctors push the pills because of the hefty contracts they have with pharmaceuticals and insurances. Or like a case, surely not the only one, of a guy that fake-diagnose people with cancer (on the hundreds) and became a multi millionaire thanks to the money. This could not happen in europe as these incentives don't exist
Public sector is lazy and inefficient, but private sector is worse in key sectors as it threatens the livelihood of the people as they lobby and corrupt the public officials
This happens also in private medical care with the opioid crisis where the doctors push the pills because of the hefty contracts they have with pharmaceuticals and insurances. Or like a case, surely not the only one, of a guy that fake-diagnose people with cancer (on the hundreds) and became a multi millionaire thanks to the money. This could not happen in europe as these incentives don't exist
Public sector is lazy and inefficient, but private sector is worse in key sectors as it threatens the livelihood of the people as they lobby and corrupt the public officials
Wouldn’t they be capped? Would senior engineers at government be earning more than the president of the US?
Yes, was thinking the same. And regardless of capping or not, does the government really want to match Wall Street salaries & bonuses and stock options and so forth?
That's precisely why most of it exists in the private sector. As it stands, the government is struggling to hire and retain people across the board because the same talent can work in private tech for twice the salary. Therefore it would be impossible to nationalize anything if you can't staff the government with qualified employees.
Change the law if that's the case. The money saved would more than make up for it.
If it would save them money, why not?
Is there a good example of nationalizing something as important as military where you must have a technological edge that it ever worked? The closest I can think is project Manhattan but a) there was a big war happening, b) people were more patriotic back then, c) there wasn’t a market for those awesome theoretical physics to earn triple the money.
The entirety of human history before the 20th century?
I think China will have a saying on that in a decade or so
Probably. But it might be a bit of bad optics for random engineers earning more than the president and the secretary of defense.
And then when you fix it, you need to solve the problem of corruption that inevitably happens in governments, and the larger the government, the higher the corruption.
This is not healthcare where you might lose some edge that benefit a few (those that can pay the premium insurances) to benefit many more, so everyone can have some decent healthcare. Here, you are basically trading some savings of billions at the cost of having worse weapons. And considering that US ‘soft’ diplomacy is backed by aircraft carriers that ensure the global trade, I do not see anyone serious arguing about the nationalization of weapon production.
Perhaps. They still do not have a proper stealth airplane, and the US had one in the eighties.
I guess we will see.
Shame we are in the 21st century then.
In any case, we had several dozen states trying these things last century. It ended well for only one of them. Which still lags behind the US in basically every innovation. So probably not a great idea.
You just seem to distrust the public sector, as there's plenty of corruption in the private sector. You're just assuming the worst possible outcome for the sake of it.
Things tend to get nationalized in emergencies (like world wars and the like). That has obviously changed with the information age as new technology has to be created faster during peacetime, which has largely replaced long 10-20 year military acquisition programs of the. cold war and before. That's also why the US military has been so drastically reduced in size since the end of the cold war.
You asked, I answered. The only thing that changed is that modern states sold their souls to capitalism, there's nothing intrinsically better or more innovative in the private sector, it just happens to be that way nowadays because states decided so.
Sure. In a big existential war you can do these things. You go and get the best and the brightest and you ask them to work in whatever you want regardless of the salary (and they are probably happy to do so cause want to live in a country that does not lose the war). But good luck doing that in peacetime.
I distrust the public sector because well, it sucks. There is a ton of evidence that it sucks. Nationalization happened in the last century and the result were for most part starvation. So not a big fan of starvation.
Soviet industrial logistics, where they shifted their entire industrial base thousands of miles away and restarted full production in months, was a major reason they lasted past 1941. Also their mass production (identical to American arms production), compared to the more bespoke work on Nazi tanks, gave them a massive advantage, maybe the key advantage of the Eastern Front (relevant part starts at 26 mins).
My argument is that it sucks by design. States decided to make it suck to justify all the money poured into the private sector. If you have the same resources and the same people, it really makes no difference if something is private or public, it was a political decision to make things the way they are nowadays.
Lots of other things changed. Lives got longer, far better and much more prosperous, and people do not get their land taken away from government just for shits and giggles. Thanks to the thing you hate so much.
It's not about hate. If the public sector could make things cheaper, therefore saving people's taxes, how is that a bad outcome for the country's citizens?
China was barely maintaining hundreds of million to not die of starvation in the 80s. They leap decades on every single aspect and all the key sectors. Healthcare, Education, military and many others had been state owned companies and they keep advancing. They are have the best of the best engineers that works in China in state-owned companies. Why is working there and not in US? is the education system that makes them more collective minded? the prestige? no Money caps? prohibition?
Maybe is not possible to replicate in US, basically because the education system and mentality driven is of the individualistic-capitalist. But that is not that is not possible is how society is and part to blame of this society is of the politicians that decided that this would be this model. Politicians that had been voted by the society itself.
It is clearly possible, but not in the current western societies
Sometimes is not even to do things cheaper. I don't want healthcare to be cheaper and therefore jeopardize my health. I want healthcare that safe lives at whatever reasonable costs
This is too overly simplistic and jingoistic and doesn't really capture how innovation happens when different players (private sector, government and academia) are all incentivized in a healthy way to produce innovations.
Private sector alone won't push the most and best long term innovation because of the incentives to profit, particularly short term profit demands and how that has negative consequences not just positive ones in attracting talent. We've seen many cases where the short-term profit incentives lead not to innovation but a host of safety, health concerns and negative externalities. You have safety issues with airlines and cars. You have issues like Purdue Pharma accelerating the opium epidemic and the damage that has/is causing by seeking profits from oxycontin. You have the energy companies like Enron dangerously manipulating energy during heat waves and rooting for deadly fires over human life for profit. You have phony financial services product "innovations" that were the cause of the 2008 recession and massive drain on taxpayers bailing out the financial institutions. And plenty more specific examples (pollution, skirting OSHA, etc).
So a society cannot just rely on the private sector alone for innovation because the incentives don't always align in a pure private sector model (basically anarcho-capitalist). That isn't to say that everything should be nationalized (both privatizing everything and nationalizing everything are bad ideas) or that the private sector doesn't contribute to innovations but the healthiest and most efficient way to progress is when the private sector is regulated and you also have healthy investment in government and academia.
I quickly looked for a different article but I found this one that makes some good points about the roles of different players in innovation:
"Major R&D breakthroughs can come from academia, commercial industry, or government. The transistor was the product of commercial R&D at Bell Labs; the low-power displays that created e-readers emerged from academia via MIT; and Siri, the voice-activated smartphone assistant, originated from government through work at the Defense Advanced Research Projects Agency (DARPA)."
"As government performed less direct R&D itself, commercial industry didn’t always fill the void. As Mike Brown noted above, market incentives aren’t always aligned to long-term, capital-intensive R&D efforts: “In 1960, we were spending 2% of our GDP on research at academic institutions; today, that number is 0.35%,” he says. “And we’re still benefiting from technologies developed for the space program in the 1960s, namely, semiconductors and the internet."
https://www2.deloitte.com/us/en/ins...-sector/role-of-government-in-innovation.html
The key thing to look at, as always the case with economics, is the incentives. Are they misaligned for societal benefits, as was the case with the unregulated financial services products that caused the financial crisis in 2008 or the pharma incentives that fed the opioid epidemic? The private sector does not always have beneficial alignment of incentives so we really need a more complex way of looking at what the Deloitte article calls innovation ecosystems, with a careful examination of where the incentives are lining up because misplaced private sector incentives have caused some of our biggest economic/health issues in the last 100+ years.
It's definitely not as simplistic as saying "government sucks at innovation, private sector is always good at it". That type of take doesn't understand complex economics at all. Private sector vs government is the wrong question and the wrong way to frame things. Going 100% nationalized or 100% privatized are both stupid ideas that won't work. It's more about how is the best way to align government, industry, academia and ensure there no misaligned incentives.
If it was stealthy how would we know?
China is playing catch up and in the text few decades will probably be there
For sure, but imagine the public sector would produce the most used pills instead of paying 3 or 4 times more to private industries. It would save a ton of money on costs that could be used to improve the healthcare system even more.
Another example where the private sector failed. Boeing. The massive problems that they have in quality that made one of the worse planes in the modern history. And the evidence is starting to pile up that as they want to save costs, the product is crap and people are dying because of it
Oh, I agree. profit gauging because the people will pay whatever to safe their lives. Capitalism at its finest. There are sectors that shouldn't be none negotiable. And again, forcing private companies to get relevant public equity (maybe 51%) should be mandatory in certain sectors. The private would still push to get that 49% per cent benefits if they are in the hundreds of millions or billions. And the public would have a saying for the well being of its population
This thread is going well off topic now.
Nationalized defense industries simply do not work well, and it has nothing to do with privatization, capitalism and what not. The problem, is also not with innovation or lack thereof.
The problem is that militaries, governments and armed forces, broadly speaking do not know what they want. This is a hard cap that has plagued armed forces of all nations for thousands of years. Back then it was simpler times, because mass producing spears, shields and metal swords is far easier than 5th generation avionics.
The problem is because the people who understand the forefront of engineering, the people who understand current technological innovation and how far things can be pushed within the next decade, do not work for the military by nature of who they are. Now, you might ask, why don't we just nationalize the companies that DO know? Well, then you'd run into the problem of having to nationalize everybody. This might seem a bit confusing but let me explain with the example of the F-35 procurement roadmap, which has, despite public opinion to the contrary, been a very successful procurement program.
The Air Force wanted a Lo part of the Lo-High equation of their fleet airforces. The cheaper, more numerous and easier to produce alternative to what was then the F-22 (and in the future the lo of the NGAD projects). The Airforce did not know what was technically feasible in 10 years time during the initial design phase of the JSF program. Their requirements were basically - needs to cheap, needs to be stealthy, needs to be have a STOVL and CATOBAR variant, needs to be more maintainable than previous hangar hoggers, needs to be able to carry standard AIM missile series etc etc. Notice how these requirements don't contain any real technical details? How stealthy? What RCS value does the plane need? What cruise speed does it require? How cheap? Cost per airframe?
This is by design. The project says, "here are our requirements, knock yourselves out." The competing private companies will all consolidate with their private sector partners - Engine companies, Materials producers, radar companies, aeronautics parts suppliers, etc etc etc until they amalgamate all of their knowledge together to put forward a prototype design, that incorporates all of the latest tech available in each civilian sub-sector. Military technology is simply an accumulation of all the latest top end civilian technology, put together to form a weaponized platform. Who knows most about civilian tech? The government? No, the people who make the civilian technology themselves.
So Lockheed Martin got together all their subcontractors for each section, their primary engineers and built together a prototype called the X-35. The X-35 would cost A, with flight characteristics, B,C,D,E etc etc. Boeing did the exact same, leveraging all their accumulated knowledge of the civilian sector and built a prototype, the X-32. Their characteristics were also displayed. What the Government here is doing is divesting competing products in a market environment to the people who know the market best. If the government handled a project and gave requirements and a prototype was made, how do we know its the best it can be? It doesn't have any other benchmark to compare it against, isn't leveraging all of the private sector to chip in and to put all their knowledge and expertise together. If what you're suggesting is that a government military hardware producer then just outsources the work to the private sector suppliers anyway, don't we just have privatized military contractors by proxy? What's the difference other than a layer of bureaucracy.
X-32 vs X-35 competed. X-35 came out on top with the best specifications, pushing its competitor out the water. Government made a deal with Lockheed, the X-35 becomes the F-35A,B,C variants and the rest if history.
Now, compare to a project that went disastrously, the LCS (Littoral Combat Ship) project. Or rather, the independence class and Freedom class.
Specifically, I am going to talk about a specific requirement, the Mission Modules.
Someone in the Navy decided, "Hang on a minute, wouldn't it be awesome to have combat ships that can swap out at dock what their speciality is in a few hours so it can serve as a ASuW ship, ASU ship, AA Ship, Littoral Gunboat, all at the same time by swapping out modules! This saves us so much manpower and cost and means we don't have to build so many different ship types"
The requirements for LCS unfortunately gave this very very specific requirement. Mission modules. All the bidders for this project MUST HAVE mission modules. Rather than high level requirements that contractors could compete against, you were now provided quantifiable hard requirements. Requirements that were not grounded in reality of the technological competency of the time. This means that all the bids for LCS came with "Yeah we will research and build Mission Modules." The Government (Navy) had no idea what the technical limitations were or the tech requirements, but imposed them anyway. If the contractors wanted to win the projects, they would have to agree to this. The JSF F35 project was the Civilian Private Sector defining what capabilities could be built, the LCS project was the government insisting it must meet these capabilities that may not even exist.
Fast forward two decades to now, and the Littoral Combat Ships got built and are being retired because the Mission modules that all the contractors bid on and agreed to build turned out to be technologically unfeasible at this moment in time.
A quote from a former naval officer on a forum highlights this
Hope these examples made sense.
If you want to see a simple analogy:
A Government Weapons procurement process is like an F1 season. All the engineering teams compete to see who can build the best racing car and at the end one constructor wins the championship (The contract with the government).
The problem is that militaries, governments and armed forces, broadly speaking do not know what they want. This is a hard cap that has plagued armed forces of all nations for thousands of years. Back then it was simpler times, because mass producing spears, shields and metal swords is far easier than 5th generation avionics.
The problem is because the people who understand the forefront of engineering, the people who understand current technological innovation and how far things can be pushed within the next decade, do not work for the military by nature of who they are. Now, you might ask, why don't we just nationalize the companies that DO know? Well, then you'd run into the problem of having to nationalize everybody. This might seem a bit confusing but let me explain with the example of the F-35 procurement roadmap, which has, despite public opinion to the contrary, been a very successful procurement program.
The Air Force wanted a Lo part of the Lo-High equation of their fleet airforces. The cheaper, more numerous and easier to produce alternative to what was then the F-22 (and in the future the lo of the NGAD projects). The Airforce did not know what was technically feasible in 10 years time during the initial design phase of the JSF program. Their requirements were basically - needs to cheap, needs to be stealthy, needs to be have a STOVL and CATOBAR variant, needs to be more maintainable than previous hangar hoggers, needs to be able to carry standard AIM missile series etc etc. Notice how these requirements don't contain any real technical details? How stealthy? What RCS value does the plane need? What cruise speed does it require? How cheap? Cost per airframe?
This is by design. The project says, "here are our requirements, knock yourselves out." The competing private companies will all consolidate with their private sector partners - Engine companies, Materials producers, radar companies, aeronautics parts suppliers, etc etc etc until they amalgamate all of their knowledge together to put forward a prototype design, that incorporates all of the latest tech available in each civilian sub-sector. Military technology is simply an accumulation of all the latest top end civilian technology, put together to form a weaponized platform. Who knows most about civilian tech? The government? No, the people who make the civilian technology themselves.
So Lockheed Martin got together all their subcontractors for each section, their primary engineers and built together a prototype called the X-35. The X-35 would cost A, with flight characteristics, B,C,D,E etc etc. Boeing did the exact same, leveraging all their accumulated knowledge of the civilian sector and built a prototype, the X-32. Their characteristics were also displayed. What the Government here is doing is divesting competing products in a market environment to the people who know the market best. If the government handled a project and gave requirements and a prototype was made, how do we know its the best it can be? It doesn't have any other benchmark to compare it against, isn't leveraging all of the private sector to chip in and to put all their knowledge and expertise together. If what you're suggesting is that a government military hardware producer then just outsources the work to the private sector suppliers anyway, don't we just have privatized military contractors by proxy? What's the difference other than a layer of bureaucracy.
X-32 vs X-35 competed. X-35 came out on top with the best specifications, pushing its competitor out the water. Government made a deal with Lockheed, the X-35 becomes the F-35A,B,C variants and the rest if history.
Now, compare to a project that went disastrously, the LCS (Littoral Combat Ship) project. Or rather, the independence class and Freedom class.
Specifically, I am going to talk about a specific requirement, the Mission Modules.
Someone in the Navy decided, "Hang on a minute, wouldn't it be awesome to have combat ships that can swap out at dock what their speciality is in a few hours so it can serve as a ASuW ship, ASU ship, AA Ship, Littoral Gunboat, all at the same time by swapping out modules! This saves us so much manpower and cost and means we don't have to build so many different ship types"
The requirements for LCS unfortunately gave this very very specific requirement. Mission modules. All the bidders for this project MUST HAVE mission modules. Rather than high level requirements that contractors could compete against, you were now provided quantifiable hard requirements. Requirements that were not grounded in reality of the technological competency of the time. This means that all the bids for LCS came with "Yeah we will research and build Mission Modules." The Government (Navy) had no idea what the technical limitations were or the tech requirements, but imposed them anyway. If the contractors wanted to win the projects, they would have to agree to this. The JSF F35 project was the Civilian Private Sector defining what capabilities could be built, the LCS project was the government insisting it must meet these capabilities that may not even exist.
Fast forward two decades to now, and the Littoral Combat Ships got built and are being retired because the Mission modules that all the contractors bid on and agreed to build turned out to be technologically unfeasible at this moment in time.
A quote from a former naval officer on a forum highlights this
Hope these examples made sense.
If you want to see a simple analogy:
A Government Weapons procurement process is like an F1 season. All the engineering teams compete to see who can build the best racing car and at the end one constructor wins the championship (The contract with the government).
Seriously. Is there no way to just move some posts in a whole new thread that is more appropriate?
Because there is no competition in the civilian jetliner space. It's being Airbus and Boeing and both of them just churn derivations of the same product.
Their military projects are always excellent.
So there is much more competition on the military top edge manufactory? Honest question