[spinningslate]

> The biggest argument I see is that the government can compete unfairly against private companies because they don’t have to make a profit.

I've seen this too, and my reaction is always to ask why that's unfair. The "free" market is supposed to be open to competition. Why is it "unfair" for public bodies to compete? Public bodies are, after all, funded by tax payers. Who in this case would be the recipients of the service. So we have individuals desiring of a service, funding said service through a public body. Now, the public body is not set up to pay a dividend to shareholders - instead it implicitly returns all profit to its consumers (presumably through reduced costs/better service/whatever).

Why is that unfair? It's not preventing commercial entities from competing. If their business model is such that they can't do so - e.g. because of the need to pay away dividends - then that's their problem.

Now: I know there's a lot more to it than that, e.g. public bodies accused of being propped up unfairly. And I know Govt in the US is treated very suspiciously by a large cohort of society.

But that notwithstanding, why is it "unfair" if a community-oriented entity decides to compete with a commercial organisation?

[admax88q]

> But that notwithstanding, why is it "unfair" if a community-oriented entity decides to compete with a commercial organisation?

> Public bodies are, after all, funded by tax payers. Who in this case would be the recipients of the service.

Not all tax payers are recipients of the service. The government run entity can collect revenue from all taxpayers regardless of which ones are their direct customers.

That's what makes it "unfair." The private entity has to turn a profit or break even on their sales alone. The government run entity can subsidize their operation by taking funds from general tax revenue.

If one entity is allowed to take always take a loss on their operations how could another entity that needs to pay their employees ever be able to compete?

[vkou]

> If one entity is allowed to take always take a loss on their operations how could another entity that needs to pay their employees ever be able to compete?

So, you're saying that regional loss-leading, and the typical VC business model should not be allowed to exist?

A city's constituents have democratic control over their budget. If they want to use that budget to buy broadband for everyone from a local supplier, that's their prerogative.

Who is the private sector to dictate how I, as a constituent, choose to spend my tax dollars? If I want them spent on a vanity sports stadium project, they'll be spent on a vanity sports stadium project. [1] If I want them spent on providing better broadband to the city, they'll be spent on providing better broadband to the city.

[1] For some reason, nobody ever complains that cities subsidizing the construction of sports arenas is bad anti-competitive behavior that destroys the business model of private sports-arena owners...

[throwaway201103]

> nobody ever complains that cities subsidizing the construction of sports arenas

They certainly do. Many people object to this sort of thing, and say "if it's such a good idea, a private business should be willing to do it." Strangely they tend to not make this argument about things like public transport, even though it's exactly the same thing.

The arguement is that these arenas, convention centers, transit systems, etc. enable more economic activity and generate more tax revenue than they cost. I don't know if that's always (or ever) the case but that's the rationale and it's not insane.

[nickff]

The real issue isn't fairness, it's outcome. The problem with municipal ISPs is that they are very likely to end up providing worse service and being more expensive than private options, but hiding the true cost by using tax money to subsidize the operation. Thus, you end up with a very expensive, low quality option that makes alternatives non-viable (as most people won't be willing to pay for the true cost of the service on top of all the taxes being used to pay for the municipal one).

[neutronicus]

Plenty of people send their kids to private school

[nickff]

Yes, you're right that the 'public option' is unlikely to destroy all the private ones, though internet provision has better economies of density (related to scale) than schooling. I would guess that the effect on private providers will be more extreme in this context, i.e. only the highest tiers of internet service will be available privately, likely to businesses in dense areas.

[vkou]

> The problem with municipal ISPs is that they are very likely to end up providing worse service and being more expensive than private options, but hiding the true cost by using tax money to subsidize the operation.

The private sector has pretty conclusively proven that in the absence of municipal competition, their offerings are expensive, and provide terrible service.

In fact, it has proven it so conclusively that people are clamoring for a public alternative.

There is zero reason to oppose unsubsidized, zero-margin municipal broadband.

There are some reasons to oppose subsidized, negative-margin municipal broadband, but if >50% of the electorate supports it, that's a pretty strong signal that its better than the private alternatives.

[nickff]

Well, there are less reasons to oppose unsubsidized, zero-margin municipal broadband, one of which is the likely scope creep and eventual subsidy. That said, I would be very interested to see it would work out.

50%+1 of the population voting for something doesn't make it good; the public overwhelmingly supports farm subsidies, and those are terrible.

[vkou]

> likely scope creep and eventual subsidy

The same can be said about private providers. Even if they temporarily lower rates and improve service in your area, to prevent entry from competitors, they will ratchet the rates up, and start cutting corners on customer service as soon as they no longer feel threatened. This is not a theoretical concern - this has happened over and over and over again, across the country.

> Farm subsidies

That's not a great comparison.

1. Farm subsidies are terrible for economic efficiency, but fantastic for economic and political resiliency. [1] Lack of bread very quickly leads to regime change. It's why every single country in the world subsidizes their agriculture and encourages overproduction.

2. The reason farm subsidies exist is not because 50%+1 of the public supports them. The reason farm subsidies exist is because the federal government was designed to give excessive amounts of political power to rural states. This means that something supported by ~20% of the public can easily turn into national policy.

3. Municipal referendums are nothing like it - they are direct democracy.

4. Municipal governments are not direct democracy, but they do not have multiple layers, or were designed to give disproportionate amounts of political power to regional minority groups. What a municipal government wants is a lot closer to the pulse of their constituents.

[1] Efficiency (which is what marketeers want) is often at odds with resiliency (which is what anyone looking past the next quarter's financials wants). Remember the start of the COVID pandemic when all of our incredibly efficient just-in-time global supply chains went to hell? Efficient systems have no built-in slack to absorb temporary shocks. When it comes to food supplies, a temporary shock can leave us with millions of emaciated corpses.

[nickff]

Farm subsidies are very popular; public choice is a real thing, but not the cause for farm subsidies.[1] Steel tariffs are similar.

I am not a democratic fundamentalist. This is to say that I don't value democracy as an ends; it is a valuable means, but saying that something is democratic doesn't change my view on the policy. I don't care how direct it is.

[1] https://www.politico.com/story/2018/07/30/poll-indicates-som...

[vkou]

It is correct to say that just because a decision was reached democratically, it does not mean it was a good decision.

But it is also correct to say that when a when a decision was reached democratically, it is generally speaking, not the business of anyone outside that group to second-guess it.

There's a very high bar that you have to clear in order to tell some other group of people what they can't spend their communal funds on.

[roenxi]

> Why is it "unfair" for public bodies to compete?

There are two halves to a business - how much value it creates for its customers (which can be roughly estimated from its revenue) and how much drain it places on society (represented by the cost of running the business). There are arguments that revenue doesn't measure the full benefit and costs don't measure the full drain. Disregard them for the moment, because this part of the thread isn't arguing about that and revenue/costs catch a lot of the value/drain.

The government can compete unfairly because they aren't constrained by costs - a government body can provide marginally better service by placing vastly more drain on the community. They have a lazy option which is (1) damaging to the community and (2) unfair because their competition can't legally force taxpayers to cover their inefficiencies. Thus it is unfair, and also bad.

As an example, the Australian government in 2008 decided to roll out fiber-to-the-premise to around 90% of Australia, an expensive undertaking that no private company would attempt in one big push. All the telecom companies cancelled their infrastructure upgrades and rollouts effective immediately and I got to spend 2 years without internet because I was moving to a newly constructed area. The telecom companies couldn't compete fairly (they couldn't justify a gold-plated rollout based on actual projected demand) so they just left the market. Access was prioritised to rebuilding existing infrastructure in swing electorates.

It is possible, but very unclear, that the Australian government offered the best option. I personally as a customer would much rather have spent less on the network and lived with a cheaper, more quickly available product. So I would rather have gone with other providers, but they had left the market because they couldn't fairly compete.