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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
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