Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2 9/18/84; site dciem.UUCP Path: utzoo!dciem!mmt From: mmt@dciem.UUCP (Martin Taylor) Newsgroups: can.politics Subject: Re: Nationalization/Crown Corps. Message-ID: <1616@dciem.UUCP> Date: Sat, 6-Jul-85 11:56:14 EDT Article-I.D.: dciem.1616 Posted: Sat Jul 6 11:56:14 1985 Date-Received: Sat, 6-Jul-85 14:12:01 EDT References: <1121@ubc-cs.UUCP> <1110@mnetor.UUCP> <1229@utcsri.UUCP>Reply-To: mmt@dciem.UUCP (Martin Taylor) Distribution: can Organization: D.C.I.E.M., Toronto, Canada Lines: 70 Summary: >>The problem is that "survival of the fittest" doesn't mean anything, as >>Bishop Wilberforce pointed out some time ago. >> > It was I who posted the article applying the term "survival of the >fittest" to companies. Allow me to admit that I've no recollection of >a Bishop Wilberforce. Nevertheless, I stand by my original concept. >"fittest" in this context is some combination of productivity, service > economy of price, etc. It will no doubt vary from product to > product and defy description, but the final judge is the customer! > If the company is fit, it makes sales! If it makes sales and > manages to avoid doing anything really stupid, it survives. Hence > the conclusion. > > Yes it is simplistic. Why do so few people understand it? "Simplistic" doesn't mean the same as "simple". It means, more or less, too simple to have a chance of being true, and is properly applied to your analysis. For one thing, the idea of "survival of the fittest" never was applied to any individual organism, but to types. Individual organisms have to contend with bad luck, but on balance those types that are "fitter" (i.e. more likely to survive and reproduce) tend to leave more progeny. Even if this simple idea sufficed in biology, how would it help in considering the fates of individual businesses? Sure, a "fit" business would have a better chance of surviving than an "unfit" one, but it would only be a chance, and in any case the argument would be circular since "fitness" is measured by survival chance. A second problem with the simplistic approach also hinges on the chance aspect. All economic activity involves some aspects of a gamble, and even the best thought-out and managed plans can "gang aft agley". A most worth-while project might die a-borning for lack of capital, whereas a better financed but worse conceived project might survive the same kind of ill luck. Remember, the real edge held by a gambling casino is not the unbalanced odds that favour the house, but the unbalanced capital that allows the house to survive a run of bad luck. In our society, the government can be (and often is) the house, and a company suffering a run of bad luck can do better by being able to draw on that capital, without which it might undeservedly die. All of which does not deny that well managed companies producing wanted goods will usually do better than ill-managed companies doing unwanted things, with or without bailouts. It does say that with reasonable selectivity, government bailouts can enhance the ability of the marketplace to sort out the good from the worthless. This way of looking at things applies to Crown Corporations. I agree that there should be no need for a Crown Corporation in a successful business area (one with several profitable companies). For one thing, it represents possibly unfair competition. But in an unprofitable but necessary area, Crown Corporations may be the only reasonable way of protecting the national interest. I think De Havilland is a case in point. They have a good product with a strong past market and probably a strong future market when the world economy recovers (especially the Third World). Right now, they couldn't turn a profit under any management, and probably would die. I don't see any reason why the Post Office should be a Crown Corporation. The arguments put forward by the Government when they converted it from a Government department (flexibility, efficiency, etc.) could apply equally well to any Government department. A better answer would be to improve the efficiency of the Civil Service. Bring it back to its healthy condition of the Pearson days. -- Martin Taylor {allegra,linus,ihnp4,floyd,ubc-vision}!utzoo!dciem!mmt {uw-beaver,qucis,watmath}!utcsri!dciem!mmt