Government Waste vs Market Inefficiencies [Archive]

emacknight

07-06-2010, 10:05 AM

The debates involving health care and UHC, and now debates about farming, tend to present the notion of government waste as repudiation for socialist policies. The most recent being food rotting in government warehouses in Venezuela and the inability of government to distribute food. A simple fact hard to refute.

But today is garbage day in my little neighbourhood, which means the free market is demonstrating inefficiencies.

All of the past cities I've lived in had garbage removal as part of city taxes. Most of the time it was a government run program, but some times it was an external company like Waste Management. And in each of those cases government waste was apparent. All of the typical complaints people have of government programs existed.

My city, on the other hand, has 5 separate companies offering waste removal--sounds like the perfect free market scenario. Each company has an incentive to optimize their routes so as to minimize drive time, to provide the best customer service, and to fuck up the least. Which should result in lower prices and a better product. All of the best parts of the free market we're promised.

Except for one simple problem: 5 separate trucks are going to drive by my garbage today before one of them stops to take my trash. The free market is providing 5 times as much garbage collection as we need. A process that to me is insanely inefficient,a that repetition is built into the price. So where government could contract to a single company, instead with have the same process run 5 times.

So on this issue, which is better and which is worse? Full government take over of the service? Government contract leading to the inevitable sweet heart deal. Should we have government intervention to force efficiencies? Should we allow/prevent collusion between companies? Or continue to accept this aspect of inefficiency.

Whack-a-Mole

07-06-2010, 10:13 AM

Some things you need government oversight of. For example it is hard to imagine private companies building roads and then charging for their use. Power plants are another one. While private they are heavily regulated because they are essentially granted a monopoly. You just do not want 10 power producers out there all running their own power lines all over the place.

Garbage pickup seems it could go either way. For small towns private companies probably makes the most sense. For large cities it'd be more of a mess and probably makes sense for the city to run it (either themselves or to contract with a waste management company).

Kearsen

07-06-2010, 10:20 AM

If 5 different companies can all drive by your house and offer competitive pricing and turn a profit, where is the inefficiency? The fact that they drive by your house?

In my city, the city government contracted with 1 single private waste management company which then contacted everyone within the city limits and offered them a deal based upon the total package of the city limits.
So far, it has worked and has been cheaper.
The good thing about the free market is most times, you get what you pay for. If you want cheap inefficient or screwed up service, you can pay for it. If you want to pay for top of the line service, you can pay for that too.
In my opinion the government is inefficient in the things they do because it doesn't usually directly affect them.

villa

07-06-2010, 10:23 AM

If 5 different companies can all drive by your house and offer competitive pricing and turn a profit, where is the inefficiency? The fact that they drive by your house?

The inefficiency occurs in situations where a single company, or indeed two companies, could provide the same service at a lower price, yet maintain the same profit level. This occurs because of high levels of fixed costs.

There's also the inefficiencies associated with the externalities involved - here the exhaust and noise pollution of the extra trucks.

yorick73

07-06-2010, 11:12 AM

The inefficiency occurs in situations where a single company, or indeed two companies, could provide the same service at a lower price, yet maintain the same profit level. This occurs because of high levels of fixed costs.

There's also the inefficiencies associated with the externalities involved - here the exhaust and noise pollution of the extra trucks.

I don't get it. If companies are tripping over each other to get to your garbage, then this is not necessarily an inefficiency for you. The question is do you pay less for garbage pickup as a result of the competition? Do you pay the same? My guess would be that having more than one company might not save money for the consumer on the front-end but may reduce the inevitable price hikes over time.

Whack-a-Mole

07-06-2010, 11:21 AM

I don't get it. If companies are tripping over each other to get to your garbage, then this is not necessarily an inefficiency for you. The question is do you pay less for garbage pickup as a result of the competition? Do you pay the same? My guess would be that having more than one company might not save money for the consumer on the front-end but may reduce the inevitable price hikes over time.

Hard to see how it could be efficient in a major metro area.

In Chicago (where I live) garbage is in alleys (often) which generally can only accommodate one car at a time. A garbage truck fills the whole thing. Having numerous companies them bouncing into each other and yelling at who has to backup I cannot see as efficient at all. Would be a nightmare for them and everyone else.

yorick73

07-06-2010, 11:28 AM

Hard to see how it could be efficient in a major metro area.

In Chicago (where I live) garbage is in alleys (often) which generally can only accommodate one car at a time. A garbage truck fills the whole thing. Having numerous companies them bouncing into each other and yelling at who has to backup I cannot see as efficient at all. Would be a nightmare for them and everyone else.

So prices would inevitably increase as the time needed to do the job increases. Or, the inefficiencies in the private sector would result in no savings for the consumer. The point I'm making is that, with competition, inefficiency only hurts the company. With only one company that has a government contract, inefficiency hurts only the consumer.

Sage Rat

07-06-2010, 11:30 AM

If 5 different companies can all drive by your house and offer competitive pricing and turn a profit, where is the inefficiency? The fact that they drive by your house?
Essentially. Suppose that we have two neighborhoods with nine houses each, and we have two garbage trucks. If there's only one company, it will send one truck to one neighborhood and one to the other, like so:

http://dl.dropbox.com/u/4181904/organized.png

If, on the other hand, I have two companies each servicing some houses in both neighborhoods, and our trucks are split between them, then our drivers may be servicing the same number of houses, but they have to drive twice as far, which adds fuel cost and time:

http://dl.dropbox.com/u/4181904/disorganized.png

That added fuel cost and wage both end up on the customer. The company also wants to make a profit, whereas the government just needs to cover costs. Essentially an honestly and efficiently run government agency will always cost less than the equivalent government organization. The only thing is that there's no particular reason for a government agency to be well run since there's no competition and generally people will elect their officials on issues of higher priority than garbage collection.

There's not necessarily a right answer.

RickJay

07-06-2010, 11:35 AM

That added fuel cost and wage both end up on the customer. The company also wants to make a profit, whereas the government just needs to cover costs.
Governments can and do try to make a profit on some services they offer. In fact, they obviously have no choice but to do so, since some government services make little or no revenue, and so the cost of those things has to be made up in other areas. Governments can't run deficits indefinitely (and if they do run them for a long time they have to make money to pay the interest back.)

So in fact, a government very likely WILL try to make a profit on garbage collection. They're either going to have to charge collection fees, as is happening in more places around here, or tax you for it.

Sam Stone

07-06-2010, 11:41 AM

You have no way of knowing which one is more efficient. Just the fact that you see trucks destined for other houses drive by you means nothing.

Hub and Spoke airline travel has turned out to be highly efficient, but if you look at just one aspect of it it can seem downright crazy. For example, If you need to get to a city that's 500 miles away as the crow flies, you might have to travel 600 miles to a hub, and 600 miles to the city, more than doubling the length. Boy, that seems inefficient - until you find out that flying direct would result in flights that are only 20% full.

To determine which is more efficient you would have to analyze the total costs of the entire system, not just the small aspect of routes overlapping in some places. For example, the government trucks could all be going to one landfill, which is a long way away. The independent operators could be driving to different landfills that are closer. That might cause their routes to overlap, but overall distance driven could be lower.

Or, the government trucks could be going from one area to another, resulting in slow pickup or requiring that drivers sit idle while waiting their turn in the queue. The private operators could employ the people more effectively.

The ultimate way to know is to look at the overall costs of both. If the city is managed well and has chosen (and stuck with) private contractors, that would be one piece of evidence suggesting the private guys are more efficient.

villa

07-06-2010, 11:41 AM

I don't get it. If companies are tripping over each other to get to your garbage, then this is not necessarily an inefficiency for you. The question is do you pay less for garbage pickup as a result of the competition? Do you pay the same? My guess would be that having more than one company might not save money for the consumer on the front-end but may reduce the inevitable price hikes over time.

Multiple companies may result in a higher price - because of the required investment in trucks. If the market can be adequately serviced by 4 trucks, and yet sufficient profit can be made to maintain 6 companies in the business, each with one truck, it is perfectly feasible that, in the short term at least, there will be six trucks doing the work that four could do, resulting in higher prices for consumers.

Also, if you increase the number of trucks, you increase the externalities. More fuel pollution; more noise pollution, more damage to roads. These costs are born by the customer, not the producer.

Whack-a-Mole

07-06-2010, 11:45 AM

So prices would inevitably increase as the time needed to do the job increases. Or, the inefficiencies in the private sector would result in no savings for the consumer. The point I'm making is that, with competition, inefficiency only hurts the company. With only one company that has a government contract, inefficiency hurts only the consumer.

I'll have to deal with clogged alleys as I try to get to/from my garage.

Also consider these companies would likely lock the consumer into year or more long contracts. They simply could not deal with consumers changing companies every week as they compete to lure new customers. My experience with cell phone company contracts is they are rarely in my best interest.

Add in pollution, traffic congestion, noise, smell and so on and the consumer is definitely adversely affected.

Duckster

07-06-2010, 11:51 AM

The debates involving health care and UHC, and now debates about farming, tend to present the notion of government waste as repudiation for socialist policies. The most recent being food rotting in government warehouses in Venezuela and the inability of government to distribute food. A simple fact hard to refute.

Cite?

So on this issue, which is better and which is worse? Full government take over of the service? Government contract leading to the inevitable sweet heart deal. Should we have government intervention to force efficiencies? Should we allow/prevent collusion between companies? Or continue to accept this aspect of inefficiency. Does it have to be all or nothing? You imply (all) government contracting leads to sweet heart deals. Got a cite for that? Are you aware of best value contracting in government contracts?

So your complaint is what? Are you attempting to compare US healthcare within a capitalist economy and open government with the political/government policies of a foreign country just to hang the "socialist banner" the-world-is-coming-to-and-end drama? Seems a bit disingenuous. If Venezuela has a food distribution problem, how does that equate to healthcare in America? Are you aware of how much edible food is thrown out daily across America by private enterprise, while people just around the corner beg for a meal? What's your real point?

Governments waste in America (Yeah, plural as in federal state and local.). So does private enterprise. Is one version of this waste "better" because your tax dollars are not directly apparent?

Sage Rat

07-06-2010, 11:57 AM

Governments can and do try to make a profit on some services they offer. In fact, they obviously have no choice but to do so, since some government services make little or no revenue, and so the cost of those things has to be made up in other areas. Governments can't run deficits indefinitely (and if they do run them for a long time they have to make money to pay the interest back.)

So in fact, a government very likely WILL try to make a profit on garbage collection. They're either going to have to charge collection fees, as is happening in more places around here, or tax you for it.
You might want to brush up on the definition of "profit". Revenue isn't profit. Revenue is revenue. Meeting cost is not profiting. Not-profiting is not necessarily running at a deficit.

Loss/Running at a deficit: Higher costs than revenue
Break even/Covering cost: Revenue equals cost
Profit: Revenue is greater than cost

HookerChemical

07-06-2010, 12:07 PM

Waste hauling contracts frequently involve a contracted rate to the municipality, which is then passed to the customer. So if Waste Management finds its costs suddenly increase, it will have a difficult time passing that cost on to the customers until it can renegotiate the contract, but bids are likely to factor that risk into the bid. Contracts typically last a few years, but when they come up for renewal, the existing waste hauler typically has the inside track due to already having the routes planned out, drivers trained, etc....
The one cost that is frequently allowed to be passed on to customers is fuel costs. This cost would likely get passed on by any waste hauler, monopoly, governmental, or free market.

IMO, this short term contract system is the best way of doing it. Yes, it grants a monopoly to one waste hauler, but it's temporary and forces the hauler to remain competitive or it will lose that contract when it's up for renewal. It reduces the number of trucks required to drive each route, as shown by Sage Rat.

I'm not sure this model would work for most utilities such as electricity, water, sewer, and (depending on your political leanings) health care. Those work in a very different way, with only one set of transmission lines, one set of water pipes, and one set of hospitals. If two companies were to manage the same service, their product would be mingled within the lines/pipes/hospitals. Compare this mingling and dependent operations to waste hauling, where several trucks can drive a single route or two companies can service different neighborhoods without mingling efforts.

Full disclosure: I work with the solid waste industry frequently in my professional work, but do not typically with waste hauling contracts or planning.

puddleglum

07-06-2010, 01:04 PM

This is not just associated with garbage pickup. Why should we have Coke and Pepsi, there is a tremendous amount of redundancy there. Also Burger King and McDonalds and Wendy's all have redundant efforts.
This is the traditional arguement for socialism. A central agency which is not trying to turn a profit can reduce the costs of redundancies and eliminate profit, thereby lowering cost for the end user.
The problems of centralized management isthe incentive problem. A monopoly has no incentive to provide good service since there are no alternative for customers to leave to. There are no incentives for innovation or cost cutting since there is no more market share to capture. Incentive problems can be solved but usually are not.

Chronos

07-06-2010, 01:18 PM

To determine which is more efficient you would have to analyze the total costs of the entire system, not just the small aspect of routes overlapping in some places. For example, the government trucks could all be going to one landfill, which is a long way away. The independent operators could be driving to different landfills that are closer. That might cause their routes to overlap, but overall distance driven could be lower.
Or the private landfills could be further away. How does this have any bearing on the public vs. private question?

villa

07-06-2010, 01:27 PM

emacknight

07-06-2010, 03:02 PM

Sam Stone

07-06-2010, 03:21 PM

Or the private landfills could be further away. How does this have any bearing on the public vs. private question?

The public/private question is being framed by starting from a supposed example of private market inefficiency. The only evidence for this we have is that apparently trucks from different companies pass each other while driving their collection routes.

This is simply not enough information to tell us which is more efficient. The private companies could be using newer, more efficient trucks. They could have more efficient landfill management practices. They could have a more productive labor force.

The whole overlap thing could be an illusion anyway. One truck cannot collect all the garbage for a city, so even one waste company will be sending many trucks out. I'm sure they follow the same routes to various areas. You may not notice the overlap because they all look the same. But when it's different companies doing the same thing, you notice.

Or maybe five trucks from the same company all head into the same area. One drives along until it's full, then it leaves and another one drives in to take it's place. They're still overlapping the same routes, but they're doing it one at a time.

So basically, I reject the entire premise of the OP based on that example.

RickJay

07-06-2010, 03:31 PM

Imagine for a second what it would look like if USPS split up the mail for our area into 5 piles based on our waste service contract. Would anyone in their right mind call that an efficient system?
It seems to work for the courier business.

So what I am providing is a case where the free market has established a system that is 5 times more wasteful than it needs to be
You haven't a clue how wasteful it is. You're basing this claim on "I see a lot of garbage trucks," which is about as useful an analysis as just making things up.

Without looking at the numbers, knowing the costs, pickup times, resource usage, revenues, salaries, and a million other things, you haven't any idea how efficient or inefficient local garbage pickup is.

RickJay

07-06-2010, 03:33 PM

You might want to brush up on the definition of "profit". Revenue isn't profit. Revenue is revenue. Meeting cost is not profiting. Not-profiting is not necessarily running at a deficit.
You don't say.

But the fact remains the government does seek to make a profit - or a margin, if you prefer - on a lot of governmental services. And, to an extent, why not? Here in Canada the passport function, for instance, makes more in revenue than it costs to run (or it used to, anyway.)

Sam Stone

07-06-2010, 03:37 PM

The inefficiencies I referred to represent the system as a whole. 5 trucks are covering the routes while being below capacity. To compare this to the airline industry would have 5 flights leaving at the same time, to the same city, with 10% capacity. One flight could service the entire route, just as one truck could service my entire neighbourhood. Instead, we have 5.

The point is that you simply aren't seeing the entire picture. Consider: Let's say you have one truck that serves your entire neighborhood, then it's full and it drives all the way back to the landfil.

Now you have five trucks coming into your neighborhood, each one leaving 1/5 full. But those trucks can each serve FIVE neighborhoods before heading back to the landfill. Now suddenly it doesn't see as inefficient.

But also, maybe having five companies means that the trucks can be sized differently. Instead of one huge truck driving through the neighborhood, trucks can be sized more efficiently based on how many contracts a company has in an area.

You also aren't seeing the whole picture. Maybe the city landfill operation is very inefficient, and the trucks have to line up there for long periods of time before disposing of their goods, and the private companies have worked out more efficient offloading techniques, and this compensates for the slightly longer travel distances of the trucks.

You honestly can't know which method is more efficient without analyzing their entire operation.

During one of the UHC debates a few months ago the USPS was brought up as an example of inefficiency. My neighbourhood only has the one truck driving around delivering mail. Imagine if they had -> 5 <- trucks running under capacity, overlapping each other.

Really? My neighborhood has a postal truck, UPS trucks, Fed Ex trucks, Purolator trucks, and a few other delivery services. In addition, we have vans driving through delivering goods to people from Sears, Home Depot, and other stores.

Is this your idea of horrible inefficiency?

Imagine for a second what it would look like if USPS split up the mail for our area into 5 piles based on our waste service contract. Would anyone in their right mind call that an efficient system?

That's pretty much what we have. And as a whole, our package and mail distribution infrastructure is much more efficient today than it was before all that fragmentation occurred.

So what I am providing is a case where the free market has established a system that is 5 times more wasteful than it needs to be, without any discernible benefit to the consumer. Garbage pickup is pretty binary, it's either done or it's not.

You haven't made this case at all. Here's a better way to make your case - go find the cities that have privatized garbage collection, and the ones that do it themselves, and see if the ones with private garbage collection cost the taxpayers more. A quick google on my part suggests that many cities have switched to privatized garbage collection, and that most of them are seeing savings from doing so. How could that be if public garbage collection is five times more efficient?

msmith537

07-06-2010, 04:08 PM

The OP is referring to what is called a "natural monopoly". Certain networked services like the cable or local power and gas will tend towards monopoly due to the expense of running multiple sets of power, cable or gas lines to the same neighborhood.

[quote=puddleglum ]
This is not just associated with garbage pickup. Why should we have Coke and Pepsi, there is a tremendous amount of redundancy there. Also Burger King and McDonalds and Wendy's all have redundant efforts.
This is the traditional arguement for socialism.
[quote]

No, the traditional argument for socialism is the tendency for wealth to concentrate with a small percentage of the population.

The argument AGAINST socialism is that a central government cannot decide how much soda to produce (releative to all the other products that need to be produced) as well as the free market.

Socialists continue to cling to a fantasy that the government has the ability and motivation to fix all problems.

Duckster

07-06-2010, 05:32 PM

Socialists continue to cling to a fantasy that the government has the ability and motivation to fix all problems.

And then there are others who cling to the fear the government will succumb to the socialists when government does anything outside explicitly defined parameters, parameters that only appear explicitly defined by the same fear mongers.

Chronos

07-06-2010, 05:38 PM

Sam, the problem here is that the OP has identified an inefficiency (and it is an inefficiency-- If nothing else, those trucks are driving more miles) associated with the free market that a government-run program wouldn't have. All you're doing is saying that the government might have other inefficiencies, but all of the inefficiencies you're pointing out are things that could also apply to the private companies.

Gangster Octopus

07-06-2010, 06:11 PM

One piece of information missing from the OP is whether or not someone is required to purchase garbage pickup from one of these five companies.

Sam Stone

07-06-2010, 06:17 PM

You don't even KNOW if those trucks are driving more miles. All we have is anecdotal evidence that trucks from different companies pass each other in residential areas. It may well be that the overall routing is more efficient this way for that particular city. Like I said, if five trucks go into an area instead of one, they can service five different areas before returning to the landfill.

Or look at it this way - let's say a neighborhood has five truckloads worth of garbage in it. Either way, five trucks are coming into that neighborhood to remove the garbage. But if they're all identical city trucks, the OP might not notice that. If they're all different, it catches his attention and he translates it as, "Four more trucks than there needs to be."

I can give you a concrete example: You don't see city garbage trucks in my neighborhood more than once - because the city staggers pickup. On my block, the garbage was picked up today. On the next block, it might be tomorrow. So I'm never going to see five trucks parade by in a single day, but if a truck comes into the general neighborhood every day, that's still five truckloads worth per week. Now if the city privatizes it and gives a block to each company, and they all pick up on the same day, then I'll see five trucks driving in, four of which skip me and continue on down the road. That sure looks inefficient, but in fact the exact same miles are being driven.

There's just not enough information in the OP to even hazard a ballpark guess as to whether the private companies are more or less efficient.

emacknight

07-06-2010, 06:31 PM

There's just not enough information in the OP to even hazard a ballpark guess as to whether the private companies are more or less efficient.

There isn't any more information available. There are only 12 houses on my street, each using one of the 5 companies. I use one, the guy across uses WM the guy next door uses Allied. Each of those trucks are running the best possible route they can, but it still means 5 different trucks go down my street, stopping at different houses.

Imagine if me and my neighbour each ordered pizza at the same time. Would you consider it efficient for the driver to make two trips? Would it make sense to send two cars?

Sam Stone

07-06-2010, 06:56 PM

I'm guessing those trucks don't drive all the way from the landfill just to pick up the trash from one or two houses. So there's other parts of the route we can't see, and we don't know the 'big picture'.

I'm not sure why this is hard to understand. I wish I could draw a diagram to illustrate.

Your pizza analogy is ridiculous. I noticed that you ignored the fact that package delivery became more reliable and more efficient when the post office gave up its monopoly and allowed multiple vendors to deliver packages. That's a much closer situation, since you have large trucks delivering goods throughout a city. A Fed Ex truck can pull into my neighborhood at the same time as a UPS truck and a Purolator truck. Is this evidence to you that we'd be better off scrapping all this redundancy and having one government delivery service so that routes could be consolidated?

Magiver

07-06-2010, 09:03 PM

And then there are others who cling to the fear the government will succumb to the socialists when government does anything outside explicitly defined parameters, parameters that only appear explicitly defined by the same fear mongers. And in the absence of fear mongers you get the country of Greece and the states of California and Illinois. The parameters are simple, deficit spending causes debt and continuous deficit spending causes default.

As to the op, multiple trash collectors are no more inefficient than multiple retail outlets for the products we buy. If 5 are too many trash collectors the market will eliminate the weak. The most likely result is that a weak company will be absorbed by a stronger one. Company names will and overlapping assets will be sold off.

When I think of government inefficiencies I think of pork. My city was awarded "stimulus money" to buy hybrid buses. We already have electric buses. I'm sure the new buses are lovely but who bought them? If every city gets a huge pile of money then which city is left to pay for it?. If it's debt that means we're paying a premium for the assets.

My state was awarded $400 million for high speed rail. Studies show the State will lose $17 million a year if it is built. We're trying to turn the money away to avoid unnecessary state debt. So the Federal government has committed to additional debt in order to saddle us with additional debt. If it's turned away it will probably be awarded to another project. Who is going to pay for this?

Personally, I feel should all go out and buy 100 "forever" stamps to put on thank you cards to be mailed out randomly to people not yet born. Or maybe they should be for apology cards. Hey, maybe we can put the "sorry we saddled you with our debt" on those highway signs currently being put up with stimulus money denoting the fact that we're spending stimulus money.

emacknight

07-06-2010, 09:58 PM

Okay, I have to apologize, there are actually 6 waste removal companies, not 5. But one of them isn't represented on my block.

Other than that, there is no trick. It's a normal block, in a normal subdivision, in an otherwise normal small city. Every Tuesday morning the people on my street roll out their garbage containers to the end of their driveway. The only difference from any other place I've been is that the garbage cans are labeled with the individual garbage company.

Maybe I'm still not clear on this. Two people on my block use the same company as me, so my company has a truck that gets our three houses, skipping over the other houses. They will have a different truck, from a different company, drive past my house to get my neighbour's trash. It's that simple. It is as stupid as a pizza delivery chain sending two cars to deliver two pizzas to my house.

If you want a comparison, imagine 5 separate sets of power lines running down your street representing 5 different power companies, all supplying the same power. Or 5 water pipes all sending the same water.

Or better yet, five sets of sewage lines that all take sewage to the same place!

emacknight

07-06-2010, 10:48 PM

One piece of information missing from the OP is whether or not someone is required to purchase garbage pickup from one of these five companies.

You're right, this is Great Debates, so here is some more relevant information:

There are currently 6 companies licensed by the city for trash removal. I am not required to contract with them, if I want I can haul my own garbage to one of four local transfer stations.

I am forbidden from burning garbage, and am liable for the garbage that I throw away--a good thing to know.

I looked through three of the companies websites, and they all take my trash to the same landfill about 30mile away (owned by one of the 6 companies). Although I maintain the legal right to determine the final destination for my trash. Also a good thing to know.

So I wasn't kidding when I said there are 5 trucks that come to my street, to take trash, to the same place. This isn't a case of overlap on a supply chain. I'm not looking at trucks doing along my street to other places. Different trucks pick up the garbage from different houses.

If I wanted, I could contract with all 6 of them. I could have six different bins (I currently have two but that's a different issue). Every Tuesday six trucks could come to my house and take my trash to the same place.

I know Fedex/UPS was mentioned as improving shipping, and that's true, when stuff is coming from different places. But what we're talking about here would be if each person on my street picked between USPS/Fedex/UPS to bring their mail from the local transfer station. There would literally be three different mail trucks going down my street every morning. There is nothing efficient in that exercise. But I do appreciate all your efforts.

emacknight

07-06-2010, 10:52 PM

My state was awarded $400 million for high speed rail. Studies show the State will lose $17 million a year if it is built. We're trying to turn the money away to avoid unnecessary state debt. So the Federal government has committed to additional debt in order to saddle us with additional debt. If it's turned away it will probably be awarded to another project. Who is going to pay for this?

Okay, you agree that's stupid. You know what would be worse? If there were 6 separate high speed rail lines, all going between the same two places, under capacity, using identical trains, with an identical schedule.

Would you agree that would be 6 times worse than what you were describing? Well, that's what the market has created here.

Magiver

07-06-2010, 11:00 PM

If you want a comparison, imagine 5 separate sets of power lines running down your street representing 5 different power companies, all supplying the same power. Or 5 water pipes all sending the same water.

Or better yet, five sets of sewage lines that all take sewage to the same place! Power and sewer are utilities. They require a great deal of infrastructure and require singular connectivity to physically work. That doesn't stop the market from operating as a series of collectives. In my city I have a choice of companies for natural gas. It comes from the same supplier but the sale of it is done by a multitude of companies who buy the product wholesale.

Garbage is a service just as a retail store is. Most cities have multiple retail outlets for a variety of product types whether it's groceries or electronics. Market forces determine the number of services that are optimal for the area.

Magiver

07-06-2010, 11:08 PM

Magiver

07-06-2010, 11:15 PM

I have to agree that 6 different companies sounds like a lot of retail chasing too few dollars. Time will tell what it really should be.

Damuri Ajashi

07-06-2010, 11:47 PM

The debates involving health care and UHC, and now debates about farming, tend to present the notion of government waste as repudiation for socialist policies....

Government waste is not necessarily any worse than private enterprise waste. Here's the way I see it, centrally planned economies work pretty well (see Japan inc. 1970-1990, or China 1980-present) until the technocrats screw up (see Japan inc. 1990-2005). The free market doesn't work as well or as efficiently because all those companies going bankrupt (creative destruction and all that) but there is no single mistake that is going to cripple the economy (at least until recently, and even then it wasn't a single mistake it was the combined mistakes of a lot of people). But when we talk about direct government participation in the economy, there are simply some things that make sense and some things that do not.

In cities like NYC, there is private and public trash collection. The public trash collectors work for the department of sanitation and pick up residential trash. The private trash collectors work for the mafia and they pick up the commercial trash. Both are fairly well organized and you have no choice but to pay for their services. Even the criminals recognize the efficiencies associated (at least in urban environments) with not having 5 different companies drive down the same street.

In my little subdivision, every homeowner contracts for their own trash pickup and every last one of them uses the exact same trash company (there are three in the area), not because there is a conspiracy or even because one is generally speaking better or cheaper than all the others but because one of them was able to grab enough of the homes that it was able to offer lower rates to all the homes in the subdivision. One subdivision over another company has about 90% of all the contracts. Having 5 trash companies drive into the same cul de sac is silly and it can't last that long before your trash company realizes that the incremental cost of collecting your neighbors trash is a lot less than what your neighbor is currently paying.

Some things you need government oversight of. For example it is hard to imagine private companies building roads and then charging for their use. Power plants are another one. While private they are heavily regulated because they are essentially granted a monopoly. You just do not want 10 power producers out there all running their own power lines all over the place.

You can in fact have multiple energy producers selling to end users and then paying a wheeling charge to have the energy distributed to their customers. Its kind of how long distance telephone service operates in America (and how Cable SHOULD operate)

If 5 different companies can all drive by your house and offer competitive pricing and turn a profit, where is the inefficiency? The fact that they drive by your house?

If there were two companies and two houses in a cul de sac, the incremental cost of one of the companies picking up the neighbors trash as well is a lot lower than the cost of that second truck driving up to that neighbor's to pick up trash. You could almost cut the trash collection costs in half in that case.

I don't get it. If companies are tripping over each other to get to your garbage, then this is not necessarily an inefficiency for you. The question is do you pay less for garbage pickup as a result of the competition? Do you pay the same? My guess would be that having more than one company might not save money for the consumer on the front-end but may reduce the inevitable price hikes over time.

This is true. When that one trash company controls the entire subdivision, they can charge just a little less than what it would cost a trash company to start servicing the first home in the area and still never lose a customer. But you are likely to get there with a free market in trash disposal.

You have no way of knowing which one is more efficient. Just the fact that you see trucks destined for other houses drive by you means nothing.

Did you miss these diagrams http://dl.dropbox.com/u/4181904/organized.png http://dl.dropbox.com/u/4181904/disorganized.png ?

Hub and Spoke airline travel

Which isn't really relevant to trash collection.

IMO, this short term contract system is the best way of doing it. Yes, it grants a monopoly to one waste hauler, but it's temporary and forces the hauler to remain competitive or it will lose that contract when it's up for renewal. It reduces the number of trucks required to drive each route, as shown by Sage Rat.

For the past 20 or 30 years people here in DC have made a career of figuring out how to inject free market principles into areas where government was doing a perfectly good job (did you know they privatized tax collection for a while, thats right they outsourced the collection of overdue taxes and gave the collection agencies 30% of what they collected, it was ridiculous but thats what you get when people are looking for answers that are consistent with a particular ideology rather than answers that make the most sense.

This is not just associated with garbage pickup. Why should we have Coke and Pepsi, there is a tremendous amount of redundancy there. Also Burger King and McDonalds and Wendy's all have redundant efforts.

So you don't think there is a line somewhere between trash disposal and consumer products where you might draw a line and say government might be able to handle these things well (perhaps better than the private sector) and the government is probably NOT going to handle these thing very well?

This is the traditional arguement for socialism. A central agency which is not trying to turn a profit can reduce the costs of redundancies and eliminate profit, thereby lowering cost for the end user.

In some cases the economies of scale and the benefits of a cohesive development strategy is superior to the creative destruction of the private sector.

The whole overlap thing could be an illusion anyway. One truck cannot collect all the garbage for a city, so even one waste company will be sending many trucks out.

Yeah but not to the same block.

I'm sure they follow the same routes to various areas. You may not notice the overlap because they all look the same. But when it's different companies doing the same thing, you notice.

What about 5 different companies going into the same cul de sac?

But the fact remains the government does seek to make a profit - or a margin, if you prefer - on a lot of governmental services. And, to an extent, why not? Here in Canada the passport function, for instance, makes more in revenue than it costs to run (or it used to, anyway.)

As a monopoly the government can make huge profits if it really wants to. It doesn't because people don't want to pay $5 to ride the subway so they elect politicians that promise $3 subway fares. Stuff like driver's licenses and car registration happens infrequently enough that noone runs on that sort of platform. The FCC in the US sells bandwidth at public auction, the money the auctions raise more than adequately fund the FCC THe mining and minerals commission at the department of the interior collects more in oil lease payments than it costs to run the organization too. I don't consider the ability of a government entity to turn a profit a particular strength.

The OP is referring to what is called a "natural monopoly". Certain networked services like the cable or local power and gas will tend towards monopoly due to the expense of running multiple sets of power, cable or gas lines to the same neighborhood.

Yeah, I still don't understand why we don't regulate Cable a bit more than we do.
No, the traditional argument for socialism is the tendency for wealth to concentrate with a small percentage of the population.

The argument AGAINST socialism is that a central government cannot decide how much soda to produce (releative to all the other products that need to be produced) as well as the free market.

Socialists continue to cling to a fantasy that the government has the ability and motivation to fix all problems.

Yeah the private sectors doesn't have that ability and motive either. Most socialists I know allow for the fact that government AND the private sector are necessary parts of the equation, the free marketeers I know do not hold similarly balanced views.

I'm guessing those trucks don't drive all the way from the landfill just to pick up the trash from one or two houses. So there's other parts of the route we can't see, and we don't know the 'big picture'.

I'm not sure why this is hard to understand. I wish I could draw a diagram to illustrate.

You mean like these?

http://dl.dropbox.com/u/4181904/disorganized.png
http://dl.dropbox.com/u/4181904/organized.png

Sure these are meant to depict mail routes and stuff but you get the idea.

I noticed that you ignored the fact that package delivery became more reliable and more efficient when the post office gave up its monopoly and allowed multiple vendors to deliver packages.

The USPS never had a monopoly on packages, DHL has been around as long as any of us have been alive. The USPS has a monopoly on first class mail ad that doesn't look like it will go away.

Magiver

07-07-2010, 12:06 AM

The USPS never had a monopoly on packages, DHL has been around as long as any of us have been alive. The USPS has a monopoly on first class mail ad that doesn't look like it will go away. DHL and the package industry is a classic example of market forces at work. They bought out Airborne Express and was in turn bought out by Deutsche Post and was then subsequently eliminated from the US domestic market by Federal Express and UPS (which bought out Emery/Consolidated which had bought out Purolator). Add in the demise of Kittyhawk and you have a great deal of market transition in a very small time frame.

Staale Nordlie

07-07-2010, 04:20 AM

Government waste is not necessarily any worse than private enterprise waste. Here's the way I see it, centrally planned economies work pretty well (see Japan inc. 1970-1990, or China 1980-present) until the technocrats screw up (see Japan inc. 1990-2005).Japan did not have a centrally planned economy from 1970-1990. It had a mixed economy, and as I understand it a fairly liberal one compared to the rest of the world. The government certainly interfered with the free market, but that's true for any mixed economy.

You're right that they screwed up in their handling of the 1990s financial crisis though. Stimulus packages. Bailouts. Growing budget deficits. What were they thinking? :smack:

As for China, China's great economic growth happened only after they abandoned central planning in favor of economic liberalization. They're still a mixed economy of course, and not a very free one at that, but economic freedom is steadily increasing along with GDP.

Damuri Ajashi

07-07-2010, 10:30 AM

Japan did not have a centrally planned economy from 1970-1990. It had a mixed economy, and as I understand it a fairly liberal one compared to the rest of the world. The government certainly interfered with the free market, but that's true for any mixed economy.

Call it what you want, the Ministry of something or another was calling all the shots. Tehre is a reason they called it Japan inc. There was a coordinated business strategy at the national level.

You're right that they screwed up in their handling of the 1990s financial crisis though. Stimulus packages. Bailouts. Growing budget deficits. What were they thinking? :smack:

I think everyone can agree that the "zombie firms" created by serial bailouts were a drag on the economy but most people ALSO agree that letting all the japanese abnks fail at once was probably not a good idea either.

Some economists believe that the massive stimulus was the onlything that kept the Japanese economy from actually tanking.

http://www.businessinsider.com/richard-koo-recession-2010-4#-1
http://csis.org/files/media/csis/events/081029_japan_koo.pdf

Japan has (proportionally) much larger debt and deficits than we do and they are not turning into Greece. Why is that?

None of these things were the technocratic "mistake" The technocratic "mistake was not regulating the banks tightly enough and letting the bailouts go on for too long. it should have been obvious much earlier in the process that the bailouts were a hospice program and not a recovery program. The banks were going to fail and the bailouts could only spread out the failures enough so that the market could absorb the impact.

As for China, China's great economic growth happened only after they abandoned central planning in favor of economic liberalization. They're still a mixed economy of course, and not a very free one at that, but economic freedom is steadily increasing along with GDP.

Well, if mixed econmies work so well, then why do people keep saying that unfettered markets are the way to go?

HookerChemical

07-07-2010, 11:34 AM

Sam, there will be duplication of miles traveled if five companies are covering the same area. When one company does it, they plan their routes for efficiency. They know that if they send Truck 1 down Apple, Birch, and Cypress Streets, it will be full. They then plan to send Truck 2 down Dogwood, Elm, and Fig Streets. Sending Truck 2 to follow Truck 1 until Truck 1 is full is grossly inefficient as Truck 2 will have to drive all six streets when you know it should only have to drive three. Any waste hauler, from the smallest city to the biggest private company does this planning.

If you have five companies, each of them will have to send a truck down each street they have customers on. As a result, Company A sends Truck 1 down all six streets. So do Companies B through E, totaling 30 streets covered (5 companies * 6 streets) as opposed to the efficient monopoly covering 6 streets. The monopoly also makes 2 trips to the landfill (Truck 1 and Truck 2), whereas the 5 company CF makes 5 trips.

It was mentioned in post 10 that the government waste haulers could be hauling the waste to a distant landfill. In my experience, this is unlikely. The county landfill will almost always be closer than the private ones.

I think waste hauling is a poor subject for a public vs private debate. As I mentioned already, the waste hauling contract is usually a limited monopoly, granted by the local government for a limited time, with contracted rates. Frequently, the county trucks aren't owned or operated by the county but by private contractors. I do, however, think that one entity hauling the waste in a given area is inherently more efficient than several companies hauling the waste.

Gangster Octopus

07-07-2010, 11:58 AM

I think a real question here is why don't the individual companies essentially trade routes to avoid duplication. I.e. subcontract out to one another for a particular neghborhood. Now some might say that is collusion, but as long as they are not colluding on price I don't think it is illegal. And as long as they are not saying "You stay away from marketing to customers in Neghborhood Y and we'll stay out of Z" it should be fine.

Another option is why doesn't a private company offer a discount if say a critical mass of folks in a particular neighborhood pick them as a service provider. That might be difficult to actually do, but not impossible.

Sam Stone

07-07-2010, 12:31 PM

I think an even better question is, if private waste hauling is inherently less efficient, how come there's a trend towards private waste hauling, and how come cities are seeing savings of 20-40% on average from privatizing?

I will agree that public/private 'partnerships' like waste hauling are not true free markets. If the government is granting a monopoly to a private entity, it's not freeing a market. It's just offloading the work of managing a monopoly to another entity.

msmith537

07-07-2010, 12:43 PM

And then there are others who cling to the fear the government will succumb to the socialists when government does anything outside explicitly defined parameters, parameters that only appear explicitly defined by the same fear mongers.

It's not "socialists", so much as it is the maddening incompetance and beurocracy that seems to accompany any government endeavor that I concerns me.

HookerChemical

07-07-2010, 01:22 PM

Magiver

07-07-2010, 03:18 PM

Private waste hauling isn't inherently less efficient. Having five companies service the same area is less efficient. Less efficient than what exactly? Less efficient than the city, less efficient use of collective assets, or less efficient use of a single commodity (fuel or labor)? If all the trucks are full then route overlap and labor inefficiencies resemble every other competitive service industry.

emacknight

07-07-2010, 03:42 PM

Less efficient than what exactly? Less efficient than the city, less efficient use of collective assets, or less efficient use of a single commodity (fuel or labor)? If all the trucks are full then route overlap and labor inefficiencies resemble every other competitive service industry.

Think about it in reverse: Imagine any other neighbourhood where the government either collects garbage or contracts it out. Picture watching a truck pull past your house to get your neighbour's garbage, then later another truck comes by to get yours, then later another truck comes and gets the guy on the other side of you. There is no way you could call that efficient.

Or better yet, imagine if the truck came around to your house 5 times, repeatedly emptying the same can. Or for those that put out multiple cans, you'd expect the truck to collect all of them at one time right? You wouldn't expect the driver to get one, drive around, come back and get other, later come back for the last.

In other words, imagine your outrage if you found out your city had 5 times as many trucks as they needed. And that those trucks each had the most efficient route planned, but then divided out the houses on each street such that they drove around under capacity. And then just for fun had one truck just idling some where.

Most people would rightly be pissed, it's the sort of shit that most people refer to when they talk about government waste and inefficiency. It's the classic three guys digging a whole, with two guys standing by watching.

This isn't a complex problem, we're all innately aware of how to efficiently make pickups/deliveries. I was a paper carrier at age 12 and knew to deliver to all the houses in order, I didn't deliver alphabetically, or by colour. I went down one side, crossed and came back up the other side.

In this scenario, we'd have 5 carriers delivering the same paper, to different houses on the same street. Would you consider that efficient?

Each company is operating at their individual best efficiency. You'll notice that there aren't 25 trucks--no company is sending 5 trucks.

If the government took over, but continued with the current process people would be pissed. Just like mentioned above, if two companies merged they wouldn't keep sending both trucks.

So if my city provided socialized trash collection, they could easily save 80%. Even the most grossly incompetent, and mismanaged city council could still pull off 50%.

Some times the free market isn't the best way to go.

Beware of Doug

07-07-2010, 03:53 PM

It's not "socialists", so much as it is the maddening incompetance and beurocracy that seems to accompany any government endeavor that I concerns me.Thank goodness private enterprise is free from incompetence, and that autocracy works so much better than bureaucracy.

:rolleyes:

Damuri Ajashi

07-07-2010, 04:07 PM

It's not "socialists", so much as it is the maddening incompetance and beurocracy that seems to accompany any government endeavor that I concerns me.

Medicare overhead = 2%
Insurance company overhead = 20%

Damuri Ajashi

07-07-2010, 04:08 PM

Private waste hauling isn't inherently less efficient. Having five companies service the same area is less efficient.

From what i have seen, this state of affairs doesn't last very long. You don't see 5 trash companies sericing the same subdivision very long before one of them gets the bright idea that they can pick up the nieghbor's garbage for less than they are paying right now.

Damuri Ajashi

07-07-2010, 04:12 PM

Think about it in reverse: Imagine any other neighbourhood where the government either collects garbage or contracts it out. Picture watching a truck pull past your house to get your neighbour's garbage, then later another truck comes by to get yours, then later another truck comes and gets the guy on the other side of you. There is no way you could call that efficient.

Or better yet, imagine if the truck came around to your house 5 times, repeatedly emptying the same can. Or for those that put out multiple cans, you'd expect the truck to collect all of them at one time right? You wouldn't expect the driver to get one, drive around, come back and get other, later come back for the last.

In other words, imagine your outrage if you found out your city had 5 times as many trucks as they needed. And that those trucks each had the most efficient route planned, but then divided out the houses on each street such that they drove around under capacity. And then just for fun had one truck just idling some where.

Most people would rightly be pissed, it's the sort of shit that most people refer to when they talk about government waste and inefficiency. It's the classic three guys digging a whole, with two guys standing by watching.

This isn't a complex problem, we're all innately aware of how to efficiently make pickups/deliveries. I was a paper carrier at age 12 and knew to deliver to all the houses in order, I didn't deliver alphabetically, or by colour. I went down one side, crossed and came back up the other side.

In this scenario, we'd have 5 carriers delivering the same paper, to different houses on the same street. Would you consider that efficient?

Each company is operating at their individual best efficiency. You'll notice that there aren't 25 trucks--no company is sending 5 trucks.

If the government took over, but continued with the current process people would be pissed. Just like mentioned above, if two companies merged they wouldn't keep sending both trucks.

So if my city provided socialized trash collection, they could easily save 80%. Even the most grossly incompetent, and mismanaged city council could still pull off 50%.

Some times the free market isn't the best way to go.

My paperboy delivers about 6 different papers to my neighborhood and he isn't a boy and he drives around in a jeep delivering different papers to different houses. If each paper had had its own delivery boy, they would all cover approximately the same ground to deliver the same amount of paper, of course there are economies of scale, its silly to try and twist the fact pattern around to lookk for ways taht econmies of scale might not be applicable.

Magiver

07-07-2010, 04:13 PM

Think about it in reverse: Imagine any other neighbourhood where the government either collects garbage or contracts it out. Picture watching a truck pull past your house to get your neighbour's garbage, then later another truck comes by to get yours, then later another truck comes and gets the guy on the other side of you. There is no way you could call that efficient. You're confusing efficient with competitive. Imagine a town with only 1 retail store and 1 grocery store. It is certainly more efficient to have one large store.

In other words, imagine your outrage if you found out your city had 5 times as many trucks as they needed. And that those trucks each had the most efficient route planned, but then divided out the houses on each street such that they drove around under capacity. And then just for fun had one truck just idling some where. I've never been outraged at competition. I've questioned companies deliberately overloading a market to wipe the other out(think drug stores).

Most people would rightly be pissed, it's the sort of shit that most people refer to when they talk about government waste and inefficiency. It's the classic three guys digging a whole, with two guys standing by watching. Nobody is standing around watching. They’re all collecting garbage. 6 small companies versus 1 large company. If the trucks are full at the end of the day then hard assets are fully utilized. The end result is a large pie that is cut into 6 slices.

This isn't a complex problem, we're all innately aware of how to efficiently make pickups/deliveries. I was a paper carrier at age 12 and knew to deliver to all the houses in order, I didn't deliver alphabetically, or by colour. I went down one side, crossed and came back up the other side.

In this scenario, we'd have 5 carriers delivering the same paper, to different houses on the same street. Would you consider that efficient? When I was a kid there was great overlap in paper route deliveries among the paperboys. Over time there was a tendency to gain more people on your block as new people moved.

Each company is operating at their individual best efficiency. You'll notice that there aren't 25 trucks--no company is sending 5 trucks. Again, you're confusing competition with efficiency. Market forces will determine efficiency.

If the government took over, but continued with the current process people would be pissed. Just like mentioned above, if two companies merged they wouldn't keep sending both trucks.

So if my city provided socialized trash collection, they could easily save 80%. Even the most grossly incompetent, and mismanaged city council could still pull off 50%.

Some times the free market isn't the best way to go. It's the best way to go for the consumer as long as market forces don't jeopardize a utility. My gas is produced by one company (by state charter) and sold through independent marketers. Any of the marketers can go out of business but my house will always stay connected because of the PUCO.

Voyager

07-07-2010, 04:23 PM

It's not "socialists", so much as it is the maddening incompetance and beurocracy that seems to accompany any government endeavor that I concerns me.

I don't know. It took me about the same time to renew my license, including an eyetest and a new picture, as it took to pick up a pizza from Papa Murphy's the other night.

Garbage collection is a natural monopoly, and my city has it contracted out to a private company. I used to live in a very small town in NJ. Because of our size, collection took only a day, and city workers did it, and did other stuff the rest of the week. They seemed rather more with it than the usual trash collector and we got more services without an extra charge. They also did stuff like pick up all our leaves from piles at the curb, instead of what can fit in our green can like now. (If I had as many leaves here as I did there I'd be putting them out at Christmas.)

I think your attitude comes from selectively ignoring good things governments do and bad and incompetent things private enterprise does.

HookerChemical

07-07-2010, 04:44 PM

My paperboy delivers about 6 different papers to my neighborhood and he isn't a boy and he drives around in a jeep delivering different papers to different houses. If each paper had had its own delivery boy, they would all cover approximately the same ground to deliver the same amount of paper, of course there are economies of scale, its silly to try and twist the fact pattern around to lookk for ways taht econmies of scale might not be applicable.

Emphasis added.

No. A thousand times no.

Here's an example. I'm going to change from six papers to four papers and use a mile long street for easy math.

In the worst case, all four paper boys travel the street to deliver the paper. The total distance traveled is four one-way miles, plus four times the distance from their starting location to the street.
In an "average" case, the deliveries will be spaced evenly, say at 0.2, 0.4, 0.6, and 0.8 miles along the road. You'd still have a total distance of 2 one-way miles traveled, plus four times the distance from the start to the street.
If only one delivery boy were doing the deliveries, he would travel the street once, covering a single one-way mile plus the distance from the start to street once.

Also, to address another issue raised upthread, one delivery boy (garbage truck) working a street only has the overhead of one bike and worker. The four worker scenario has four times the overhead (bike, worker pay).

emacknight

07-07-2010, 05:22 PM

Magiver

07-07-2010, 05:44 PM

Now, imagine the Herald buys the Post creating the Herald Post, and prints only one paper each day, and not two. Would you expect them to keep both delivery drivers, or eliminate the redundancy? That analogy doesn't make sense. You're comparing 2 combined products with a competing service industry. The paper routes (a service) still overlap from carrier to carrier. It's an apples to oranges situation. The pure allocation of resources cannot occur outside of a monopoly so efficiency within a non-monopoly is dictated by market forces.

emacknight

07-07-2010, 05:50 PM

That analogy doesn't make sense. You're comparing 2 combined products with a competing service industry. The paper routes (a service) still overlap from carrier to carrier. It's an apples to oranges situation. The pure allocation of resources cannot occur outside of a monopoly so efficiency within a non-monopoly is dictated by market forces.

If you merged two companies, would you keep redundancy, or eliminate it?

Magiver

07-07-2010, 05:53 PM

If you merged two companies, would you keep redundancy, or eliminate it? You would eliminate it.

emacknight

07-07-2010, 05:54 PM

You would eliminate it.

Why, would you see it as inefficient?

Magiver

07-07-2010, 05:56 PM

Why, would you see it as inefficient?redundancy within a company is inefficient. Redundancy between 2 competing companies is competition.

emacknight

07-07-2010, 06:05 PM

redundancy within a company is inefficient. Redundancy between 2 competing companies is competition.

Right.

If two of the 5 garbage companies merged, they would eliminate one of the trucks that service my block because one of them is redundant. If all 5 merged, there would only be one truck, because four of them would be redundant.

There isn't much to garbage collection here other than taking the garbage. They either do it or they don't. Much like supplying electricity or natural gas. It's either on or it's not.

If the government took over garbage collection, they would eliminate four of the trucks, and as long as the garbage gets collected, we wouldn't notice a thing. There isn't much more to the service.

Sam Stone

07-07-2010, 06:18 PM

emacknight: I'll say it again - your observation that private trucks pass each other in your neighborhood is no where near a proof that private trash hauling is less efficient than public trash hauling.

I do analysis like this for a living, you know. Part of my job involves building requirements for companies doing business process reengineering and refactoring to improve efficiency. I know what goes into an analysis like this.

Let me give you an example of just one thing that you are completely ignoring, and which could make all the difference: What is the capacity factor of those trucks? What if the city trucks tend to head back to the landfill when only 70% full, but the private trucks are 90% full? How does that affect your analysis?

This can easily happen. If the city parcels out its trash collection into zones and sets up rigid barriers between them (i.e. driver A is assigned to truck B, and they are assigned to zone C, and this relationship is fixed), then what happens on a light trash day for that neighborhood? Does the truck come back half empty? What if in another area there was unusually heavy trash, and the truck fills up - with three houses left to do? What happens then? Does another truck have to drive out for just those three houses? Or are they flexible enough to re-route someone else? Will union rules allow them to do it? Will they have to pay drivers overtime?

Perhaps their solution to this is to size the trucks and zones such that they typically come back 70% full, so they can handle any overages without requiring a second trip.

Perhaps the private companies are more flexible, and have managed to engineer their processes so that their trucks are 20% more full.

We don't even know how much of the overall vehicle miles traveled is increased by the neighborhood overlap you described. Depending on how densely packed the neighborhood is and how far away the landfill is, it could be a trivial amount in the first place.

There are no doubt hundreds of factors. I've been involved in BPR analysis, and you can spend days just sifting through all the potential factors trying to figure out what the top 20 are in terms of impact. Perhaps the terminus side of the pickup at the landfill is horribly inefficient, with trucks idling in lines for long periods of time waiting to dump their garbage. Maybe the city has under-invested in infrastructure and their trucks are old and inefficient, or union rules have prevented them from automating certain operations.

Here's another one - maybe the private agencies have a better handle on exactly who their customers are, and can size their trucks accordingly, so that they can send smaller, more fuel efficient trucks into neighborhoods with fewer customers. Maybe they've developed technology for interim deposit of trash into larger vehicles for hauling to the distant landfill.

Do the private companies charge by the bag? Did the city? If they do, that acts as an inventive for people to not throw out as much garbage. Maybe they've reduced the entire amount of garbage by 10% through pricing, and have lower costs of collection and landfill storage.

There could be hundreds of factors that you can't see until you dig deep into the operations of a company. Your observation is just one piece of data that would be used to determine where efficiency could be improved. Earlier, I gave you a counterexample of a situation much like that which is unquestionably more efficient - splitting up package delivery between multiple vendors.

Now, it's entirely possible that in this case having five contractors is less efficient. All I'm saying is that your observations do not come close to proving the case.

Magiver

07-07-2010, 06:23 PM

Right.

If two of the 5 garbage companies merged, they would eliminate one of the trucks that service my block because one of them is redundant. If all 5 merged, there would only be one truck, because four of them would be redundant.
That's not accurate. You're premise suggests the trucks operate at 1/6 capacity. Just because multiple trucks pass through your area does not mean they could make all the stops. Most of the time in the operation is in the pickup and not the movement of the truck. What is more realistic is that there are 20 trucks serving 18 trucks worth of service.

Voyager

07-07-2010, 06:37 PM

And maybe the private companies are owned by the Mafia and inflate the cost of dumping, to get kickbacks. If you compare heroes of industry with public boobs, industry of course comes out the best.

What actually happens, and is probably optimal, is that the rights to trash collection are owned by the public, and private companies (the five in the example) do competitive bidding for the contract for a limited time. The public benefits from competition without the waste of multiple vendors recrossing the same area. If the companies are more efficient, the savings goes to their bottom line. if they do not provide service, they lose the contract the next time (and changing trash haulers is fairly simple.) The key to this is that the public can restrict private haulers from entering the market except at well defined intervals. Saying five haulers are collectively more efficient than one is laughable unless you invent all sorts of chains and shackles for the public option. Saying a single private hauler is more efficient than a city (especially a small city) is a lot more reasonable.

emacknight

07-07-2010, 06:48 PM

emacknight: I'll say it again - your observation that private trucks pass each other in your neighborhood is no where near a proof that private trash hauling is less efficient than public trash hauling.

I'm not observing them pass. I am observing them pick up trash on my street. Do you realize that? You have yet again failed to understand the situation. I'm not suggesting it's inefficient that they drive down my street. It's inefficient that they STOP and make PICKUPS on my street. Do you realize that is what we are talking about?

As I said before, each company is individually as efficient as they can be. Each hired a super smart guy like you to evaluate their process and show them the be routes. But it doesn't change the fact that there are 5 companies providing the same service. Each company is efficient, but having 5 companies is stupid.

I do analysis like this for a living, you know. Part of my job involves building requirements for companies doing business process reengineering and refactoring to improve efficiency. I know what goes into an analysis like this.

Let me give you an example of just one thing that you are completely ignoring, and which could make all the difference: What is the capacity factor of those trucks? What if the city trucks tend to head back to the landfill when only 70% full, but the private trucks are 90% full? How does that affect your analysis?

Why do you keep saying this. It's completely retarded and not in any way relevant.

What if the private trucks drive over children ever day but the government only drives over 1?

You were better off rejecting things that don't fit your ideology.

Gangster Octopus

07-07-2010, 07:10 PM

I don't know. It took me about the same time to renew my license, including an eyetest and a new picture, as it took to pick up a pizza from Papa Murphy's the other night.

Garbage collection is a natural monopoly, and my city has it contracted out to a private company. I used to live in a very small town in NJ. Because of our size, collection took only a day, and city workers did it, and did other stuff the rest of the week. They seemed rather more with it than the usual trash collector and we got more services without an extra charge. They also did stuff like pick up all our leaves from piles at the curb, instead of what can fit in our green can like now. (If I had as many leaves here as I did there I'd be putting them out at Christmas.)

I think your attitude comes from selectively ignoring good things governments do and bad and incompetent things private enterprise does.

This specific example pretty conclusively shows that is not a natural monopoly. A natural monopoly is one in which the fixed costs are so high that there is naturally only one company. Many times it is required for a government to step in and do this, because of the high initial entry and capital costs (but not always, there are private electric companies...of course then it requires regulation because it is still a monopoly). The existence of five garbage collection companies is evidence in of itself that it is not a natural monopoly.

Gangster Octopus

07-07-2010, 07:12 PM

Voyager

07-07-2010, 07:52 PM

This specific example pretty conclusively shows that is not a natural monopoly. A natural monopoly is one in which the fixed costs are so high that there is naturally only one company. Many times it is required for a government to step in and do this, because of the high initial entry and capital costs (but not always, there are private electric companies...of course then it requires regulation because it is still a monopoly). The existence of five garbage collection companies is evidence in of itself that it is not a natural monopoly.

Five collection companies competing for the same market is something I've never seen any place I've lived. (There are multiple companies competing for the business market which has fewer pickups and higher volume.) The "natural monopoly" part (which I may be misusing) comes from the inefficiencies which have been discussed, not cost of entry in this case.

However government regulation can de-monopolize even natural monopolies. We can choose from several DSL companies over the same phone lines, and even for power, California had something allowing you to purchase power from an alternate source, which then fed an equivalent amount of power into the grid (or something.) So things have gotten a lot more flexible since I worked for the Bell System, when we were convinced that long distance was a natural monopoly also.

waterj2

07-07-2010, 08:44 PM

emacknight

07-07-2010, 09:25 PM

emacknight

07-07-2010, 09:38 PM

emack, is there any differentiation amongst the companies, i.e. do some offer to pick up more often for a different price? do some offer free haulaway for large items while others don't? Just curious if the service is completely homogenous amongst the five companies?

Well, it's funny you should ask. When researching them, I requested a trial pick up from each company. Then evaluated whether or not they picked up the trash, and gave them a score of 0 if they didn't and 100 if they did.

I'm kidding, I called around to find the 'cheapest' only to learn that it doesn't exist. Scott Adams, author of Dilbert, coined the term confusopoly in one of his books. Each company has a wildly complex pricing structure, which is ultimately how they differentiate themselves, making it nearly impossible to price compare. One company offers three sizes of a bins, each at a different price. Another company has four sizes, just slightly different than the previous. Do you want a company that provides a 20 and 30 gallon bin, or 22 and 48? Do you want to be billed monthly or quarterly? Do you like forest green or midnight black?

They each have their own strategy for "extras." One charges a lot more for couches, but doesn't charge much for lawn waste. The other has a seasonal package for lawn waste instead of a per bag fee. One tried to give me a weird trial rate for the first 3 months.

I spent about a week sifting through the 5 of them without being able to tell the difference, and in the end picked one with a low price for the bin size we guessed we might need.

Sam Stone

07-07-2010, 09:51 PM

I don't see any way to get around the fact that having competing trash haulers introduces an inefficiency into the system that isn't present with a monopoly. Any of the inefficiencies you mention could be present in either multiple competing systems or in a monopoly system. There doesn't seem to be much of a way around this inefficiency as long as people are allowed to chose a different trash service than their neighbors.

Even if having the five trucks work the same area is an inefficiency, how much of an inefficiency is it? How does the additional energy and cost of this compare to the overall costs of the system? What other efficiencies might the private market bring that compensate for this?

And again, you don't know that the five-truck method is less efficient, because you don't know all the details about how they work. If five trucks means that each can come back 95% full, while the government system sends them back 70% full, and the additional neighborhood drive only adds 20% of the miles driven, then using the five trucks and bringing each one back full is more efficient. Or there could be a whole bunch of unseen factors here that drove this model the way it is. Or, it could really be very inefficient. The point is, the mere observation of their behavior near one person's house doesn't give us enough information to know.

Could a single monopoly theoretically be more efficient than competing companies? Sure. But historically they have proven not to be. That's because true monopolies don't exist under the harsh pressure of competition. I think people really underestimate this effect. It's one thing to say you're going to be efficient, and it's another when you know deep in your bones that there's another guy out there doing his best to undercut your prices, and that your company's existence depends on you constantly striving for improvement wherever you can find it.

Take the last recession. Private industry laid off a lot of jobs. The government? Almost none. Government can pick up the slack with tax dollars. Private companies live or die based on their balance sheets. It keeps them leaner and fitter.

This is just a variation on the old argument that state monopoly is better than the free market because it avoids all that duplication of service. Coke vs Pepsi, Ford vs GM. It seems so wasteful. But it's not. If monopoly was better than competition, you'd see government monopolies everywhere, and the places that have them would have better economies.

This is a form of Ceteris Paribus fallacy: The assumption of "All else being equal". Hell, the private market is using five trucks! If we just replace them with one, then all else being equal we'll be more efficient!" Except all else isn't equal. The incentives are different, the organization structures are different, the rules are different.

Damuri Ajashi

07-07-2010, 10:25 PM

Emphasis added.

No. A thousand times no.

Here's an example. I'm going to change from six papers to four papers and use a mile long street for easy math.

In the worst case, all four paper boys travel the street to deliver the paper. The total distance traveled is four one-way miles, plus four times the distance from their starting location to the street.
In an "average" case, the deliveries will be spaced evenly, say at 0.2, 0.4, 0.6, and 0.8 miles along the road. You'd still have a total distance of 2 one-way miles traveled, plus four times the distance from the start to the street.
If only one delivery boy were doing the deliveries, he would travel the street once, covering a single one-way mile plus the distance from the start to street once.

Also, to address another issue raised upthread, one delivery boy (garbage truck) working a street only has the overhead of one bike and worker. The four worker scenario has four times the overhead (bike, worker pay).

I think you said what I said. I meant they EACH travel the same distance as the one paper boy. BTW why is it easier to explain with 4 paper boys instead of 6?

waterj2

07-07-2010, 10:58 PM

This is just a variation on the old argument that state monopoly is better than the free market because it avoids all that duplication of service. Coke vs Pepsi, Ford vs GM. It seems so wasteful. But it's not. If monopoly was better than competition, you'd see government monopolies everywhere, and the places that have them would have better economies.I'm not arguing that government monopolies are superior to free markets, but that the trash collection market doesn't make much sense to be operated at the individual level. As has been suggested earlier in the thread, municipalities often contract out to trash hauling companies, and the companies compete against each other for contracts. The company running it's trucks 70% full has higher costs than the one running 95% full, and can bid out its contracts lower.

I'm no expert on trash collection, but it seems to me that there are efficiency gains to managing things on a larger scale, as well as better accounting for externalities such as backed up traffic behind the trucks.

Personally, I've lived in cities my whole life, and all I'm familiar with is that I pay rent, my landlord pays property tax, and trash trucks come around every Friday morning and take whatever I put out, subject to various restrictions. The system emacknight describes would completely baffle me. I have no idea whether the City of Boston runs its own trash collection or contracts it out, or how efficient it is, but I've really got no complaints on my end of things. I often do get stuck behind a trash truck on its weekly round on my way to work (not on my street, another one around the corner, on a different day, and I can't really complain, being on a bicycle), and multiplying the number of truck trips through the neighborhood would probably be a noticeable, if minor, impact on my life.

ralph124c

07-08-2010, 03:39 AM

emacknight

07-08-2010, 07:34 AM

Government monopolies are usually less efficient than private businesses. This is for two reasons:
-politicians benefit from public monopolies-they get patronage jobs and campaign "contributions", from those they place in public jobs
-the main goal of politiians is to increase budgets, so having access to the public's money (taxes) guantees that costs always rise (never go down)
Take the case of school busing (to achieve racial "balance"): the city of Boston (MA) has had a busing program for over 35 years. This costs about $77 million/year, and causes air pollution and clogged streets. Because children are moved (bussed) from one end of the city to another, many parents have opted out (by sending their kids to private schools). So, the schools are now mostly minority, and there is no sense in continuing..but the busing continues (the owner of the bus line makes substantial campaign contributions/bribes to Boston politicians.)
Thus, the waste of money continues. The schools suffer, but it is important that the failed bussing continue-it is now a vested interest, and must be funded.

There is no doubt it my mind that competition between private companies will drive efficiency and innovation. As I said repeatedly, each garbage company has the best route they can, runs trucks as full as they can, invests in better trucks to speed up collection. This part at the level of the individual company is not in question.

I don't know why Coke and Pepsi keep getting mentioned because they are completely irrelevant to the discussion, each is a different product Trash collection doesn't change, it's taking my garbage. But since they seem important to people consider that each company delivers pop to the same places. It's not uncommon to see both a coke and a pepsi truck outside a gas station making deliveries.

If Coke and Pepsi ever merged, would it be more or less efficient to keep having two trucks make the deliveries to the same places? Two bottling plants? Two head offices? Each company on it's own is individually very efficient. But two similar companies have overlap.

You'll notice that Coke also makes diet Coke, Cherry Coke, Coke Zero, and Vanilla Coke. All get sent to the same stores. Coke realizes that it makes more sense to send them all in the same truck, than to have 5 separate trucks with 5 separate drivers, all leaving from the same place and going to the same place. Even if the 5 trucks are at 90% but the one truck is at 70%.

You mentioned busing children to school, and that works in this example. Imagine if instead of a horribly inefficient government run system, the city gave up and said, "from now on each parent can contract with a licensed bus company." Each morning, 5 separate buses would come to your neighbourhood, each stopping at a different house, to take kids to the same school.

Notice how that's set up. 5 kids, at 5 houses, all on a single block are going to the same school. Should you send one bus or 5? If my city gave up the bus contract to private competing companies, I would have 5 buses makings stops on my street.

ralph124c

07-08-2010, 08:02 AM

Ispolkom

07-08-2010, 08:34 AM

The city I live in (St. Paul, Minnesota) has private trash pick up. Completely private. There are at least a dozen companies hauling trash, and you get to choose among them.

The results are:

a) you can save money if you shop around and are willing to switch companies.

b) companies compete on price and service

c) trash pickup is much cheaper than in Minneapolis, where they let out the contract for each neighborhood.

d) there are garbage trucks on the street every day.

This last is a big deal if, like most St. Paulans, your trash is picked up from the alley. In St. Paul the city doesn't maintain alleys. That means that the present system results in heavy garbage trucks running down the alley you have to pay to fix. (I don't live in an alley neighborhood, so this doesn't affect me.)

There are occasional calls to go to a district system, but the argument against that is that small companies with few trucks would be shut out.

I admit that having all these different trucks and trash cans seemed weird when I moved in, and it seems inefficient, but I'm not sure how to measure that. I do know that it's cheaper for me the trash producer, especially since I don't have to worry about the alley issue.

Oddly enough, curbside recycling is a one-company monopoly.

Gangster Octopus

07-08-2010, 09:04 AM

CannyDan

07-08-2010, 09:31 AM

Even if having the five trucks work the same area is an inefficiency, how much of an inefficiency is it? How does the additional energy and cost of this compare to the overall costs of the system? What other efficiencies might the private market bring that compensate for this?

And again, you don't know that the five-truck method is less efficient, because you don't know all the details about how they work. If five trucks means that each can come back 95% full, while the government system sends them back 70% full, and the additional neighborhood drive only adds 20% of the miles driven, then using the five trucks and bringing each one back full is more efficient. Or there could be a whole bunch of unseen factors here that drove this model the way it is. Or, it could really be very inefficient. The point is, the mere observation of their behavior near one person's house doesn't give us enough information to know.

You seem to be making an ideological argument, not an actual one. Yes, we all must agree that we do not know the full and complete circumstances here, and so we can’t produce a perfectly correct microanalysis of the efficiencies, blah, blah, blah…. But it appears we know enough to draw some reasonable conclusions. Thus we can say with pretty fair assurance that having 5 or 6 trucks/companies driving the same routes must be less efficient than having some smaller number doing the same service. You in fact need to construct some rather esoteric circumstances and some pretty specific assumptions to show that the observed system could be, maybe, if all these special conditions apply, as efficient as fewer companies/trucks (or even a governmental alternative) providing the same service. This suits your philosophical bent, but doesn’t comport well with the actual circumstance here.

<snip>Take the last recession. Private industry laid off a lot of jobs. The government? Almost none. Government can pick up the slack with tax dollars. Private companies live or die based on their balance sheets. It keeps them leaner and fitter.

Are you kidding? My local government has curtailed all sorts of services and reduced personnel by more than 25% over the last two years.

This is just a variation on the old argument that state monopoly is better than the free market because it avoids all that duplication of service. Coke vs Pepsi, Ford vs GM. It seems so wasteful. But it's not. If monopoly was better than competition, you'd see government monopolies everywhere, and the places that have them would have better economies.

The comparison with retail choice is misplaced. Coke versus Pepsi is “duplication” only if the product is “something to drink”. If that were the case, then it would indeed be more efficient to serve the need for drink with a single, globally acceptable substance, say Coepsi. But in the real market this is not duplication because Coke and Pepsi strive to differentiate themselves as separate products, serving different needs—a need for Coke versus a need for Pepsi. Same for Ford versus GM. Any reasonable analysis would conclude that, if the yardstick were simply “a passenger automobile”, then a generic, interchangeable, plain vanilla blend vehicle that could be produced in FoGMrd factories without branding and independent of planned model year obsolescence would be more efficient than the present system. But keeping the separate competing companies in business requires them to produce choices for the consumer. That’s pretty much definitional of a free enterprise system.

And see in the case in point, exactly the same posturing, with the competing companies all seeking to market their services by offering “different” service options (bin size, color, special pickups, etc.). But in this case, for most people, this is a distinction without a difference. For most people, the criterion of importance is Garbage picked up? Yes/No. And for this, duplication of vehicles on the same street cannot possibly be more efficient than the alternative.

This is a form of Ceteris Paribus fallacy: The assumption of "All else being equal". Hell, the private market is using five trucks! If we just replace them with one, then all else being equal we'll be more efficient!" Except all else isn't equal. The incentives are different, the organization structures are different, the rules are different.

Uh huh. And they will stay different as long as the companies work to keep them different. Like Coke, Pepsi, Ford and GM. But soon any one of the companies will realize that it can pick up the trash next door to an existing account for free (less ‘tipping cost’ at the dump, plus some tiny increment of ‘fullness’ on a truck that probably holds 40 cubic yards, more if it’s a crusher) and offers them a package deal way below whatever they’re paying now. Then the dominoes will begin to fall.

I’ll bet that, if we revisit this in a year or two, the number of companies servicing the OP’s neighborhood will be dramatically reduced, by simple competitive attrition. Or even – oh no! – a government contract to a single operator for a defined time period, let at competitive bid and renewed by bid at the end of the time period.

gonzomax

07-08-2010, 10:33 AM

HookerChemical

07-08-2010, 11:55 AM

Let me give you an example of just one thing that you are completely ignoring, and which could make all the difference: What is the capacity factor of those trucks? What if the city trucks tend to head back to the landfill when only 70% full, but the private trucks are 90% full? How does that affect your analysis?

This can easily happen. If the city parcels out its trash collection into zones and sets up rigid barriers between them (i.e. driver A is assigned to truck B, and they are assigned to zone C, and this relationship is fixed), then what happens on a light trash day for that neighborhood? Does the truck come back half empty? What if in another area there was unusually heavy trash, and the truck fills up - with three houses left to do? What happens then? Does another truck have to drive out for just those three houses? Or are they flexible enough to re-route someone else? Will union rules allow them to do it? Will they have to pay drivers overtime?

Perhaps their solution to this is to size the trucks and zones such that they typically come back 70% full, so they can handle any overages without requiring a second trip.

Perhaps the private companies are more flexible, and have managed to engineer their processes so that their trucks are 20% more full.

Speculate much? Your argument distills down to "If we assume government is inefficient, we can prove government is inefficient, therefore government is inefficient."

Take government out. As I've said before, this is a lousy topic for arguing for government vs privatization. Assume it's a single private waste hauler. This can be due to government contracting, natural monopoly, or anything else.

Second, the truck load is why any waste hauler plans out their routes. Everybody is going to design the routes so the trucks are almost full. You're speculating that the government is inflexible and can't vary the haul much, but that's pure speculation. I can speculate that the teamsters can hold Waste Management's feet to the fire as well. My speculation is as speculative as yours. You have to compare apples to apples.

We don't even know how much of the overall vehicle miles traveled is increased by the neighborhood overlap you described. Depending on how densely packed the neighborhood is and how far away the landfill is, it could be a trivial amount in the first place.

While it is true that we don't know how much the local haul distance compares to total haul, we have to compare apples to apples to get a fair picture. The local routes could be a trivial distance/time, but we have to make some assumptions. The most fair is that long haul distances are equal. If we don't assume that, we have five companies hauling waste different distances. In that case, four are wasting time and fuel traveling to any landfill but the closest.

There are no doubt hundreds of factors. I've been involved in BPR analysis, and you can spend days just sifting through all the potential factors trying to figure out what the top 20 are in terms of impact. Perhaps the terminus side of the pickup at the landfill is horribly inefficient, with trucks idling in lines for long periods of time waiting to dump their garbage. Maybe the city has under-invested in infrastructure and their trucks are old and inefficient, or union rules have prevented them from automating certain operations.

Here's another one - maybe the private agencies have a better handle on exactly who their customers are, and can size their trucks accordingly, so that they can send smaller, more fuel efficient trucks into neighborhoods with fewer customers. Maybe they've developed technology for interim deposit of trash into larger vehicles for hauling to the distant landfill.

Again, you're making lots of speculation. We have to compare apples to apples. Perhaps the private landfill lacks the necessary infrastructure to handle all the trucks. Based on my experience, landfills regularly approach their permitted daily/weekly/annual waste acceptance limits. In fact, many private waste haul contracts specify a backup landfill if the primary site is unavailable for any reason.

You're speculating that Waste Management has a better idea of who their customers are and what their needs are. Do you think that a WM (or any other national solid waste company) has a better grasp of what the people of Podunk want than the Podunk City Council or County Board? Again, you're making wild speculation with little or no basis. You have to compare apples to apples.

Do the private companies charge by the bag? Did the city? If they do, that acts as an inventive for people to not throw out as much garbage. Maybe they've reduced the entire amount of garbage by 10% through pricing, and have lower costs of collection and landfill storage.

There could be hundreds of factors that you can't see until you dig deep into the operations of a company. Your observation is just one piece of data that would be used to determine where efficiency could be improved. Earlier, I gave you a counterexample of a situation much like that which is unquestionably more efficient - splitting up package delivery between multiple vendors.

Now, it's entirely possible that in this case having five contractors is less efficient. All I'm saying is that your observations do not come close to proving the case.

The OP is looking at a small picture and examining the potential for inefficiency due to competition. Having five different garbage trucks drive down the same street to pick up the same trash is an inefficiency that is usually resolved by limiting the waste collection to one hauler. That single hauler can be private or tied to a local government, which makes this a particularly poor subject for a public vs private debate. Still, the identified overlap is both real and inefficient when apples are compared to apples.

As you discuss, there are differences outside the scope we're looking at, but those are not relevant to the discussion. I can make equally wild speculation about how waste is collected to support an unsupportable position, but apples to apples is the only way to compare the problem as defined in the scope of the OP.

I think you said what I said. I meant they EACH travel the same distance as the one paper boy. BTW why is it easier to explain with 4 paper boys instead of 6?

My apologies if I misunderstood you. I used four paperboys because I'd rather deal with a street that's one mile and broken into distances of 0.2 than 6 paperboys and distances of 0.14285....

Beware of Doug

07-08-2010, 12:00 PM

The military, the political field, and in corporations they are all flawed by kingdom building. If you can get your department to grow, get a bigger budget and hire more employees, you become more powerful and make more money.And at the end of the day, power is even more important than money. If you can consolidate power by fucking up your organization and have even a chance of getting out clean, you do it. It's Macchiavelli plus Hobbes: a power struggle of all against all.

Sam Stone

07-08-2010, 12:12 PM

Speculate much? Your argument distills down to "If we assume government is inefficient, we can prove government is inefficient, therefore government is inefficient."

<rest of long post snipped>

You're missing my entire point. I'm not trying to claim that the businesses ARE more efficient. I'm disputing the claim that the OPs observations about the truck movements in his neighborhood are proof that they ARE more inefficient than a single city monopoly. The burden of proof is not on me, because I'm not the one making the claim. I was simply trying to point out that there are a hell of a lot of factors that go into overall efficiency. Its' not 'speculation' to say, "Here's an example of the kinds of things which could affect overall efficiency which you haven't considered."

There are a lot of business models which appear to be inefficient on the surface when looked at simplistically but which turn out to be more efficient in practice. I've heard arguments against free trade that go, "Obviously it's more efficient to build things at home rather than build them across the ocean and ship them here." And that seems intuitively obvious to some. What's more efficient - building a car in the U.S., or building one in Japan and having to ship it to the U.S.?

It's not until you dig down into the details that you discover that modern shipping is remarkably inexpensive, and that other factors like automation and tiny improvements in process resulted in the Japanese being able to make better, cheaper cars AND pay for their shipping and still be cheaper than American cars.

Hub-and-spoke airline travel is another good example. Or Fed Ex's hub system. If I send a package from Edmonton to Vancouver by Fed Ex, chances are it's going from Edmonton to Memphis, then from Memphis to Vancouver - probably five times the distance it 'needs' to go. How inefficient! Except that it's not, but you won't see the efficiency until you dig deep into the process and understand the optimizations Fed Ex has made.

Having five trash deliverers serve the same neighborhood instead of one may result in overall less efficient trash pickup - or it may not be. I wouldn't be willing to say until I looked at the entire system. That's my only point.

not_alice

07-08-2010, 12:26 PM

Also, if you increase the number of trucks, you increase the externalities. More fuel pollution; more noise pollution, more damage to roads. These costs are born by the customer, not the producer.

Not necessarllly.

Just because the poster sees X trucks does not mean that every address sees X trucks. Or maybe the trucks are smaller and so more fuel efficient. Maybe offloading at the dump or other facility is better with these trucks. Maybe A complany with small trucks needs less capital to get started, and can offer innovative services not apparent to the lay eye. Or can offer services in smaller places that wouldn't otherwise have service. Or a zillion other things.

The question is, when describing "inefficiencies", you have to state what it is you want top optimize, and persuade why that is the right measure.

In this case, the need for landfill space hasn't changed. Maybe there are more trucks. But maybe there are more jobs too, and that is something the local system wants or is OK with.

I see no de facto reason to see that #trucks is (no pun intended) the driving factor for "economic efficiency", or even that "efficiency of the neighborhood trash collection economy" is significant in the bigger scheme of things, even in the broader trash collection community.

not_alice

07-08-2010, 12:34 PM

Imagine for a second what it would look like if USPS split up the mail for our area into 5 piles based on our waste service contract. Would anyone in their right mind call that an efficient system?

Sure - I see multiple visits by USPS a day, and UPS and FedEx and other delivery trucks too, and I am in a residential area in BFE. Why not consolidate?

Instead of assuming you see inefficiencies, turn the question around - given what you see, what are the efficiencies to be gained if the service to *me* appears to be the same?

So what I am providing is a case where the free market has established a system that is 5 times more wasteful than it needs to be, without any discernible benefit to the consumer.

Maybe you don't get any benefits, but someone does. If by no benefits, you mean you pay no more than you did before, then of what concern is it to you?

As a minor comparison, but not entirely relevant, recycling is tax funded and contracted to one of the 5 companies. It is done using one truck for the entire area. It's not a real apples to oranges comparison, but I find it interesting that the two are happening at the same time.

Right! It is possible to put forth the resources - equipment, people, capital, in innovative ways to create new services, even in refuse collection!

No? Then why not pick up the recyclables and dump them in the landfill like we used to? Less trucks rumbling in your neighborhood, easier scheduling for you,. what could be more efficient than that? :)

not_alice

07-08-2010, 12:40 PM

(and it is an inefficiency-- If nothing else, those trucks are driving more miles)

We don't know that. Nor do we know the relationship between miles driven and costs.

If you do, please share your model with us.

not_alice

07-08-2010, 12:42 PM

Each of those trucks are running the best possible route they can, but it still means 5 different trucks go down my street, stopping at different houses.

With a degree primarily in optimization algorithms, this really catches my eye.

How do you know the trucks are running the "best" routes based on your observation of a specific block?

not_alice

07-08-2010, 12:47 PM

Okay, you agree that's stupid. You know what would be worse? If there were 6 separate high speed rail lines, all going between the same two places, under capacity, using identical trains, with an identical schedule.

Would you agree that would be 6 times worse than what you were describing? Well, that's what the market has created here.

Are the trucks in your area under capacity? do they have reasonable expectations of growth to fill capacity as a business model, even if it is to roll up the competition? At which point you will come here and pine for the days when competition made garbage pick up more reliable or when there wasn't one giant-ass noisy smelly truck on your small street, but a bunch of smaller cleaner ones, right?

not_alice

07-08-2010, 01:09 PM

There is no way you could call that efficient.

I could - but then I want to college to learn precisely how to build mathematical models of efficiencies and how to solve them. Bottom line is you are not presenting near enough information to create such a model, unless in the unlikely case that your street is the only street these trucks serve.

Or better yet, imagine if the truck came around to your house 5 times, repeatedly emptying the same can. Or for those that put out multiple cans, you'd expect the truck to collect all of them at one time right? You wouldn't expect the driver to get one, drive around, come back and get other, later come back for the last.

Is that happening? If so, why haven't you mentioned it until now?

In other words, imagine your outrage if you found out your city had 5 times as many trucks as they needed.

I sense your outrage, sure, but I am waiting on even the scantest evidence that there are 5x trucks as needed. You haven't even described the trucks, their resource usage (fuel, labor, maintenance, capital) or the capacity of the trucks, the amount and distribution of the trash, the nauter of the road network and the operation of the landfill, all of which are important to know to creat a model to perhaps come tot he conclusion you are stating as fact and getting outraged about.

Sorry, not buying it.

And that those trucks each had the most efficient route planned, but then divided out the houses on each street such that they drove around under capacity. And then just for fun had one truck just idling some where.

Most people would rightly be pissed, it's the sort of shit that most people refer to when they talk about government waste and inefficiency. It's the classic three guys digging a whole, with two guys standing by watching.

No, it is the classic "people no understanding complex systems" but acting as they do.

At best, you are presenting a hypothesis, not a conclusion. Where are the experiments, which are possible to do via modeling, that support your conclusion?

This isn't a complex problem, we're all innately aware of how to efficiently make pickups/deliveries. I was a paper carrier at age 12 and knew to deliver to all the houses in order, I didn't deliver alphabetically, or by colour. I went down one side, crossed and came back up the other side.

Actually, I interviewed once for a division of UPS that models their deliveries, and this was in the mid-80s when FedEx was just ascending. You can not believe how complex it is to optimize trucking routes like that.

In fact, now that I mention FedEx, their entire innovation was that it would be more efficient, even though counterintuitive, and wildly profitable, to pick up packages from across the country every day, ship every one of them to Memphis, and then immediately ship it to its destination, and promise to get it there the next morning.

No way the average Joe understands that level of innovation or modeling, even though they encounter it, even interact with it every day. It is actually a beautiful thing when it works like that, that everyone thinks it is so simple anyone can do it.
In this scenario, we'd have 5 carriers delivering the same paper, to different houses on the same street. Would you consider that efficient?

But when it comes down to it, people are *not* generally cognitively capable of thinking like that, nor are they trained to.

Just like mentioned above, if two companies merged they wouldn't keep sending both trucks.

True - but that is why you have to look at what is actually being optimized. I agree in time the situation you describe was ripe for a rollup, which means it is a game of capital and return on investment. But that doesn't mean you will ever end up with just one provider, or, absent any modeling, you can say what number of providers is optimum in any sense at all.

So if my city provided socialized trash collection, they could easily save 80%. Even the most grossly incompetent, and mismanaged city council could still pull off 50%.

If you think there is so much profit there, it would behoove you to get into the trash hauling business, huh? Bid 25% of what the City invests now, underbid everyone, and live happily ever after.

not_alice

07-08-2010, 01:21 PM

Right.

Wrong.

You bitched about using retail as ana example, hten chose another poor example as analogy.

First off, newspapers f the sort you describe do not have the pratice market as trash pickup does, in fact their market is shrinking. There are few new entrants at scale. And the delivery of papers has not historically been a business unto itself - the papers have generally been vertically integrated and handled their own delivery.

Now, as papers fell away in a market, often down to two, they would often, in a desperate bid to find efficiencies in order to focus on their core mission or reporting, would de-integrate somewhat and create joint operations in production and delivery (probably subject to anti-trust issues, but no matter, it happened).

Then you have one truck delivering both papers, but still not to a captive market. If every house in every city in the market was buying papers, then in this era, I bet you would have seen newspaper delivery companies do the actual delivery, picking up at the plant, delivering, maybe adding some services such as subscription management and bundling options. But that didn't happen.

It did happen in the internet though - you buy your information delivery system quite separately from the information itself.

Like I said, if you want to make a claim about the trash trucks in your city, instead of using analogies to other industries which upon close inspection are structured in a materially different way, why not simply create a solid model of the thinking you are actually interested in?

not_alice

07-08-2010, 01:32 PM

I'm not observing them pass. I am observing them pick up trash on my street. Do you realize that? You have yet again failed to understand the situation. I'm not suggesting it's inefficient that they drive down my street. It's inefficient that they STOP and make PICKUPS on my street. Do you realize that is what we are talking about?

Of course he does. He does it for a living, and so do I in a different context than Sam Stone. Would you arguem medicine with your doctor as vehemently as you are arguing this? Maybe you didn't know there are professionals who do this, and it isn't hocus-pocus but advanced engineering? If you didn't realize it before but do now, does that cause you to step back and reassess if you have all the information as I suggested?

As I said before, each company is individually as efficient as they can be.

Sure you said that, but presented no evidence. You still haven't said how you define efficiency or why that is the appropriate measure, let alone how you came to your conclusions.

Each hired a super smart guy like you to evaluate their process and show them the be routes. But it doesn't change the fact that there are 5 companies providing the same service. Each company is efficient, but having 5 companies is stupid.

Maybe that is the rub - each supersmart guy knows there are 4 others. And they also know proprietary information regarding costs, capacity, not only now, but in the future, but also what the broader goals of the company is. You don't seem to have any of this info, but you seem to make conclusions as though you (and all of us) do.

Sam Stone appears to be one of those "smart guys". Why not accept his word that the problem is more complex than you assert?

What if the private trucks drive over children ever day but the government only drives over 1? You were better off rejecting things that don't fit your ideology.

That's a good way to demonstrate you have a handle on the actual modeling of the process you are asserting has certain features.:rolleyes:

not_alice

07-08-2010, 01:42 PM

I'm no expert on trash collection, but it seems to me that there are efficiency gains to managing things on a larger scale, as well as better accounting for externalities such as backed up traffic behind the trucks.

Nor I, truth be told, this thread is the first I have heard of individual pickups.

But, it may be that, if in fact we can assume that in time the companies will roll up, then the city is in fact getting multiple trials about sizes and variations of services now that it can specify as desirable later when contracts come up again. Maybe some size bins are not wanted or needed. Think if it as a giant beta test of lots of options. And their is certainly efficiency in knowing the results instead of speculating on what the best services for that area would be, perhaps much greater to do this now than have a contract with all the wrong services later.

not_alice

07-08-2010, 01:46 PM

You mentioned busing children to school, and that works in this example. Imagine if instead of a horribly inefficient government run system, the city gave up and said, "from now on each parent can contract with a licensed bus company." Each morning, 5 separate buses would come to your neighbourhood, each stopping at a different house, to take kids to the same school.

Notice how that's set up. 5 kids, at 5 houses, all on a single block are going to the same school. Should you send one bus or 5? If my city gave up the bus contract to private competing companies, I would have 5 buses makings stops on my street.
No, my point is, bussing to achieve racial "equality" is a failed idea. Kids should go to schools in their neighborhoods 9they can walk)..instead of being shipped off to a school on the other side of town.

That's not a bad idea. It could lead to innovations, such as teachers on buses that have kids going a long way - help with homework or whatever. Maybe the busses could be split by grade to help with this. That would be a powerful selling point, and it other parents chose a different company, so what? That's what I want for my kid - it sucks they have to be on a bus, but if it is a rolling classroom extending their education? Some would pay for that!

not_alice

07-08-2010, 01:51 PM

Sam Stone I am not sure I nderstand the capcaity arguments you are making. resumably the amount of trash is fixed regardless of privae versus public. X amount of trash requires X amount of trucks which requires X amount of trips to the dump. Maybe I am not understanding something.

Is your trash exactly the same every week? Are your neighbors? Are you sure?

What he was trying to say was that a truck can't have capacity too close to the average trash on the route, because variations on any given week might mean it can't complete the route or needs to double back (over flow).

On the other hand, if you have a truck that is way larger than average, you never overflow, but you have higher costs per week jsut to operate a bigger truck, and that is wasted.

So you really gotta work at that to get it right, and since trucks are large investments, you have to predict yoru needs in advance, knowing people move, seasons change, new houses get built, you gain customers and lose customers.

Plus, your sales guys won't be happy if you are at or near 100% capacity because then they can't sign you up!

Every business has these kinds of tensions internally, regardless of competition, and that is what Sam Stone was getting at.

not_alice

07-08-2010, 02:03 PM

You seem to be making an ideological argument, not an actual one. Yes, we all must agree that we do not know the full and complete circumstances here, and so we can’t produce a perfectly correct microanalysis of the efficiencies, blah, blah, blah…. But it appears we know enough to draw some reasonable conclusions. Thus we can say with pretty fair assurance that having 5 or 6 trucks/companies driving the same routes must be less efficient than having some smaller number doing the same service. You in fact need to construct some rather esoteric circumstances and some pretty specific assumptions to show that the observed system could be, maybe, if all these special conditions apply, as efficient as fewer companies/trucks (or even a governmental alternative) providing the same service. This suits your philosophical bent, but doesn’t comport well with the actual circumstance here.

Spoken like someone who has never modeled even a modestly complex system.

Go ahead try it. :)

I will agree with Sam Stone - given what we know here, we can't say anything with "fair assurance" if we want to be taken seriously as having considered the alternatives.

The comparison with retail choice is misplaced. Coke versus Pepsi is “duplication” only if the product is “something to drink”. If that were the case, then it would indeed be more efficient to serve the need for drink with a single, globally acceptable substance, say Coepsi. But in the real market this is not duplication because Coke and Pepsi strive to differentiate themselves as separate products, serving different needs—a need for Coke versus a need for Pepsi.

OP said this happens with the trash service too. Just ans many scoff at a difference between Coke and Pepsi, he scoffed at the difference in trash services. That's OK, some people will just choose one at random. I prefer Pepsi, but buy what is on sale. Some people never change choice. All taken into account by marketing and service models. No problem.

And see in the case in point, exactly the same posturing, with the competing companies all seeking to market their services by offering “different” service options (bin size, color, special pickups, etc.). But in this case, for most people, this is a distinction without a difference. For most people, the criterion of importance is Garbage picked up? Yes/No. And for this, duplication of vehicles on the same street cannot possibly be more efficient than the alternative.

Ah so you have some marketing studies that show the value of the different options to a vendor? And that these choices are carved in stone, and people are not subject to switching? Because that would make it pretty unique. People switch phone companies all the time, tv companies, ISPs, in the end to most they are pretty much undifferentiated except for some branding campaigns, just like coke, pepsi, or trash pickup.

BTW, while we are on the subject of truck efficiency, does the scale of this compare at all to the scale of all the delivery trucks around town to stores large and small? I still don't get what is being optimized and why it matters in this case.

I’ll bet that, if we revisit this in a year or two, the number of companies servicing the OP’s neighborhood will be dramatically reduced, by simple competitive attrition. Or even – oh no! – a government contract to a single operator for a defined time period, let at competitive bid and renewed by bid at the end of the time period.

And what will have been optimized will not be truck costs or externalities, but market knowledge and use of capital. A new entrant may still try to come in, with smaller trucks like before, but the rolled up company will have the initial market share and all the proprietary info about what services worked and didn't. That is the value of going through this period - it is an efficient use of capital, and marketing efforts, regardless of whether truck miles are minimized during this short period or not.

emacknight

07-08-2010, 03:14 PM

Of course he does. He does it for a living, and so do I in a different context than Sam Stone. Would you arguem medicine with your doctor as vehemently as you are arguing this? Maybe you didn't know there are professionals who do this, and it isn't hocus-pocus but advanced engineering? If you didn't realize it before but do now, does that cause you to step back and reassess if you have all the information as I suggested?

I studied optimization as part of my mechanical engineering degree, and I've worked process optimization.

So, uh, now what? Should we pull out our cocks? Compare our alma maters? Rank our GPAs?

Sam Stone appears to be one of those "smart guys". Why not accept his word that the problem is more complex than you assert?

Unfortunately, Sam Stone is entirely blinded my his ideology, as he summed up in post #20
So basically, I reject the entire premise of the OP based on that example.

Care to put your ideology aside and try again?

In all your experience, and all your wisdom, would you ever recommend to a garbage company that they should have multiple trucks picking up trash from a single block of houses?

How many ridiculous and extraneous conditions do you need to make to justify your statement?

emacknight

07-08-2010, 03:43 PM

With a degree primarily in optimization algorithms, this really catches my eye.

How do you know the trucks are running the "best" routes based on your observation of a specific block?

I don't, I was giving them each the benefit of the doubt, I could have made a ridiculous assumption like Sam Stone that each company sends trucks to the dump when 70% full. Then repeate it several times. Instead I simply assumed for sake of argument that that they wouldn't intentionally go out of their way to waste time/money/resources.

But then again, each truck is a giant rolling advertisement, maybe they save on ad costs by just driving the trucks around.

Sure - I see multiple visits by USPS a day, and UPS and FedEx and other delivery trucks too, and I am in a residential area in BFE. Why not consolidate?

It's true, there are often solutions that seem counter intuitive, such as doing deeper into the cravas. Sending everything through Memphis, routing all air traffic through Toronto.

But tell me this: if a Fedex truck leaves from the sorting hub with two packages on route to my house, under what circumstances would you recommend that he deliver one, drive away, then come back later and deliver the other?

This is very close to what is happening on my block, so let's see if you know the answer to that question.

Having thought about this issue since moving in last year, I think this situation represents one of those oddly counter intuitive problems. We all like to think of private industry and being more efficient than government. We'd like to think that competition will bring about cost savings, innovations, and efficiencies. This example seems counter to that, we have 5 companies overlapping and providing an identical service--there is a cost associated to that.

jtgain

07-08-2010, 04:05 PM

emacknight

07-08-2010, 04:14 PM

Last week, I ordered Papa John's pizza and the neighbor ordered Domino's. Can you believe the inefficiency? Two different delivery drivers sent to the same street! Why can't the government take over the pizza delivery business so that one driver could have delivered both of our pizzas?

You didn't happen to notice that they were different pizzas did you? That's sort of central to the issue here. Unless you think that trash collection varies by individual taste.

You didn't happen to also realize that quite of few cities have government control over trash collection did you? Does your neighbourhood have private or government trash collection?

Perhaps you're confused because everyone on your street orders the same pizza at the same time every week.

As I said before, if you and your neighbour BOTH ordered from Dominos at the same time, would you expect that the delivery driver would take both pizzas at once? Is that how you would do it? Or do you think it would be better for Dominos to send him out, make a delivery, then come back to get the other pizza, then drop that one off?

The question I asked about Fedex was if the driver had two pizzas for you, do you think he should drop them both off while he's at your house?

Sam Stone

07-08-2010, 04:49 PM

emacknight

07-08-2010, 05:05 PM

You don't understand why they might leave 70% full? Let me clue you in then.

Oh, so then why did you say government would be at 70% but private would be at 90%?

People don't put out the same amount of trash in a given week. If a truck has a fixed route, then one of two things is going to happen: either the trash will be lighter than normal, in which case the truck will be returning partially full. Or, the trash may be heavier than normal, in which case the truck will not be able to pick it all up. That means a second truck would have to be dispatched, and it would return mostly empty.

A very common process optimization step for this kind of problem is to figure out how to maximize the capacity utilization for the trucks. But that's not an easy problem. There are two ways to do it. One is to get a better handle on trash variability. The other is to use dynamic routing. With dynamic routing, trucks keep going until they are full, then another truck pulls in and continues the route. This sounds easy, but it is not. For one thing, what is the second truck doing while the first fills up? Just sitting idle? What happens when a truck is half full but overlaps the route of another?

This is just a tiny example. Routing problems like this are not easy. They can be made damn near impossible if you are hamstrung by union rules, antiquated information systems, trucks without radios and GPS position reporting, and a bureaucratic culture that refuses to consider process improvements that require big infrastructure upgrades.

One thing to note is that they do have a pretty good idea since we sign up for specific volume containers, giving them a sense of maximum load. I pay for the volume whether I use it or not.

but that's not the point

All things being equal: would the problems you describe change when you have 5 companies serving an area vs 1 company serving an area?

It sounds like you're saying, "it's complicated so only private companies can do it because they are high tech, government will screw up because it sucks."

Forget government for a moment and compare 1 large company serving an area with 5 small companies serving the same area.

Sam Stone

07-08-2010, 05:09 PM

Now let's consider how the private industry could deal with this:

1. They could have a 'tag a bag' system where you buy garbage tags per bag, then clip them onto the bag to show you've paid. The advantage is that the truck can scan the tag and record how much garbage it picked up from you. This data can then be collected and analyzed to figure out trash patterns per person. They can then send trucks out on specific routes that optimize the fill capacity of the truck.

2. You can go one better, and request pickup on a web site by entering the number of bags you need picked up. Then they can schedule the right sized truck for your neighborhood because they know exactly how much trash is waiting for them.

3. If they have a network of trucks picking up from neighborhoods piecemeal, it becomes easier for one truck to request another. Head office can build systems that track the number of bags loaded onto each truck, and do predictive analysis to figure out when each truck is likely to fill. Then they can dynamically reschedule the nearest, emptiest truck to sweep through and pick up the trash the regularly scheduled truck couldn't take.

4. They have the option of offering a homeowner a discount for holding their trash for a week if they don't have a truck available to pick it up.

5. Because the deal with clients directly, clients notify them to not pick up their trash when they are on vacation, which helps optimize routing.

6. New startups generally have new computer hardware, the latest scanning hardware and newer, more fuel efficient vehicles, etc. They're better set up to be able to build optimizations, track data, etc.

7. New startups aren't operating under layers of old bureaucracy, union rules, and political considerations that may hamstring a government operation. For example, a government agency may not be able to make optimizations that reduce the number of drivers needed, or use automation to eliminate a second trashman on the truck, because it's near impossible to fire them anyway so there's no point.

Even this level if thinking is trivial compared to the work you'd really do if you were trying to re-engineer a trash hauling process. There could be inefficiencies baked into the entire process from dispatching to work scheduling to maintenance.

This really isn't ideological, you know. It was really my experience with this kind of analysis that made me go, 'wha?' when you guys were claiming that it was obvious that the private trash system was less efficient. It may or may not be, but you really have no clue from just your own observations. At best, you have a data point worth investigating.

CannyDan

07-08-2010, 05:13 PM

Spoken like someone who has never modeled even a modestly complex system.

Go ahead try it. :)

OK, I won't take offense, since you put a smiley in there.

I will though note that you have absolutely zero idea about my background, my schooling, or my experience with "even modestly complex system[s]". As emacknight said above, do you really want to measure dicks? I don't think this is the forum.

On point, and more so since you seem to like the school bus analogy, I'll reveal the fact that I owned and operated a school bus fleet for a number of years. We serviced all grades preK-12 for more than two dozen schools, morning and evening plus buses for sports and other off campus activities. Oh, and handicapped students, too. We used several different sizes and types of vehicles, and had operations of one kind or another underway pretty much 24/7/365. Plus we maintained our own fleet, and trained all our own drivers. This being a private fleet with a profit motive, the intricacies and the efficiency tradeoffs of routing are more than familiar to me. I lived and breathed routing efficiencies morning, noon and night for almost two decades. So please, cease with the disparaging comments about my familiarity with real world matters of pick-up and delivery.

I will agree with Sam Stone - given what we know here, we can't say anything with "fair assurance" if we want to be taken seriously as having considered the alternatives.<snip>

OK, now we're quibbling. emack and I both seem to agree that we do not know every single intricacy of each of those companies' operations. But we also agree, with what we maintain is "fair assurance", that five companies operating over identical geography and providing identical (beyond cosmetic differences) services cannot be the most efficient method.

So please stop denigrating what we do know merely because we cannot know everything. You still have to stretch credulity rather far to envision some peculiar set of circumstances under which the situation as emack has observed it could indeed actually be the optimum of efficiency.

not_alice

07-08-2010, 05:26 PM

I studied optimization as part of my mechanical engineering degree, and I've worked process optimization.

So, uh, now what? Should we pull out our cocks? Compare our alma maters? Rank our GPAs?

No, you should relate your conclusion to the model which covers the situation. If you say you have already, then that tells us what we need to know about your training I suppose.

Unfortunately, Sam Stone is entirely blinded my his ideology, as he summed up in post #20

Stop poisoning the well. I kwop we are talking trash, but stilll :)

You mean the"ideology" where he says your model /data combo is entirely insufficient to draw the conclusions you draw, while also consistently stating that it may be possible to to present such a combo to support your conclusion, and where he takes no position on whether or not you can do it, only that you haven't yet done it?

In all your experience, and all your wisdom, would you ever recommend to a garbage company that they should have multiple trucks picking up trash from a single block of houses?

Sure, it could work out that way for the reasons already described and many more. Just like City busses run on the same streets, and sometimes they pass each other. sometimes you might see two separate UPS delivery trucks in the same neighborhood or even on the same street. For the same reason you might see two Starbucks across the street from each other, as we do even in our small town. It all depends on what you are modeling and what you are trying to optimize given the resources you identify and how they are constrained.

You act like parallel queues, of which this appears to be a variation, are unheard of. Think about that the next time you go to a supermarket, a gas station, a bank. Are they all crazy to have their queues set up the way they do? Are the inefficient simply because they are parallel?

Me, I'd rather observe the data first, then see what model might be appropriate, and then see how it comes out. But you haven't presented us with anything other than "there are a bunch of garbage trucks on my street each week, therefore it is inefficient.". We are simply saying there is a lot missing before you can say "therefore". Just like your algebra teacher did at one time probably when you first covered proofs.

No need to take this personally, simply fill in the missing blanks, and you might turn out to be correct!

Sam Stone

07-08-2010, 05:36 PM

Oh, so then why did you say government would be at 70% but private would be at 90%?

I did NOT say that. I said that you hadn't made the case that five trucks WERE more efficient than one. To show why you hadn't proved it, I said that IF five trucks could be filled to 90% and the single truck to 70%, five trucks COULD be more efficient.

I wouldn't dare to make a claim one way or the other about which one actually IS more efficient, because unlike you I'm not going to make a wild-assed guess based on one piece of anecdotal evidence, based on an observation of a tiny part of a complex system. That would be you doing that. I make no claims of efficiency whatsoever.

One thing to note is that they do have a pretty good idea since we sign up for specific volume containers, giving them a sense of maximum load. I pay for the volume whether I use it or not.

And that's one of the potential optimizations I just pointed out in the message I was writing when you posted yours.

but that's not the point

That's EXACTLY the point. There are potential efficiencies elsewhere which may override the supposed inefficiency of five trucks serving the same neighborhood. And even that may not actually be inefficient. It may just look that way from your window.

All things being equal: would the problems you describe change when you have 5 companies serving an area vs 1 company serving an area?

All things are not equal. That's my entire point. You have no idea what drives these decisions. For all you know, your neighborhood is an outlier. Or that you're just seeing an artifact of a much more complex routing system than you can imagine.

But rather than try to analyze this, there's a very good proxy for determining if the private trash collection is more efficient - is the overall cost for your trash collection higher or lower?

It sounds like you're saying, "it's complicated so only private companies can do it because they are high tech, government will screw up because it sucks."

I never said that either. I do think that there are aspects to government operation that can make it hard to re-engineer, but that has more to do with the fact that these operations have often been around a long time, have not been updated well, have a lot of entrenched special interests, etc. The same thing can happen in private industry, and it's one of the reasons why big companies often wind up getting their hats handed to them by leaner, newer companies with more drive, ambition, and fewer legacy issues to deal with.

Forget government for a moment and compare 1 large company serving an area with 5 small companies serving the same area.

I would not discount the possibility that the inherent competition between five companies would result in them striving for efficiencies that wind up making the overall system more efficient. Or if it truly is not, then what you'll probably see is adaptation, such as the weakest ones dropping out of the market, or the companies signing agreements with each other to share information or workload data so that a truck from one company could pick up the slack from another to improve both company's capacity utilization, or something like that.

What I am comfortable with is that these companies will not operate at a loss forever. That drives them to be efficient or to get out of the market. They don't have the option of just raising their prices when their competitors don't.

I will say one thing - often when governments outsource to a small group of companies, the result does not improve efficiency because there is still no real market - a government-sponsored monopoly can easily turn into a situation where a company can raise prices without fear of competition, have its risks offloaded onto the government, etc. So it's not always the case that privatizing government services is a good thing. The critical piece to reform of this type is that the outsourcing is done competitively and the new system operates within a competitive market. That's often not true.

emacknight

07-08-2010, 05:36 PM

Now let's consider how the private industry could deal with this:

That wasn't what I asked.

I said forget government, compare 1 large company vs 5 small companies. How do those issues change?

Are all 5 small companies facing the same issues? Does the large company face the same issues as the small ones?

How do the issues you described hurt the large company more or less than the 5 small companies?

That's what this is about. Right now 5 small* companies are picking up trash within the same area. Where I consider trash collection a commodity, it's the same from all companies, either picked up or not. How does that compare to one large company picking up trash within the same area?

*Hard to call Waste Management or Allied Waste a small company.

not_alice

07-08-2010, 05:38 PM

I don't, I was giving them each the benefit of the doubt, I could have made a ridiculous assumption like Sam Stone that each company sends trucks to the dump when 70% full. Then repeate it several times. Instead I simply assumed for sake of argument that that they wouldn't intentionally go out of their way to waste time/money/resources.

Doesn't sound like much benefit of the doubt when you immediately say it is not as efficient as possible withtout everdefining the parameters of the model, let alone what "efficient" mans in the context.

We are not in your head. You might very well have a really good sense of something, but you are not expressing it to the readers here clearly.

But then again, each truck is a giant rolling advertisement, maybe they save on ad costs by just driving the trucks around.

Bingo! That's one point I was trying to make - maybe what the market optimizes is the use of capital, and one way it does that is via marketing. Perhaps effective marketing is far more important to the goals of the company - making money for the investor - then minimizing truck miles (assuming they are not already minimized).

But tell me this: if a Fedex truck leaves from the sorting hub with two packages on route to my house, under what circumstances would you recommend that he deliver one, drive away, then come back later and deliver the other?

Easy. The first package, and all the others on the first run, paid for morning delivery. The 2nd ones paid for a later delivery, but a bit less money.

Alternatively (and I am sure I can think of alternates all day but what's the point) either there is a big rush of packages that day that overrode regular capacity to deliver, or regular capacity was diminished via breakdowns, driver absences, errors, etc.

That's life in a complex system. Sometimes you don't perceive the longer term maximum and only see what feels like a inefficiency. sometimes if you are striving to run very close to capacity all the time, as FedEx surely is, a temporary breakdown will cause a temporary glitch. You just deal with it and move on.

Same thing happens at airports with bad weather delays. Planes end up in the wrong place at the wrong time, there is not enough excess capacity to simply use a different plane, so people get stuck until it all clears up.

Doesn't mean the system is globally inefficient just because any of that happens.

This is very close to what is happening on my block, so let's see if you know the answer to that question.

I have never been on your block, but it doesn't sound like anything you said so far. I thought we were talking about multiple trucks from 5 companies doing pickups, not 2 trucks from one company doing deliveries.

Having thought about this issue since moving in last year, I think this situation represents one of those oddly counter intuitive problems. We all like to think of private industry and being more efficient than government. We'd like to think that competition will bring about cost savings, innovations, and efficiencies. This example seems counter to that, we have 5 companies overlapping and providing an identical service--there is a cost associated to that.

Great! you have been thinking about this at least 7 months. Can you share the model you created? After all, you seem quick to accuse others of ideology - lets not talk public or private, lets just look at detailed models.

not_alice

07-08-2010, 05:45 PM

You didn't happen to notice that they were different pizzas did you? That's sort of central to the issue here. Unless you think that trash collection varies by individual taste.

You yourself described a bewildering menu of services from teh trash company. Whatcha talkin' bout now Willis? :)

As I said before, if you and your neighbour BOTH ordered from Dominos at the same time, would you expect that the delivery driver would take both pizzas at once?

No of course not. Maybe the pizza come out at different times. I don't want mine to get cold and soggy just because of the jerk next door, do you? Maybe there is such demand that the drivers are huslting and there is more than one in my neighborhood. They get back to the store, grab a stack, and go. That the very next stack has a pie next door to mine from the previous stack, probably no one knows or cares.

Is that how you would do it? Or do you think it would be better for Dominos to send him out, make a delivery, then come back to get the other pizza, then drop that one off?

He is working for tips. He will figure out what is best - the answer might not be the same each time.

The question I asked about Fedex was if the driver had two pizzas for you, do you think he should drop them both off while he's at your house?

Certainly the truck packing algorithms will strive for that, but errors happen sometimes. Or, like the pizza, if there are going to be 2 trucks there n the neighborhood, then that gives the packers some leeway as to how to make it fit, they could put two separate shipments in separate trucks to optimize the bigger picture somehow. Nothing wrong with that. Nothing at all.

not_alice

07-08-2010, 05:54 PM

Oh, so then why did you say government would be at 70% but private would be at 90%?

More flexibility in decisions means they can buy equipment/capacity more closely matched to demand. Maybe smaller trucks in your neighborhood and bigger ones downtown instead of medium or large everywhere. Its the same as how you choose what size glass to drink out of - depends on how thirsty you are, how much ice, etc. Or else you suffer from glasses that are too small (more refills) or two large hard to hold, mostly empty all the time).

One thing to note is that they do have a pretty good idea since we sign up for specific volume containers, giving them a sense of maximum load. I pay for the volume whether I use it or not.

But they don;t have trucks to match your paid for volume exactly, since no one will always have full volume, the trucks will always be partly empty if they did. Maybe a lot empty, in which case the trucks are simply too big and capacity is wasted where it could be used across town somewhere maybe. A smaller truck that matches predicted demand, as opposed to paid for volume, could run 90% full all the time with the same trash put out. The day after Christmas, when everyone has a full barrel, then you have to hustle, but the rest of the year it is worth the savings.

If you have unexpected full loads, then another small truck nearby can take up the slack.

All things being equal: would the problems you describe change when you have 5 companies serving an area vs 1 company serving an area?

For me they would because 1 company would be unlikely to support experiments in the variations of services that you described, at least not simultaneously, and probably never.

It sounds like you're saying, "it's complicated so only private companies can do it because they are high tech, government will screw up because it sucks."

Maybe you are the one with ideology on the mind. He is only describing models, and quite well I might add.

not_alice

07-08-2010, 06:00 PM

OK, I won't take offense, since you put a smiley in there.

I will though note that you have absolutely zero idea about my background, my schooling, or my experience with "even modestly complex system[s]". As emacknight said above, do you really want to measure dicks? I don't think this is the forum.

Wjhy you guys keep talking about dicks instead of simply describing a model, maybe even one that leads eventually to the conclusion of the OP. We are on the 3rd page already, isn't it time for the big reveal? :)

On point, and more so since you seem to like the school bus analogy, I'll reveal the fact that I owned and operated a school bus fleet for a number of years. We serviced all grades preK-12 for more than two dozen schools, morning and evening plus buses for sports and other off campus activities. Oh, and handicapped students, too. We used several different sizes and types of vehicles, and had operations of one kind or another underway pretty much 24/7/365. Plus we maintained our own fleet, and trained all our own drivers. This being a private fleet with a profit motive, the intricacies and the efficiency tradeoffs of routing are more than familiar to me. I lived and breathed routing efficiencies morning, noon and night for almost two decades. So please, cease with the disparaging comments about my familiarity with real world matters of pick-up and delivery.

What was the underlying principle of the modeling? What was the definition of efficiency?

OK, now we're quibbling. emack and I both seem to agree that we do not know every single intricacy of each of those companies' operations. But we also agree, with what we maintain is "fair assurance", that five companies operating over identical geography and providing identical (beyond cosmetic differences) services cannot be the most efficient method.

Yeah but you are jut talking to hear yourself talk because you haven't described *any* of the the terms you are relying on, including what "efficient" or "fair assurance" means to you. Basically you are dismissing everything everyone says because of your intuition. Pardon me while I don't pay much attention.

So please stop denigrating what we do know merely because we cannot know everything. You still have to stretch credulity rather far to envision some peculiar set of circumstances under which the situation as emack has observed it could indeed actually be the optimum of efficiency.

LOL talk like that would not have gotten you far in a place where you actually need to justify conclusions.

not_alice

07-08-2010, 06:05 PM

Where I consider trash collection a commodity, it's the same from all companies, either picked up or not.

The pricing and service menu you described indicates the companies themselves do not see it as a commodity, particularly as regards their investors, who they are ultimately responsible too, no one else. In the business world, "commodity" does not mean what you think it means.

Sam Stone

07-08-2010, 06:07 PM

Or we could break this down to the main assertion - that it's always better to have one big organization delivering a commodity to a region than to have five smaller companies delivering the same number of commodities.

Do you really believe that's true? Would you rather have only one big grocery store that everyone shops at, rather than five smaller stores? Would you rather have one big parcel delivery company? Do you think these monopolies would remain efficient without competition? Would they go out of their way to make better products, treat customers better, or constantly re-engineer their processes to weed out the fat if they were the only game in town?

The main argument for bigness is that it can bring economies of scale. But economies of scale are specific to goods that have declining marginal costs and large fixed costs. Service delivery is not like that. There's nothing inherently more expensive about having five companies do the job of one then the cost of the job does not decline due to economies of scale.

So we're left with the perceived inefficiencies of five trucks leapfrogging each other to pick up trash instead of having one truck come through and do it. Your claim is that this is intuitively and obviously inefficient. But you haven't quantified that at all, and it sounds like you haven't really thought through the math of it.

Have a look at this cite (http://portal.acm.org/citation.cfm?id=1052730) and it's references to get a general idea of how complex routing optimization can be. If a city sends one truck into each neighborhood, this could actually be very inefficient if it results in more overall zones, less capacity utilization per truck, more miles driven per truck, etc. It's not intuitively obvious to me that five trucks operating in a mesh-type arrangement is inherently less efficient than those same five trucks each taking a different zone. I'd have to see the specific details of the route.

Even if the actual curbside pickup was less efficient, you still don't know how that effects the overall efficiency of system, because you don't know what percentage of total costs are affected by this perceived inefficiency. It could be that the old system was so inefficent in other ways that five companies could come in, split the market up between them, and still make a profit at current prices because of efficiency gains elsewhere.

In short, we don't really know much of anything outside of one piece of anecdotal evidence, and drawing sweeping conclusions from that is folly.

emacknight

07-08-2010, 06:15 PM

I take it neither of you are familiar with The Black Swan by Nassim Nicholas Taleb. You both work very hard to interject the most extreme possible circumstance.

You think my street is an outlier? What exactly do you think happens on all the other streets?
The Fedex driver is suddenly having a busy day? (btw the price structure was the correct answer)
The pizza came out of the oven at a different time?
Weather delay at an airport?

You both are trying very hard to add an insane amount of complexity to an otherwise normal scenario.

Trash collection isn't new, and I am NOT trying to reinvent it. And as I said, and you both agreed, I had never seen a situation like this before. All my life I have lived with city collection, and simply assumed that was standard.

Then I moved and found it was private. Which to me presented an interesting data point in the comparison between public and private services. We are all very familiar with water, gas, power being a public utility, and more recently becoming private.

So here is a case study were trash collection is privatized, and these are my observations of that system. It is not my final project or a thesis, it's a fucking internet message board.

It's also not nearly as complex as the two of you are trying to make it. Right now 5 companies provide garbage pick up. Not just to my street, but to the entire city.

And so it's funny to see the lengths you guys will go to to try and avoid the obvious answer.

If my city decided that they were going to take control of garbage collection, by issuing a contract to a single company--creating a monopoly--think about the bids each of the 5 companies would submit. Since you both know so much about this, imagine you've been contracted to help with a bid.

Do you think any of them would suggest a system in which 5 trucks overlap each other picking up garbage essentially at random?

Like I said, my provider is different from either of my neighbours, so they get a different truck than I do. Do you think a company bidding on that contract would stick with that model? Or are they more likely to just have one truck go down my street picking up trash at each home?

emacknight

07-08-2010, 06:20 PM

Since you've both used the word anecdote:

What do you think actually happens in my city? What part do you think I'm making up?

Do you know of any other city with private garbage collection?

Sam Stone

07-08-2010, 06:44 PM

Lots of cities have private garbage collection.

Did the cost of your garbage collection go up or down? Did the service get better or worse? Did the city save money?

emacknight

07-08-2010, 06:58 PM

Oh, and since not_alice asked for my model: it is the same as every city that has a single collection company be it government or monopoly. Areas get a trash day, and on that day a truck goes up and down the streets picking up trash sequentially. The size of trucks, and areas they drive, being based on volume/weight. Combined with all the nifty tricks and gadgets that go along with trash pickup.

The current model involves what looks like an ordinary collection system: picture 10 houses on a street, in an otherwise normal subdivision, in an otherwise normal city.

My system has a single truck go up the street, collecting trash one house after another. Eventually it turns around and picks up trash on the other side.

The current system in my neighbourhood looks quite similar. Except that the houses are randomly* assigned to 1 of 5 companies. Each company goes up and down the streets picking up trash sequentially from their assigned group.

If you were working for one of those companies, would you suggest to the boss, "hey, let's take our clients, assigned them randomly to 1 of 5 groups, and set up our pickups based on that."

*I use the term random because each company doesn't have control over their client list, unless they choose to reject clients they deem unprofitable. I wasn't aware of this happening.

not_alice

07-08-2010, 07:03 PM

I take it neither of you are familiar with The Black Swan by Nassim Nicholas Taleb. You both work very hard to interject the most extreme possible circumstance.

I will look it up, but what will I find? That seems an unusual title for a treastise on process optimization! And I highly doubt any such treatise will disagree with me or Sam_Stone on this.

You think my street is an outlier? What exactly do you think happens on all the other streets?

We don't know. That is the point. We don't have any data, and you aint sharing :)

We can only tell the about the types of data it takes to model this properly, and we have both just scratched the surface. No way I could make a report to a CEO or investors on a model just on what's been addressed here. Not in a constrained market with 4 or more competitors anyway :)

The Fedex driver is suddenly having a busy day? (btw the price structure was the correct answer)

It was one of several correct answers I gave you, yes.

The pizza came out of the oven at a different time?

Maybe you should go to a really busy pizza shop that delivers. See if pies come out the same order that calls come in...

Weather delay at an airport?
Fly much?

You both are trying very hard to add an insane amount of complexity to an otherwise normal scenario.

Not really. It only seems complex to you. We do this stuff every day (if I may speak for Sam Stone for a moment), probably could do it half asleep. Its nothing really.

Trash collection isn't new, and I am NOT trying to reinvent it.

Clearly. But the people responsible in your town sure are.

Baseball wasn't new either when Billy Beane decided that maybe the traditional statistics and strategies in baseball were not really as effective as was commonly believed. He undertook some statistical analyses, and applied them towards building effective and inexpensive competitive teams.

How? By looking beyond what "everybody knows" to see what really is there in the data.

And as I said, and you both agreed, I had never seen a situation like this before.

I have never seen a town with such delivery. As an abstract system, it is not far removed from much of my experience. Commercial trash pickup is probably pretty much the way you describe, especially in suburbs where access is good, which probably lends credence to the idea that residential might work well using that approach. I doubt the idea just dropped from the sky. It could have been something as simple as a City Council guy expressing an idle thought with no real preparation - "Why not do it in the residential areas the way we do it out by the malls?".

Then I moved and found it was private. Which to me presented an interesting data point in the comparison between public and private services. We are all very familiar with water, gas, power being a public utility, and more recently becoming private.

Those are structurally different. You are connected to a fixed network that acts as a conduit for the good or service. Where the good or service enters the conduit doesn't really matter. But you can't really choose another conduit except in the rarest of cases (maybe you can install sufficient solar energy and drop off the grid, or find a good well or something like that). Trash works like none of these, other than you said you can opt out and haul your own trash - but I bet you can't let it pile up either!

So here is a case study were trash collection is privatized, and these are my observations of that system. It is not my final project or a thesis, it's a fucking internet message board.

Have you learned anything? Maybe about not taking about the size of your dick at least? We are all here to fight ignorance after all.

It's also not nearly as complex as the two of you are trying to make it. Right now 5 companies provide garbage pick up. Not just to my street, but to the entire city.

I don't think anyone here has described anything complex at all. Not conceptually anyway. If you had to actually *run* the model, well....

And so it's funny to see the lengths you guys will go to to try and avoid the obvious answer.

If my city decided that they were going to take control of garbage collection, by issuing a contract to a single company--creating a monopoly--think about the bids each of the 5 companies would submit. Since you both know so much about this, imagine you've been contracted to help with a bid.

Now you are getting into an entirely different area, which is auction economics. And the question there should be, how should the city structure the auction in order to maximize the revenue (or whatever) to the City? And that is not going to be as straightforward as you might thing. Witness the successes and horrible failures surrounding the auctioning of wireless spectrum around the world.

Were I to advise the City, I'd counsel them to get it right the first time. Were I counseling the companies, I'd advise them on if the contract is even worth bidding on as far as their investors go, and if so, then what an appropriate strategy for bidding would be based on the structure of the auction.

Do you think any of them would suggest a system in which 5 trucks overlap each other picking up garbage essentially at random?

Oh hell yeah!

Why do you think the US has as many wireless companies as they do, and they don't have their own territories? Because it keeps them on their toes for one - good for consumers! Because it maximizes the revenue to the auctioneer when there is more than one winner.

In fact, OTTOMH, I would consider advising the City, depending on its size, to break down the city into districts of roughly equal business demand, and auction each one off individually, quite possibly simultaneously. Since it is illegal for the companies to collude, and their revenues will be maximized by having more scale, they likely will all bid on all the territories. Nice, huh?

Like I said, my provider is different from either of my neighbours, so they get a different truck than I do. Do you think a company bidding on that contract would stick with that model? Or are they more likely to just have one truck go down my street picking up trash at each home?

Like I keep saying, what are you trying to maximize? They might. Maybe more nimble trucks are more efficient, who knows, we haven't mentioned that yet. In my neighborhood, the trucks don't use labor to pick up the can, there is a remote arm. Maybe it is way cheaper to have 5 trucks with 5 guys, than 1 truck with 3 guys as used to be more common. Less spilling, less sweeping, etc. And maybe the trucks are versatile and can be used for trash one day and recycling the next. I think yard waste pickup is not common everywhere, so there is room for growth once you are in....

Think outside the trash barrel :)

not_alice

07-08-2010, 07:12 PM

My system has a single truck go up the street, collecting trash one house after another. Eventually it turns around and picks up trash on the other side.

So it is a traveling salesman (http://en.wikipedia.org/wiki/Travelling_salesman_problem) problem you are talking about? Notice what there very first sentence n that link says. If you are able to solve that problem, you my friend are going to be very rich and famous indeed momentarily.

If you were working for one of those companies, would you suggest to the boss, "hey, let's take our clients, assigned them randomly to 1 of 5 groups, and set up our pickups based on that."

If a model suggested that would improve efficiency, and match with the overall business model, not only would I, but I would expect a very nice bonus out of the increase to the bottom line.

Here is yet another possible reason, which you can't possibly have observed: The trucks you use to implement that break down way les frequently, and any extra cost on the road (if there is any at all) is more than made up for in reliability.

*I use the term random because each company doesn't have control over their client list, unless they choose to reject clients they deem unprofitable. I wasn't aware of this happening.

I am sure their marketing groups observe clusters quite carefully. As noted above, perhaps discounts are offered to neighbors of existing customers. I highly doubt that the current distribution of customers is random in any sense of the word. Do you have any statistical evidence of this new statistical claim?

IdahoMauleMan

07-08-2010, 07:18 PM

In short, we don't really know much of anything outside of one piece of anecdotal evidence, and drawing sweeping conclusions from that is folly.

I'm enjoying this thread immensely.

But let's carry this one step further....we've been discussing trash collection, but it could just as easily apply to airplane slots at an airport, converting corn acreage to ethanol, subsidizing mortgages, or pricing and rationing health care.

Sam, you've just proven in a few posts that a few bits of anecdotal evidence are absolutely not sufficient for sweeping conclusions and mandates about what is, or is not, most efficient.

I would bet that the debate on this thread for the last 3 pages is far more thinking than Henry Waxman's congressional staffer put into bits of the 2,000 page cap-and-trade bill, or some other staffer put into the 2,000 page health-care bill.

And the latter stuff is now *law*. It's rigid. It's inflexible. If it's wrong, it cannot be changed. If market conditions change, it won't be able to change with it.

Suppose some garbage-collection bill had buried somewhere on page 1,378 that there must be one - and only one - garbage truck on route in Pleasantville, USA. Because some staffer somewhere thought that was a good idea to put into a bill that no one will read. And perhaps, because they were influenced along the way by the One-Truck-Per-Town lobby that thought it was a good idea.

An Unintended Consequence has just been created. Efficiencies have been lost. Customer service has been pre-ordained to deteriorate. And it's all baked in concrete as law.

This is exactly what happens when the government takes over large swaths of the economy.

All with the best intentions, of course.

not_alice

07-08-2010, 07:57 PM

But let's carry this one step further....we've been discussing trash collection, but it could just as easily apply to airplane slots at an airport, converting corn acreage to ethanol, subsidizing mortgages, or pricing and rationing health care.

Those are all cool problems indeed, and each of them is a subset of a larger problem as well.

Sam, you've just proven in a few posts that a few bits of anecdotal evidence are absolutely not sufficient for sweeping conclusions and mandates about what is, or is not, most efficient.

I would bet that the debate on this thread for the last 3 pages is far more thinking than Henry Waxman's congressional staffer put into bits of the 2,000 page cap-and-trade bill, or some other staffer put into the 2,000 page health-care bill.

I am not really familiar with the law or the debate on it - been busy on other stuff. But isn't it striking that in one sentence you say you agree that anecdotes are not sufficient to make sweeping conclusions, and then in the next you do exactly that?

Anyway, I am guessing that there is a lot of academic and civil servant research on any economic issue like that that can be pointed to, no?

But in the end on complex issues, there is no one right answer, and you have to proceed on incomplete information no matter how much you have. It is the nature of the world once you are past checkers and tic-tac-toe.

And the latter stuff is now *law*. It's rigid. It's inflexible. If it's wrong, it cannot be changed. If market conditions change, it won't be able to change with it.

Why can't laws or markets adapt again? This is the US we are talking about right? Laws can't be changed?

But maybe you are jut talking about a subset of a bigger system? Which is partly what we are getting about with the trash trucks.

An Unintended Consequence has just been created. Efficiencies have been lost.

Neither Sam_Stone nor I have said anything to suggest that the OP is not correct in the conclusion, only that it is not supported from the data he has offered. Maybe one truck is best in his, or some other, situation. We just don't know yet.

Customer service has been pre-ordained to deteriorate. And it's all baked in concrete as law.

Is "customer service" what we are optimizing? I asked a bunch of times, I was hoping someone would eventually say. If so, how would you measure it without bias?

This is exactly what happens when the government takes over large swaths of the economy.

Uh, not fair to extract from local conditions, even if true, to global conditions where other parameters come into play.

Would you suggest for instance, that the US auctioning of wireless spectrum that is now our cell phones was anything less than ideal from the govt's point of view, or the market's point of view? That spectrum represents a large ans still growing swath of the economy as you say.

All with the best intentions, of course.[/QUOTE]

Ispolkom

07-08-2010, 09:06 PM

emacknight

07-09-2010, 12:00 AM

Here is a much more visual reference that I think will help:

Picture any generic mall food court, with 5 restaurants (McD's, Taco Bell, there is usually a pizza place, and a Panda Express). The 5 of them each serve a portion of the 100 customers that visit. And as such, each individual restaurant is set up and designed to serve that portion, and does it well. They each individually have the right number of cash registers, right number of fryers, right quantity of condiments.

They are all chains, and all very good at being able to set up in a new mall, adjusting to size constraints, and different volumes of customers.

Now, consider a new mall opens that decides to have the same food court, but with just one restaurant to serve the same 100 customers.

What would you expect the set up to look like? I know you could demand millions of variables before you can answer, but this is a back of the napkin type calculation.

Would you, an educated individual, expect to see one large version of McDonald's set up to deal with 100 customers. Or would you expect to see 5 individual McDonald's.

I personally see this as rather straight forward because I have been in both very small and very large McDonald's. The size of the restaurant varies based on the number of customers they expect to serve.

I think that we, as reasonable individuals, can see a level of inefficiency to have a massive restaurant that only serves a trickle of customers. And likewise, we can see the lost revenue if a restaurant is too small to deal with regular and predictable busloads of tourists.

Even without knowing all of the millions of possible externalities, we can pretty safely say that McDonald's is unlikely to build 5 small restaurants each with their own manager, instead of 1 larger one.

So to recap: each individual small restaurant is going to be as good as it can be given it's constraints. But if given the option, it's unlikely that a restaurant would choose to build 5 small versions instead of one large one.

not_alice

07-09-2010, 12:07 AM

Here is a much more visual reference that I think will help:

yet another non-analagous analogy snipped

Is there a reason why you wont even try to begin to construct an actual mode3l of the problem in the OP in order to analyze, you know, the problem in the OP?

emacknight

07-09-2010, 12:19 AM

I'm impressed by the depth of a priori reasoning in this thread, free of any actual facts.

I admit that when I bought my house six years ago I thought that it was a pretty dumb thing to have disorganized trash pickup. But it isn't. It's cheaper, for whatever reason, than the alternative. In Minneapolis the residential charge is $19 a month http://www.ci.minneapolis.mn.us/solid-waste/billing.asp (I assume the $7 credit for recycling, and the $2 rental for the small cart). My monthly charge is $13. What's the difference? I can shop around, they can't across the river.

What I find interesting is that my neighbors have different ways of evaluating good trash pick up: is it a local business, do they pick up lawn waste, do they take large objects, etc. It just goes to show that trash pick up isn't a simple commodity.

I pay $38.96 every 2 months, for a bin slightly larger than your small bin, but not as large as your large bin.

Then I pay an optional $79.50 seasonal fee for yard waste. There was an on-call option of paying a $2 per bag fee if I didn't want the whole season, but that had a 12 bag minimum for them to pick it up. They give me a bin for the seasonal package, but I have to pay for the bags if I use the on-call system.

Then recycling is paid for through property taxes, but at the moment I can't find that bill. Oh weird, I just found it online. We pay $40 a year for recycling.

Anybody know who wins?

not_alice

07-09-2010, 12:27 AM

Anybody know who wins?

Apples and oranges, but you both win!

Why apples and oranges? We know nothing about the cost structure of either business, nor do we know anything about the demand side or the access to resources or alternates/replacement options in either place. So we can't really make a guess on which side is optimized. Maybe one, maybe the other, maybe neither, maybe both. They are independent of each other almost certainly, less so if the same trash companies serve both places, but even then the interactions between two distant locations are small and possibly negligible.

Ispolkom

07-09-2010, 08:17 AM

I pay $38.96 every 2 months, for a bin slightly larger than your small bin, but not as large as your large bin.

...

Anybody know who wins?

What do residents pay in neighboring municipalities that have city-organized trash pick up?

My point was to compare two neighboring cities, one that has city-organized trash pickup, and one that has disorganized. Other than that, they are fairly similar. Trash pick up costs less in the latter city.

It's not great evidence, I'll admit, but I think that it's more to the point than talking about newspaper deliveries and food courts.

YMMV.

RickJay

07-09-2010, 08:44 AM

You didn't happen to notice that they were different pizzas did you? That's sort of central to the issue here.
You know what would be really central to the issue would be some actual facts, as opposed to your anecdotes about how many garbage trucks you claim to see rolling around.

emacknight

07-09-2010, 08:51 AM

What do residents pay in neighboring municipalities that have city-organized trash pick up?

My point was to compare two neighboring cities, one that has city-organized trash pickup, and one that has disorganized. Other than that, they are fairly similar. Trash pick up costs less in the latter city.

It's not great evidence, I'll admit, but I think that it's more to the point than talking about newspaper deliveries and food courts.

YMMV.

Minneapolis, that you quoted, is a neighbouring city. That's out it compares.

You know what would be really central to the issue would be some actual facts, as opposed to your anecdotes about how many garbage trucks you claim to see rolling around.

What actual facts do you think you need? And which do you think I'm just making up?

emacknight

07-09-2010, 09:02 AM

ETA: I'm not asking for a detailed comparison of two systems. I'm pointing to the very obvious redundancies of having 5 small companies vs 1. Five websites, 5 offices, 5 parking lots, 5 pay roll clerks.

If there was just one larger serving the entire area, they would only have 1 of those things. Like I said, if two of them merged, they would eliminate the obvious redundancies.

I feel this is correct, because like with the food court, none of the 5 break themselves in half to have 2 smaller restaurants. They pick the size that is right for the number of customers.

Or maybe it's counter intuitive, and having two of everything will create internal competition, so each employee will work harder. Or maybe it's like when Best Buy bought Futureshop so they could pretend people have choice.

emacknight

07-09-2010, 10:12 AM

To give you a better sense of what I'm talking about, and why we don't need the level of detail some have requested, consider these two examples from the restaurant industry that I mentioned above:

A few years ago Tim Horten's (a Canadian coffee/doughnut chain) and Wendy's merged. Now, in this case, each product was different enough that it didn't just become Wenhorten's Coffee and Old Fashioned Burgers. Each company maintained it's brand image. But after the merger, they began to build duel-restaurants that were about the size of either previous restaurant, but now had two small kitchens each offering their respective products.

There were efficiencies to be gained by eliminating the need for two separate and individual restaurants. The merger found overlaps that they could eliminate, and kept the individual parts that they needed.

Tacobell and KFC did something similar as well. They realized there is no point going through the trouble of building so separate and individual restaurants at a given location. So they built combined ones--eliminating the unnecessary overlap. Inside they had a common seating area, merged the ordering, split the kitchen in half to have two lines, and used common fridge/freezer space.

emacknight

07-09-2010, 10:29 AM

Is there a reason why you wont even try to begin to construct an actual mode3l of the problem in the OP in order to analyze, you know, the problem in the OP?

I did, several times, Sage Rat even made some pictures. The concept seemed far too complicated, leading some people to demand more information than required. As if it was some how more than garbage collection. A couple of people got so bogged down in the minutia that they couldn't understand what was actually going on. I figured a more visual reference would help. We're all familiar with mall food courts, but we are not all as familiar with trash removal.

So in a mall food court, you'll see 5 restaurants, 1 of which is a McDonalds. You won't see 2 mini twinned McDonalds, the franchise will put in the proper sized restaurant for that location, preventing redundancies. If given the opportunity to be the only restaurant, they would put in one proper sized larger restaurant--eliminating redundancy.

Right now there are 5 companies providing a service to a fixed group of customers.

My premise is that the service they provide isn't differentiated enough to warrant 5 overlapping companies. If someone else's truck took my trash next week I wouldn't notice. All I would see is that the garbage is gone. It's not like ordering Dominos and Coke but getting Papa John's and Pepsi. It's more like ordering electricity and natural gas from Xcel, but getting it from Ontario Hydro and Center Point.

And as a result, I see redundancies in the system. Because there are 5 individual companies, there are 5 of everything. I highlighted the trucks, but they also have five offices, and five secretaries, etc. Five of everything doing the same thing, all to a minimally acceptable standard that involves [garbage picked up yes/no].

not_alice

07-09-2010, 10:33 AM

What actual facts do you think you need? And which do you think I'm just making up?

Have you read the actual theread? Already mentioned several times:

1 - Descriptions of the trucks
2 - descriptions of the road network
3 - descriptions of the distribution of trash
4 - description of the dumping site
5 - description of the labor market and other costs
6 - description of the capital structure of the trucking companies
7 - description of related (nearby markets) if any

I'd say at least an attempt at those 7 things would be a good start. Surely, having been observing the trash pickup in your new town for 7 months at least, you should have no trouble giving us a pretty good first swag at the first 3 with little effort.

I don't think anyone will beat you up if you try to give this info in good faith as best you can. No one expects a perfect model or even a sense of what the parmaeters are to drop out in the very first pass.

But any effort at describing the actual problem, and your observations, is more valuable than a long string of only tangentially related analogies.

not_alice

07-09-2010, 10:37 AM

To give you a better sense of what I'm talking about, and why we don't need the level of detail some have requested, consider these two examples from the restaurant industry that I mentioned above:

Instead of going into detail abotu food court restaurants or whatever in an attempt to persuade us about trash pickups, an entirely different industry and market with a different industry structure, why not invest your effort in details about, you know, the matter, in the OP?

And please for the love of the Flying Spaghetti Monster, can you please tell us what precisely it is that you think is not optimal in your trash pickup system and why that of all possible functions to optimize is the one that matters most?

not_alice

07-09-2010, 10:56 AM

I did, several times, Sage Rat even made some pictures. The concept seemed far too complicated, leading some people to demand more information than required.

I saw those pictures, they are not a model. They simply showed that on one stretch of a trucks route it might make pickups boustrophedonically or not.

There is no objective funtion to be optimized, so there is no model.

I suspect you are partly concerned with what is called in the literature a "traveling salesman problem" . I pointed you to a peephole at wikipedia so you can begin to understand how complex that simply stated problem really is. It is among the well know class of problems that are conjectured to not be solvable in general terms other than by what are essentially grossly inefficient brute force algorithms.

If you are standing alone in saying that this is not so, in essence saying "I have the answer, but the margins are too narrow to write it down", well, the last time someone said that, it took hundreds of years to solve the conjecture and the solution was not going to fit in any margins, so pardon us if we are skeptical of your claims how trivial a problem this is.

Meantime, I recall that when I asked you for a model, you wanted to get into a dick waving contest. Are those diagrams really your idea of a model? Because if so, let me clarify what I meant before you reached for your crotch: A series of equations that describe the process and its constraints relative to process-specific parameters, and one or more parameter-based functions meant to describe what is sought to be optimized subject to the constraints.

If we construct that, and it is generally an iterative process, no one is going to plop it right out of their head complete on the first pass, then we can actually perform experiments by (methods depending on the structure of the model) calculating the optimum and doing a sensitivity analysis (i.e. seeing how much the answers might change relative to variations in the initial assumptions of the model's parameters.

When I talk about models, that is what I mean. When you swung out your dick suggesting you were quite experienced with modeling processes and how dare I suggest otherwise, I gave you the benefit of the doubt.

I still do, but for the benefit of other readers who are following along, I want to clarify what I meant, and what Sam Stone is alluding too also, and let them decide for themselves if what you have provides is in any way shape or form a "model".

And as a result, I see redundancies in the system. Because there are 5 individual companies, there are 5 of everything. I highlighted the trucks, but they also have five offices, and five secretaries, etc. Five of everything doing the same thing, all to a minimally acceptable standard that involves [garbage picked up yes/no].

So you are suggesting that these companies, who are hustling for a buck in a competitive atmosphere, and at the same time creating 5 times as many jobs for local people, are causing the price of pickup to be too high in the marketplace? Is that what you are concerned about?

because I wonder, since you said you were new in town, how did it come to be this way in your area? Was there a single pickup before at some time? What caused the city to change strategies? There is likely someone at City Hall responsible for monitoring all this, have you bothered to ask that person what the comparison is between then and now?

emacknight

07-09-2010, 12:35 PM

Give me some time, I'll put together the answers to your 7 questions, but first:

I suspect you are partly concerned with what is called in the literature a "traveling salesman problem" . I pointed you to a peephole at wikipedia so you can begin to understand how complex that simply stated problem really is. It is among the well know class of problems that are conjectured to not be solvable in general terms other than by what are essentially grossly inefficient brute force algorithms.

You keep bringing up the traveling salesman, which shows what you're doing wrong in this problem. That optimization is about finding an absolute maximum/minimum and I agree is complex. If that was the task at hand, we would need a lot of data. But that's not what we're trying to do, and you know that.

You are focusing too tightly on finding that absolute best path, when what I'm talking about is eliminating the more obvious failures. If we simply pick a path for the salesman at random (F - C - B) we will get a value say X. If we pick a second path completely at random, we will get a path Y. You now have two data points and can choose one over the other. Neither is a maximum or minimum, but if they represented cost, we could choose the cheaper. If they represented profit we could choose the larger. We don't actually need the absolute maximum or minimum.

If you want to stick with TSP, that involves 1 salesman. My situation involves sending 5 together all at the same time on the same trip. Redundancy. When companies merge, they eliminate redundancy.

So you are suggesting that these companies, who are hustling for a buck in a competitive atmosphere, and at the same time creating 5 times as many jobs for local people, are causing the price of pickup to be too high in the marketplace? Is that what you are concerned about?

I let it go the last time you said it, but this time I call bullshit. That's a variation on broken window fallacy. "We should all be happy that more jobs are created, even though more jobs weren't needed." We wouldn't be happy if the government had make work projects involving 5 guys driving around, it's wasted resources. The extra jobs you keep describing are paid for from my bill, which means that money doesn't go towards other things. Those extra jobs are redundant, which is a waste of resources. Let me have my money, so I can pay them to do something else. Free market right?

not_alice

07-09-2010, 12:53 PM

Give me some time, I'll put together the answers to your 7 questions, but first

OK fair enough.

You keep bringing up the traveling salesman, which shows what you're doing wrong in this problem. That optimization is about finding an absolute maximum/minimum and I agree is complex. If that was the task at hand, we would need a lot of data. But that's not what we're trying to do, and you know that.

No, I most certainly do not know that. Please don't speak for me.

I have been clear that since yoru OP, you have not yet defined what you meant by "inefficiency" or other terms of art related to business process and economics.

The reason I mentinoed the TS Propblem is because you seemd to have indicated in your opinion that the route the trucks take is "inefficient" somehow and that calculating efficient routes is not complex. I merely pointed out to you that not only is it complex indeed, it is the very embodiment of one of the great unanswered conjectures in the mathematics of computer science.

I did that with the hope that it might nudge you off your insistence that the OP is not describing a complex problem, or failing that, to alert the readers that there is a rational basis for my claim that it is.

You are focusing too tightly on finding that absolute best path, when what I'm talking about is eliminating the more obvious failures. If we simply pick a path for the salesman at random (F - C - B) we will get a value say X. If we pick a second path completely at random, we will get a path Y. You now have two data points and can choose one over the other. Neither is a maximum or minimum, but if they represented cost, we could choose the cheaper. If they represented profit we could choose the larger. We don't actually need the absolute maximum or minimum.

You are backtracking. You have defined a situation as "inefficient" despite being asked many times to explain precisely the measure you use, and why it is significant.

Now it iappears that if you saw a one truck company with a truck that went around the block to double check on something one time, you would cry it is inefficient. Maybe it is in a sense, but is it significant?

Unless you define your terms, you are just punching at air. That is why I keep asking you to define your terms, to describe in detail the process and system that concerns you, and then maybe we can go through a pass or two of integrating that into a model so you see how that works.

If you want to stick with TSP, that involves 1 salesman. My situation involves sending 5 together all at the same time on the same trip. Redundancy. When companies merge, they eliminate redundancy.

There is extensive literature on any variation you can think of, I am sure. Perhaps your local library or search engine can assist you before you make such silly statements again.

I let it go the last time you said it, but this time I call bullshit. That's a variation on broken window fallacy. "We should all be happy that more jobs are created, even though more jobs weren't needed." We wouldn't be happy if the government had make work projects involving 5 guys driving around, it's wasted resources. The extra jobs you keep describing are paid for from my bill, which means that money doesn't go towards other things. Those extra jobs are redundant, which is a waste of resources. Let me have my money, so I can pay them to do something else. Free market right?

If you would stop and try to build a model instead of shucking and jiving you would see how silly and self serving that is.

You missed the part right around the part where you quoted where I suggested that you tell us if your prices are in fact lower than they were under a previous regime of one truck.

We are about 3 pages into this now and you still don't realize that it is at all possible that savings from modern trucks, reduced manpower on the trucks, reduced maintenance expenses, etc. could more than make up in savings what it costs to hire a $10/hr office clerk or whatever? Really?

Before you go any further, can you answer one thing?

When you said you have experience building models, what exactly did you mean? What types of models?

Gangster Octopus

07-09-2010, 01:26 PM

I think I am in agreement with Sam Stone in general on this. There is nothing other than "five trucks" to indicate that this is inefficent compared to a city run (or contracted monopoly) garbage disposal service.

But lets back up here a second, pesumably a city run service could "mimic" the curent system, if it were efficient, and have five trucks. Since there is no city run service we have no way of comparing. So we are operating on a hypothetical versus a n actual. We can work with that. The hypothetical on the one side seems to be that there shouldonly be one truck and there are some efficeincies to be gained by in essense consolidating the routes. Poi thtat htis is the case the question is then, "Why isn't this happening in the marketplace?" Competing companies could still work out where they subcontract out garbage delivery and increase their efficeincies as long as they are not colluding on price or on service. It is just a matter of whose truck is used.

But apparently we don't see that which would indicate a couple of things: 1) There are no efficeincies to be gained; or 2) there are barriers to being able to achieve higher efficeincy. The latter may be the transaction costs may be prohibitive or there may actually be some legal restriction that we don't know about.

Of course a third possibility is this, the five companies are not offering the same service and therefore it is not interchangeable. emack discussed the different services available, and while some of it seemed nonsensical, it still indicated there was some differntiation of service, which tends to have value.

So primarily, my guess is that efficeincy may be abble to be gained if there is some sort of mandated (eithr by the government or the market) uniformity in service. Since this has not happened, does not mean there is not inefficiency, but it does point out that the mere fact there are five trucks is not de facto evidence of inefficeincy, either.

not_alice

07-09-2010, 01:47 PM

So primarily, my guess is that efficeincy may be abble to be gained if there is some sort of mandated (eithr by the government or the market) uniformity in service. Since this has not happened, does not mean there is not inefficiency, but it does point out that the mere fact there are five trucks is not de facto evidence of inefficeincy, either.

Why would a mandated market be "efficient"? At best it would be a local optima of of sort, but how would you know where it is, and how would upi manage the market as an overseer to make sure it gets there and stays there?

The whole point of a market based system is you don't have to know or do any of that - the incentives inherent in the system itself drive the market operation towards at least a local optimum, and not only that, as conditions change, the incentives change, and so the overall market will adapt to the changed conditions and find the new optima.

The flip side of that is, if you propose to do the same thing by some sort of central management or mandate, etc., then you have to make a really good case as to how you can do it at all, let alone do it well.

Now, there are few if any "pure" markets, so this is not for every situation. Most places you get some sort of hybrid, as is probably the case in the OP.

BYW, my area is not big enough to have multiple trash haulers (I think), but I thought a bit more about the possibility of auctioning 5 routes out and at first glance, it seems like it could be a very good way to go for City Hall (if the businesses are on the up and up, which seems like a fair question to ask in the trash industry).

Gangster Octopus

07-09-2010, 01:58 PM

Why would a mandated market be "efficient"? At best it would be a local optima of of sort, but how would you know where it is, and how would upi manage the market as an overseer to make sure it gets there and stays there?

The whole point of a market based system is you don't have to know or do any of that - the incentives inherent in the system itself drive the market operation towards at least a local optimum, and not only that, as conditions change, the incentives change, and so the overall market will adapt to the changed conditions and find the new optima.

The flip side of that is, if you propose to do the same thing by some sort of central management or mandate, etc., then you have to make a really good case as to how you can do it at all, let alone do it well.

Now, there are few if any "pure" markets, so this is not for every situation. Most places you get some sort of hybrid, as is probably the case in the OP.

BYW, my area is not big enough to have multiple trash haulers (I think), but I thought a bit more about the possibility of auctioning 5 routes out and at first glance, it seems like it could be a very good way to go for City Hall (if the businesses are on the up and up, which seems like a fair question to ask in the trash industry).

I think I was less than clear, I didn't mean a mandated market. I meant that the market mandates, so to speak, what is optimal, invisible hand and all that. I actually am trying to make the point you are making, altbeit I am did so far less competently.

emacknight

07-09-2010, 02:55 PM

1 - Descriptions of the trucks

Waste Management (http://3.bp.blogspot.com/_X54KkKq-B1I/SsP96W1wL_I/AAAAAAAAAY4/kHnFuplBcXQ/s400/garbage_truck_flickr_srqpix.jpg)
Ace (http://www.acesolidwaste.com/images/homebannerfull142.jpg)
Allied (http://www.alliedwastetwincities.com/trash.php)
Walters (http://www.waltersrecycling.com/images/Residential-truck.jpg)

2 - descriptions of the road network

New Brighton, MN (http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=New+Brighton,+MN&sll=45.063673,-93.200143&sspn=0.007123,0.01929&ie=UTF8&hq=&hnear=New+Brighton,+Ramsey,+Minnesota&ll=45.075824,-93.201828&spn=0.056974,0.154324&z=13)

3 - descriptions of the distribution of trash

It's at people's houses. They put it in a bin, and roll the bin to the end of their drive way.

4 - description of the dumping site

It all goes to Elk River Land Fill (http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=22460+Hwy+169+NW+Elk+River,+MN+55330&sll=45.075824,-93.201828&sspn=0.056974,0.154324&ie=UTF8&hq=&hnear=22460+U.S.+169,+Elk+River,+Sherburne,+Minnesota+55330&z=16) owned by Waste Management.

5 - description of the labor market and other costs

It's a generic Minnesota city.

6 - description of the capital structure of the trucking companies

Allied Waste (http://www.disposal.com/)
Walters (http://www.waltersrecycling.com/)
Wast Management (http://www.wm.com/)
Veoliaes (http://veoliaes.com/Home)

7 - description of related (nearby markets) if any

The city of Minneapolis provides collection as linked above.

not_alice

07-09-2010, 03:02 PM

Thnks.

Any thoughts on how we might describe any of that numerically?

Or what we are referring to when we say "inefficient"?

emacknight

07-09-2010, 03:20 PM

not_alice

07-09-2010, 03:58 PM

And as I've said before, each of these companies have a model for trash collection. Likewise, in every city that has a monopoly provider, there is a model, pick any of them, that is the model I would use, why? Because it meets a minimum standard and because it's irrelevant.

Well, if you said "all I want is a minimum standard in teh OP" no one would have responded.

Are you suggesting now that you are NOT getting whatever your minimum standard is?

This could all be cleared up if you would just define your terms. Until now you were worried about the undefined :inefficiencies", now all you want is "minimum standards od service"? What are these 2 terms? How are they related?

What's significant is that the model I would chose would NOT look like 5 small companies overlapping.

Why not? That is pretty much how wireless phone service is. Would you rather each phone company has a set of states to itself? Would that be better somehow? they all have overlapping infrastructure in pretty much every neighborhood across the US.

If we had access to the models used by the five companies we could compare them.

I am not interested in what they think their models are, I am interested in how you express them, because you are the ones deriving insight from your observations of the models.

If we had access to the models used by two city monopolies, we could compare them.

But that's not what we're doing here, which you don't understand, which is why we are on page 3.

Neither Sam Stone nor I has asked for the models of the existing companies. We are seeking to help you understand the nature of such models in general.

And your apparent refusal to make an effort is the real reason we are on page 3. How far into it were we when someone asked you to define "inefficiency" for example? How far are we into it now? Why fill 3 pages refusing to answer that?

If WM swallowed up by the other 4, I am quite confident they would apply the models they are currently using, expanding it as if they gained 100% of the market share. And I am confident that would NOT look like having 5 mini companies overlapping. That's the part you can't seem to understand.

Oh I understand you are quite confident of that alright.

I just don't understand the basis for your optimism.

Are you suggesting that if WM rolls up all the others, literally buys the companies, that they will simply dump all the existing equipment and replace it with bigger trucks? Maybe you are, and maybe you will, but what is the basis of that claim, especially if you are saying it is somehow more efficient? More efficient at *what* exactly? Less secretaries in the office? That is the closes you have gotten to answering the question. Is that all there is?

The model used by one company does not look like 5 overlapping versions of a smaller model.

So far, we have heard the 5 company model results in more flexible service choices and lower prices. And you are complaining. Why exactly?

I use ACE, my neighbour uses WM. Right now, one truck gets my trash driving by my neighbour's. Then a second truck drives past my house to get my neighbours. If WM bought ACE, gaining me as a client, I would expect the WM truck to pick up my trash, then my neighbour's.

Or, if WM provided service that you preferred, then you would simply swtich and the same thing would happen. So what?

Maybe there is a space-time-continuum issue between our house that I'm not aware of, I guess I hadn't thought of that. It's also possible that the WM trucks use adamantium to fight the iron golums, but ACE uses silver to fight vampires. So in the end they'd still need two trucks. Also an issue I hadn't considered.

Or maybe the trucks they used are sized to meet the demand they have (and can reasonably expect before they can buy newer trucks in the future).

Hell, even if I simply switched from ACE to WM, what do you think would happen?

WM would pick up your trash assuming they have the capacity in their truck, and then ACE and the others would try to woo you to switch again. It's the churn that keeps prices down in lots of markets like that. You switch, you switch again. Others switch the other way. That's the beauty, it is really hard to increase market share, but easy to lose it, so you have to win on customer service. Why would a single company solution have that incentive?

They won't, for the same reason that if all the wireless companies rolled into one, life would really suck, and that is why we have regulations to prevent that. Not that there wouldn't be phone service, but that it would be lesser service than the alternative.

Do you think WM would send a second truck, or use the one that goes past my house? That's what we're talking about here.

If everybody on your route switched to WM, then they would probably buy the now unused trucks from the other companies, re-paint them, hire the drivers, and continue on. Their current truck does not have capacity to handle 5 times the work. It is sized for the job they have and can reasonably foresee into the near term future (for some value of "near term").

There isn't a need for a brand new model. A model exists for every city in the country, and currently exists for each of the 5 companies in mine. As as far as I can tell, no individual monopoly decided it was best to break itself into 5 mini versions that overlap providing the same service. Can you think of one? I know you can think of outliers and black swans to justify your answer.

Well, I already mentioned phone wireless phone services. Pretty much any company or industry that is subject to antitrust regulation has the same issues. Each market is somewhat different, but in general we believe that competition leads to more efficiency in the economic sense.

In reality, if WM swallowed up one company after another, or slowly expanded its market share from 20% to 100%, it's model would expand, not duplicate. When one truck got too full to service an area, the area would be divided for two trucks to service.

Precisely.

They would get a second truck of the same small convenient size as I said above, not get a single bigger truck.

Why?

Because within the situation, where there is going to be churn (and maybe limited growth in new housing) then matching capacity to market share is a big deal on the bottom line. It would be crazy to make large capital investments in capacity you can't use or might lose.

The way you describe things, if WM went from 20% to 40%, they would go through mitosis to maintain consistency, completely replicating their business, and arbitrarily dividing the houses between the two. Then do it again when one or both reached 40%.

No, I have said no such thing.

I have said that one builds a model that takes into account various parameters, and how they change over time, and provides you with an "efficient" (in a variety of possible senses) plan for how to allocate resources at any given time.

Why would you even think that because they have twice as many pickups that they need twice as much office space?

Look, I appreciate your efforts here, but I am only going to give you one or two more tries. If you are not going to define your terms, or participate in even the smallest bit of model building, I am going to decide that your dick wagging was nothing but posturing, that I have given you enough to mull over some other time if you get curious, and leave it at that.

emacknight

07-09-2010, 04:07 PM

Thnks.

Any thoughts on how we might describe any of that numerically?

Or what we are referring to when we say "inefficient"?

The definition of inefficient is the same one that is used in conjunction with "government waste and inefficiency."

Consider this (http://boards.straightdope.com/sdmb/showthread.php?t=507951) thread about health care.

I absolutely *hate* this argument. You realize it could be made about *any* service or product and that it is the basis of communism? Get rid of the capitalist and things are cheaper! Except that it does not work that way at all. In fact, it mostly works the opposite way. We say in Spanish that "it is the eye of the owner what fattens the horse". It is the interest of the owner which makes the company prosper and grow. And the only way for a company to prosper and grow is to provide valuable services or products. Once you do not have that incentive there is no incentive to be efficient or to provide a good service. Do you think food would be cheaper in America if the government took over all food production and removed all the profit the farmers and food production industry makes?

When you have a government-run or controlled industry you have much more bureaucracy. Much more need to cover formalities (and your own butt) than to be efficient. After all, if they need more money they can just raise taxes.

I love the free market. I have no problem with someone making a profit by figuring out how to provide better service at a better cost. I also think the United State should adopt a totally nationalized universal health care system.

The reason is that the free market fails utterly in this environment. A government run system will have the faults and inefficiencies that government run systems always have, but will be unlikely to match the train wreck that our “free market” system gives us.

not_alice

07-09-2010, 04:22 PM

Thnks.

Any thoughts on how we might describe any of that numerically?

Or what we are referring to when we say "inefficient"?

The definition of inefficient is the same one that is used in conjunction with "government waste and inefficiency."

Consider this (http://boards.straightdope.com/sdmb/showthread.php?t=507951) thread about health care.

So your answer is no, I can't say what is "inefficient" in my OP?

HInt. Here are some things you might have said anywhere in this thread but didn't AFICT:

1 - I pay more than I should
2 - The roads get damaged from big trucks and the City has to pay to fix it
3 - I get less service than I should
4 - If I call the companies, it takes a long time before they answer the phone
5 - Some trucks spill trash on the street and don't sweep it up
6 - The trucks are old and noisy

Stuff like that.

Instead all you have really said is:

1 - A few days a week up to 5 trucks roll by once each on my street.
2 - I think more people have jobs as a result of this arrangement than the alternative.
3 - I had to make a one time decision about which trash company to select.

I'm not really seeing the issue and given the care others and I have put in trying to explain it, and your inability or unwillingness to delve into the answers, I wonder if your OP might have been better placed in MPSIMS instead of GD.

In the end, I think your position is that you would sacrifice a few low level jobs to see less trucks on your street, and you might be willing to pay an extra few bucks a month to make it happen.

As I said upthread, whatever your concern is, why not simply take it to City Hall for them to take into account while they manage the contract and prepare for the next one. For all I know, there may be a technical violation in your complaint that can be fixed - not about the jobs, but maybe the trucks need to be off your street by a certain time and they are not. Who knows?

emacknight

07-09-2010, 04:27 PM

Are you suggesting that if WM rolls up all the others, literally buys the companies, that they will simply dump all the existing equipment and replace it with bigger trucks? Maybe you are, and maybe you will, but what is the basis of that claim, especially if you are saying it is somehow more efficient? More efficient at *what* exactly? Less secretaries in the office? That is the closes you have gotten to answering the question. Is that all there is?

Quote:
Hell, even if I simply switched from ACE to WM, what do you think would happen?

WM would pick up your trash assuming they have the capacity in their truck, and then ACE and the others would try to woo you to switch again.

You still don't get it. I know you think you're smart, and you probably are, but you still don't get it.

Last time:

If I switched from ACE to WM, what would be the most likely outcome. Forget marketing, forget weather.

Right now, an ACE truck gets my garbage. If I switched to WM, what would they do? Use the same truck that services my street, or add a second truck to mimic the previous scenario of ACE getting my garbage? What do you think, with all your experience, seems more likely?

Even if there was an issue of capacity, such that the truck on my street was full, what do you think the most likely result would be? Send two trucks to my house, or adjust the overall route the truck drives to put some houses on another truck?

Try applying all that training and experience you have to the situation at hand. What do you think ACE would do if I asked and paid for a second bin? Since you assume the truck is already at capacity. Would they send two trucks to my house? One at 99% the other at 0%?

That's what we're talking about here.

Sam Stone

07-09-2010, 04:55 PM

I think the problem we're having communicating on this is that you're looking at the situation very specifically, and not_alice and I are looking at the issue systemically.

Can you accept that one system can be more efficient than another, even if some isolated parts of it are less efficient? This happens all the time. The hub-and-spoke thing I mentioned before is a good example, and you seemed to miss my point on that.

So let me go over it again. Let's say you know nothing about hubs and spokes. You don't know why Fed Ex does it the way they do. You are just observing the behavior of the company in a specific instance.

You give a package to company A and ask for it to be delivered to a city 200 miles away. This company takes the package, puts it on a plane, and flies it in the opposite direction 1,000 miles. The next day, the package leaves that place, and flies right over your bloody head and lands at the proper destination 200 miles away. Total distance: 2200 miles.

You give the package to company B. Company takes it to the airport, puts it on a plane direct to your destination. Total distance: 200 miles.

Knowing nothing else, tell me which one is more efficient? Would you conclude from your observations of this single package delivery that company A was nuts and company B was way more efficient? If someone told you that it was 'obvious' to any small child that company B was more efficient because it flew less than 1/10 of the distance to get your package to its destination, what would you say to them?

My guess is that, knowing what you know about Fed Ex, you'd say "I really can't tell. I have no idea what decisions drove them to that particular way of doing things. I don't know what other efficiencies they gain by doing that."

That's where I'm at with your example. And let me give you yet another example of how this mechanism could turn out to be more efficient.

Let's say that instead of allowing individual contracts with customers anywhere in the city, these five companies were broken up into five different zones, each one having a monopoly over that zone. Now you get just one garbage truck per zone, and all residents are served by the same company. Is that more efficient?

Well, let's consider - if everyone is forced to use that company, they might not be willing to do things like use uniform trash containers. They might not bother notifying the company of vacations. If the zone is relatively small, variance in trash pickup might lower the capacity utilization of the trucks. Some neighborhoods might put out more trash than others, but the city might require all the vendors to charge the same amount per person, so inequities develop. If people don't have an incentive to minimize their trash, overall trash amounts might be higher.

Or, instead of focusing on the five trucks, think of two pickup models. One is that a truck is sent into a neighborhood on a regular schedule and just picks up everything put out front. If it fills up, another one is dispatched to continue. In the other model, routes can be specifically selected per truck based on known amounts of garbage and path optimization algorithms and all the rest. Routes that have small amounts of garbage spread over longer distances can be serviced with small trucks. Routes that have heavy amounts of garbage in smaller areas can be serviced by larger trucks. Perhaps the fact that there's a 'mesh' of trucks that have spread out routes means that it's easier for one truck to slide into an area and pick up overfill that another truck couldn't handle, without having to send a truck all the way out from central dispatch. The result could be trucks that drive optimal paths and return 100% full.

If four other companies do the same thing, then you as an observer see overlap and it looks inefficient. Maybe maybe even if it was all done by one company they could improve that aspect of efficiency. But given that there are competitive companies, this might in fact be a very efficient way to do things.

So why not just contract out to one company? Well, because then you lose the competitive aspect, and one thing we've learned from markets is that if they are truly competitive, they tend to drive the competitors towards Pareto-optimal results. We want these guys competing. We want them to be innovating to grab customers from each other. Even if it means some local theoretical inefficiency, in the long run it will be better for the consumer than just creating a monopoly and trying to regulate it.

Once again I'm not trying to claim that the method chosen IS more efficient. I really don't know. Maybe it's just the situation forced on the companies by the way the city chose to break up trash hauling. Maybe what you're seeing are infant-market effects, and the process of competition will lead to consolidation. Or maybe everyone is operating under such restrictive rules that the resulting system is truly crazy and your garbage costs will go up.

All I'm saying that the limited information you've given us doesn't really tell us much about overall efficiency.

not_alice

07-09-2010, 04:58 PM

You still don't get it. I know you think you're smart, and you probably are, but you still don't get it.

You did read teh part where I said I do this stuff for a living,right?

And the part where you claimed to be my equali n model building, and where you haven't been able to state a single thing numerically yet except for 5 trash companies?

Pardon me while I get a tissue for your crocodile tears.

[QUOTE]Last time:

If I switched from ACE to WM, what would be the most likely outcome. Forget marketing, forget weather.

All other things being equal, next week their truck stops at your house and your previous company passes by. I'd say that is pretty darn certain, wouldn't you?

Right now, an ACE truck gets my garbage. If I switched to WM, what would they do? Use the same truck that services my street, or add a second truck to mimic the previous scenario of ACE getting my garbage? What do you think, with all your experience, seems more likely?

Asked and answered.

Even if there was an issue of capacity, such that the truck on my street was full, what do you think the most likely result would be? Send two trucks to my house, or adjust the overall route the truck drives to put some houses on another truck?

Well,if the first truck was full, it would not get to your house at all would it? So you are only going to get one truck no matter what.

How the other truck is told to arrive depends on some complex modeling. I can't venture a guess. But I am sure you will.

Try applying all that training and experience you have to the situation at hand.

My training and experience is to build a numerical model. I do believe I have been trying to apply that during the entire thread. Do you suggest otherwise?

What do you think ACE would do if I asked and paid for a second bin?

Assuming you are allowed to, they would use some of the excess capacity (10% excess was bandied about before, I am fine with that as an example) and move along merrily.

If on a given week, EVERYONE on the ACE route needed a second bin, and they didn't know ahead of time, the truck would fill early on and they would have to deal with it. It is probably not common that a truck overfills (it will take a lot less than all of you to fill it, maybe 1/9th of you is all it takes).

This actually happened to me once. I was moving and downsizing, I had a basement full of old papers and recyclables. I put out easily a whole years worth all at once. When the driver go there, he refused to take it. He said it would fill him up and then he couldn't complete his route. I told him, not my problem, sorry for your troubles, but call the dispatcher and work it out. He wasn't happy, but in exchange for my helping with the heavy lifting, he did it. What happened much further down the route when the truck actually filled up, I have no idea. He very well may have had to dump, and circle back for a second trip.

Since you assume the truck is already at capacity. Would they send two trucks to my house? One at 99% the other at 0%?

If yours was really the one that put it over the top, and they didn't expect it, then they would get a second truck, irrelevant as to available capacity as long as it is enough, or dump the load and return. Unless as someone mentioned, there is a provision for them to skip a house, possibly under some penalty they are willing to accept occasionally.

How can I know how your trash companies work when you are the one who says you have observed them for 7 months at least, but you won't give us any details?

You already played gotcha games with FedEx, and I got the answer right, didn't I? So why do you think I am wrong in suggesting you are not providing anywhere near enough information?

That's what we're talking about here.

Really? from your OP I was to infer that, if some poor soul put out a trash can that a full truck couldn't accept, and another truck would have to come, that that is some evidence of economic inefficency?

How often do you think that happens?

And you further think that that is not already accounted for in the (descriptions of) models that you have been presented here by both me and Sam Stone?

In case it was NOT clear, let me say that any proper model would take into account how often you are willing to accept that service can't be completed. Once an hour, once a day, once a year, whatever. No big deal, it is standard in this type of model.

Here is an example form real life: When I worked at Hubble Space Telescope Science Institute in the earliest days, I worked on scientific instrument scheduling algorithms. I won't bore you with the details, but the requirement was to schedule 6 months worth of observations at a time. There would be several months to calcualte that once all the scientific proposals were in, so we knew what we would be looking at. Many of the scientists would do their observations when the schedule told them, not when it was convenient for the scientist. You can bet the schedule was loaded to 100% capacity all the time.

Now, even given such a complex schedule calculation, the sky is a funny thing. sometimes tuff happens unexpectedly I am not an astronomer, but I use to say "maybe a star goes supernova", more formally we called it a "target of opportunity". in that case, we had (IIRC) 24 hours to reconfigure the remaining schedule so the TO could be viewed immediately with as little disruption to others as possible.

This is a VERY non-trivial problem, especially when you take into account the nature of the satellite itself and the firmament as constraints.

But the point is, having to change the schedule on the fly is almost always part of any model. That is why you do sensitivity analysis. You end up sacrificing some overall efficiency in routine operations to cover unexpected stuff (like traffic jams!). How much is up to you, and based on what you find important otherwise.

For example, you could have one small truck for every house if never missing a house was the most important thing. Where you accept tradeoffs from there, each user of a model is different.

not_alice

07-09-2010, 05:24 PM

So why not just contract out to one company? Well, because then you lose the competitive aspect, and one thing we've learned from markets is that if they are truly competitive, they tend to drive the competitors towards Pareto-optimal results. We want these guys competing. We want them to be innovating to grab customers from each other. Even if it means some local theoretical inefficiency, in the long run it will be better for the consumer than just creating a monopoly and trying to regulate it.

This is an important point - one there is competition, you don't really want one guy to get a leg up, either by better service or by acquisition in order to maintain efficiency.

Let's say that initially everyone is assigned a trash company at random so every one has the same market share.

But via marketing, they are allowed to try to get people to switch.

Every week, people will switch. Some will leave Company A, some will arrive, this is called churn.

For our purposes, this means that a truck driver will almost never drive the same route twice. Oh he will be on the sme roads, but the houses he picks up form will change, and maybe there is a cul de sac that he skipped before that now he has to go in. Every week will be different, even for a driver of a trash truck.

So the company need is a process to figure out the new route in enough time, and to convey it to the driver, and to hire drivers on the ball enough to be flexible.

Note that maye those kinds of drivers tend to be quicker, more predictable in their timing, smile more to custoemrs and ptential customers, and so better overall for the city.

Now, maybe Sam Stone and I sense a possibility - one city alone can't justify paying us to create this model and conveyance to driver system, but if enough cities across America liked it, then maybe it would be worth it to build and market. Similarly maybe if we could bundle it with garbage trucks themselves.

My point is that the competitiveness springs from innovation far from the source. You get better trash service because some guy like me decides to market some modeling services to trash truck manufactueers to build in their trucks to make them more competitive.

Then companies that buy those trucks market themselves as more competitive to Cities.

And the Cities make their residents happy with more predictable and better services.

Why? Because each step of the way someone saw an opportunity in innovation.

And it need not be as fancy as scheduling algorithms, it could be as basic as investing in keeping the trucks shiny and clean. That might mean some industrial hose company is going to be a source for at least some of the increase in efficiency in a competitive trash market.

Heck, where I live, I will tell you what we need - a better wheel/axle system on the carts. They seem to break a lot, I guess when the truck puts the barrel down. That shouldn't happen. But we only have one company and so people just have to deal with it. A new company marketing with "wheels that don't fall off" would do fine here!

Damuri Ajashi

07-09-2010, 06:16 PM

That's not accurate. You're premise suggests the trucks operate at 1/6 capacity. Just because multiple trucks pass through your area does not mean they could make all the stops. Most of the time in the operation is in the pickup and not the movement of the truck. What is more realistic is that there are 20 trucks serving 18 trucks worth of service.

Assuming that they all get full up they are covering up to five times as much territory to do so. This means gas, this means man hours this means inefficiency.

Saying a single private hauler is more efficient than a city (especially a small city) is a lot more reasonable.

Like I said, in my area every homeowner contracts for their own garbage pickup and there is a natural monopoly as those companies that already pick up half most of the garbage in my subdivision can offer everyone a better price than a company that only picks up a few homes. After they get their monopoly, they only have to charge less than a competitor would charge to pick up the first home and they get to keep their monopoly. The HOA around here is packed with qseudo-economists who think that this is the free market and I can't convince them that they are better off taking bids every year for the garbage pick up for the whole HOA than to let one that has developed a natural monopoly to continue to charge a dollar less than their nearest competitor will charge to pick up the first house.

I'm not observing them pass. I am observing them pick up trash on my street. Do you realize that? You have yet again failed to understand the situation. I'm not suggesting it's inefficient that they drive down my street. It's inefficient that they STOP and make PICKUPS on my street. Do you realize that is what we are talking about

Your case would be more convincing if you lived on a cul de sac or if your particular street makes for horrible through traffic.

This specific example pretty conclusively shows that is not a natural monopoly. A natural monopoly is one in which the fixed costs are so high that there is naturally only one company. Many times it is required for a government to step in and do this, because of the high initial entry and capital costs (but not always, there are private electric companies...of course then it requires regulation because it is still a monopoly). The existence of five garbage collection companies is evidence in of itself that it is not a natural monopoly.

Natural monopolies can develop out of any high barrier to entry not only high fixed costs. In this case it is high variable costs that creates the barrier to entry. Once I have am picking up all the garbage in the area, I can charge less to every household on my route than you could charge any one of them because you would have to send a truck out of its way especially to pick up that one guy's garbage. I am already in the area and the marginal costs to me for each successive household in the area is less and less. I can distribute just enough of those savings that a new garbage company simply cannot compete in that neighborhood but I would still be charging more than I would be willing to accept if I had to compete for a contract that covered the entire neighborhood.

redundancy within a company is inefficient. Redundancy between 2 competing companies is competition.

And it is still a redundancy. The question is whether that redundancy is justified by the benefits of competition. IF you can gain the benefits of competition without the redundancy then...

You're right, and I was thinking about this yesterday. If the 5 trucks from 5 companies end up being near capacity in serving the entire area, it will still take 5 trucks from one company. The only improvement would be in how the trucks are routed, not insignificant, but not really worth the trouble.

The more companies you have the more partially empty trucks you will end probably up with. Poor routing doesn't just mean more gas, it means more man hours and more equipment depreciation.

And to clarify again, the trucks are all making stops on my street. Each company has at least one customer on my block. If I see a truck, it's because it's making a stop for a customer, there is no other reason to come down my street.

Ahh so it is a bit like a cul de sac

Even if having the five trucks work the same area is an inefficiency, how much of an inefficiency is it? How does the additional energy and cost of this compare to the overall costs of the system? What other efficiencies might the private market bring that compensate for this?

Well, THATs the question isn't it? IN the healthcare arena, we know that medicare has a 2% overhead while private insurance companies have a 30% overhead. Does the benefit of a private insurance market (more market segmentation is the only thing I could think of) justify this additional overhead? How does the fact that medical provider overhead is higher because of multiple payors play into the calculus (For example, private doctors frequently pay 10% of their gross receipts to companies that specialize in dealing with insurance companies). Having a health system that is largely reliant on private insurance companies for people under 65 means that they have an incentive to push off medical costs until you qualify for medicare. Can't we at least make an argument that health insurance might be better administered by a single government payor but allow for a private sector for those who want something better than what the government will provide? Heck, we do it with our schools, why not with our hospitals?

If five trucks means that each can come back 95% full, while the government system sends them back 70% full, and the additional neighborhood drive only adds 20% of the miles driven, then using the five trucks and bringing each one back full is more efficient.

Yes if everyone in the private sector is competent and everyone in the public sector is incompetent, then you are correct, we are probably better off with whatever inefficiencies we might encounter in the private sector.

But historically they have proven not to be. That's because true monopolies don't exist under the harsh pressure of competition. I think people really underestimate this effect. It's one thing to say you're going to be efficient, and it's another when you know deep in your bones that there's another guy out there doing his best to undercut your prices, and that your company's existence depends on you constantly striving for improvement wherever you can find it.

Oh, I quite agree but I think you really overestimate the effect.

If monopoly was better than competition, you'd see government monopolies everywhere, and the places that have them would have better economies.

If competition was better than monopoly, why would the government ever be involved in anything? Wouldn't competition provide better police service? Military? Courts?

You in fact need to construct some rather esoteric circumstances and some pretty specific assumptions...This suits your philosophical bent, but doesn’t comport well with the actual circumstance here.[/'quote]

You act as if you never met a Libertarian before.

[quote]And see in the case in point, exactly the same posturing, with the competing companies all seeking to market their services by offering “different” service options (bin size, color, special pickups, etc.). But in this case, for most people, this is a distinction without a difference. For most people, the criterion of importance is Garbage picked up? Yes/No. And for this, duplication of vehicles on the same street cannot possibly be more efficient than the alternative.

You should try shopping for mattresses. Simmons manufactures a different mattress for every retailer, the main difference is often that the label on the mattress has a different name on them and perhaps a sheet of paper of plastic is inserted somewhere in between the coils and the padding.

Nor I, truth be told, this thread is the first I have heard of individual pickups.

My neighborhood has lots of options but there is only one trash company that operates in any one neighborhood

not_alice

07-09-2010, 06:46 PM

The more companies you have the more partially empty trucks you will end probably up with. Poor routing doesn't just mean more gas, it means more man hours and more equipment depreciation.

companies will buy trucks to match predicted demand plus room for some growth. Then, with growth, (if growth) they will budget to increase capacity at that time.

No truck need ever be too empty, that would be a waste. But you don't need the biggest truck to start.

Ahh so it is a bit like a cul de sac

Actually I read that a different way. It is just a small block, maybe on a grid, maybe not, but still, if a truck has no customers, it need not go there.

I think what would really blow OP's mind is if ALL of the people on the block had chosen on company, and the others still passed through because it positioned them optimally for where they did have nearby customers.

Well, THATs the question isn't it?

yeah, we have asked him to elaborate probably a dozen times and he won't.

Can't we at least make an argument that health insurance might be better administered by a single government payor but allow for a private sector for those who want something better than what the government will provide?

That sounds like a fine topic for another thread. Different industry, different structure, different parameters.

If competition was better than monopoly, why would the government ever be involved in anything? Wouldn't competition provide better police service? Military? Courts?

Generally the Govt tries to stay out of everything except natural monopolies and safety-type regulations, and some services that are deemed either essential, or public goods (forensic psychological services for retarded folks, for instance, and basic research for another, and education for a third)

You act as if you never met a Libertarian before.

there was no ideology expressed whatsoever. Only descriptions of modeling processes, which derive from the same mathematics we all learned in school - we learned how to figure the area of a square for instance. Well, with longer recipes, but not really overly complex individual steps, we can accomplish a lot more and show a lot more. It is not rocket science, it is available to everyone if only they want to learn. I am sure there are ample course material on the internet these days from top universities for anyone to peruse for free.

Politics has nothing to do with it, it is simply applying the tools of math to describe a system, just like when I described the scheduling algorithms for Hubble. I did a similar one once to schedule kids at a summer camp, subject to rapid changes if it rains. What are the politics of those models? None at all I say.

My neighborhood has lots of options but there is only one trash company
that operates in any one neighborhood

I think we can get a half size smaller bin but the cost is actually the same as the larger one. Guess which 95% of the people have (based on my dog-walking excursions)?

Damuri Ajashi

07-09-2010, 07:02 PM

The pricing and service menu you described indicates the companies themselves do not see it as a commodity, particularly as regards their investors, who they are ultimately responsible too, no one else. In the business world, "commodity" does not mean what you think it means.

Really, what do you think a commodity means?

For the sake of argument, lets say salt is a commodity. I go to the store and every company sells salt in different size packages. One sells 10 oz package, one sells 11 oz package, one sells 12 oz package, and one sells a 13 oz package. Does the size of the packaging make the salt any less of a commodity? Maybe its not a perfect analogy but it seems like its not totally off base.

not_alice

07-09-2010, 07:25 PM

Really, what do you think a commodity means?

For the sake of argument, lets say salt is a commodity. I go to the store and every company sells salt in different size packages. One sells 10 oz package, one sells 11 oz package, one sells 12 oz package, and one sells a 13 oz package. Does the size of the packaging make the salt any less of a commodity? Maybe its not a perfect analogy but it seems like its not totally off base.

No, a package of salt is not a commodity to you in that way. It might be a kitchen staple, but not a commodity. This (http://en.wikipedia.org/wiki/Commodity) is good enough for my purposes right now.

Damuri Ajashi

07-10-2010, 12:25 AM

Or we could break this down to the main assertion - that it's always better to have one big organization delivering a commodity to a region than to have five smaller companies delivering the same number of commodities.

It depends but in the case of commodities where the product is basically indistinguishable, economies of scale are usually enough to make the one large company a better option.

The main argument for bigness is that it can bring economies of scale. But economies of scale are specific to goods that have declining marginal costs and large fixed costs.

Like trashy pickup in a cul de sac.

Service delivery is not like that. There's nothing inherently more expensive about having five companies do the job of one then the cost of the job does not decline due to economies of scale.

I'm starting to think you really don't get it. 5 trucks means 5 investments, 5 crews, more gas than one truck would consume and more traffic than one truck would produce.

If a city sends one truck into each neighborhood, this could actually be very inefficient if it results in more overall zones, less capacity utilization per truck, more miles driven per truck, etc. It's not intuitively obvious to me that five trucks operating in a mesh-type arrangement is inherently less efficient than those same five trucks each taking a different zone. I'd have to see the specific details of the route.

Yeah the trucks that pick up in my neighborhood operate something like a zone defense, that sort of dynamic coordination can be pretty efficient. BUT 5 trucks from 5 different companies are not coordinating and if they are then they are not really 5 different companies are they?

I am sure their marketing groups observe clusters quite carefully. As noted above, perhaps discounts are offered to neighbors of existing customers. I highly doubt that the current distribution of customers is random in any sense of the word. Do you have any statistical evidence of this new statistical claim?

My company promises that they won't charge me any more than they charge any of the other people in my division, and if they make everyone the same promise then that means they don't charge me any less either.

Anyway, I am guessing that there is a lot of academic and civil servant research on any economic issue like that that can be pointed to, no?

Yes this town is awash in white papers.

Neither Sam_Stone nor I have said anything to suggest that the OP is not correct in the conclusion, only that it is not supported from the data he has offered. Maybe one truck is best in his, or some other, situation. We just don't know yet.

Sam Stone is one of our resident libertarican/Republitarians. We might be reading stuff into what he says.

Would you suggest for instance, that the US auctioning of wireless spectrum that is now our cell phones was anything less than ideal from the govt's point of view, or the market's point of view? That spectrum represents a large ans still growing swath of the economy as you say.

The auction process isn't perfect either. These guys employ all sorts of game theory to carve out advantages. For example, AT&T and Verizon colluded to purchase bandwidth in a specific range and that caused a lot of smaller carrier to spend all their money buying bandwidth in that same range so that their network would be compatible with their phones. Then AT&T and Verizon bought up the entire bandwidth in another range effectively leaving the small carriers without any phones (noone makes phones for some podunk carrier). If a competitive marketplace for phone carriers is important and reducing the barriers to entry are important in the cell phone industry then I would say, no I don't think it is ideal.

No truck need ever be too empty, that would be a waste. But you don't need the biggest truck to start.

I can see how each company might end up with a stub truck that doesn't get filled at the end of the day.

Actually I read that a different way. It is just a small block, maybe on a grid, maybe not, but still, if a truck has no customers, it need not go there.

Lets say it was a cul de sac, can't you see any metric by which you could say that one company would be more efficient than 5 companies knowing only that there are 5 trash companies coming into the cul de sac?

Generally the Govt tries to stay out of everything except natural monopolies

Ands I'm saying that trash collection can easily develop into a natural monopoly if run privately.

No, a package of salt is not a commodity to you in that way. It might be a kitchen staple, but not a commodity. This (http://en.wikipedia.org/wiki/Commodity) is good enough for my purposes right now.

If all kitchen salt is the exact same combination of atoms then why isn't it a commodity? Is it because it is in different size packages, I know commodity contracts have standardized sizes.

emacknight

07-10-2010, 12:54 AM

I think the problem we're having communicating on this is that you're looking at the situation very specifically, and not_alice and I are looking at the issue systemically.

Yes, this is exactly our problem, more on this later.

Can you accept that one system can be more efficient than another, even if some isolated parts of it are less efficient? This happens all the time. The hub-and-spoke thing I mentioned before is a good example, and you seemed to miss my point on that.

Yes, I fully get this. I feel like you assumed at the start that I felt my block was inefficient, and so the whole system was. You bring up the hub and spoke model as a counter to that.

But that's where you keep going the wrong direction, that's not my issue. That isn't what I'm seeing, or why I brought this issue up. I see 5 companies with hub and spoke systems, all working just fine. Each individual company is doing great, we have 5 Fedexes running at peak performance.

But because there are 5 that overlap, and provide essentially the same service, I see redundancies that wouldn't be there if it was just one company. Which is why I keep mentioning the "what if Fedex bought out mini-Fedex?" What would be the logical flow?

So why not just contract out to one company? Well, because then you lose the competitive aspect, and one thing we've learned from markets is that if they are truly competitive, they tend to drive the competitors towards Pareto-optimal results. We want these guys competing. We want them to be innovating to grab customers from each other. Even if it means some local theoretical inefficiency, in the long run it will be better for the consumer than just creating a monopoly and trying to regulate it.

Fuck me, it took four pages but THIS is the discussion I am trying to have. This is the issue at hand. Does competition drive competitors towards Pareto-optimal results?

This is what gets brought up in all of the public vs private debates. I'm quite confident that all over Canada and the US, city councils have a guy stand up and suggest that they make garbage collection private. And they says, "competition in the long run will be better for the consumer."

This is a case study to that effect. Like you, I would never have believed a city existed where 5 competing companies collected residential trash.

Once again I'm not trying to claim that the method chosen IS more efficient. I really don't know. Maybe it's just the situation forced on the companies by the way the city chose to break up trash hauling. Maybe what you're seeing are infant-market effects, and the process of competition will lead to consolidation. Or maybe everyone is operating under such restrictive rules that the resulting system is truly crazy and your garbage costs will go up.

All I'm saying that the limited information you've given us doesn't really tell us much about overall efficiency.

Well, now that we're on the same page, what information do you really need?

What measures can we use for efficiency? not_alice scoffed, but this thread is based on the assertion that "government is wasteful and inefficient." In hindsight I suppose I should have challenged that notion as veraciously as not_alice attacked this concept.

If it's cost, I think I'm paying slightly more than near-by residents that have city collection, and I'm pretty sure I chose the cheapest.

emacknight

07-10-2010, 01:21 AM

For the record, this is not a cul-de-sac, and I don't give a flying fuck how many trucks drive on my street.

I realize I described the situation badly at the start by saying, "I see trucks on my street."

What I was trying to explain was that 5 trucks make pickups on my street, to the 10 houses that are on my street. I'm sure lots of garbage trucks drive up and down my street not making stops, I don't care about those, I don't see those as being efficient or inefficient.

This statement sums it up best:
redundancy within a company is inefficient. Redundancy between 2 competing companies is competition.

This is the debate we're supposed to be having. Somebody, I'm not going to say who, got a little bogged down in the details.

What's funny, is that if you take that statement apart you get:
1. redundancy is inefficient
2. redundancy between 2 competing companies is competition.
3. redundancy is competition
4. competition is inefficient.

That is what I am trying to get at.

Now back to the start: my neighbourhood has 5 waste companies providing a service. I believe that service is interchangeable, undifferentiated, a commodity if you will.

Replacing the 5 companies with 1 would eliminate the redundancies, continue to provide exactly the same service, and thereby be more efficient.

What does efficient mean? Lower cost for one, since we've eliminated redundancies. I'm not going to pretend to care about the others, but yes, there is pollution, damage to roads, etc.

not_alice

07-10-2010, 02:44 AM

For the record, this is not a cul-de-sac, and I don't give a flying fuck how many trucks drive on my street.

Yes you do otherwise you wouldn't be harping on how if there was one company there would be less trucks.

What I was trying to explain was that 5 trucks make pickups on my street, to the 10 houses that are on my street. I'm sure lots of garbage trucks drive up and down my street not making stops, I don't care about those, I don't see those as being efficient or inefficient.

Maybe your city is the size and shape of a tic-tac-toe board or something. Otherwise, we don't have enough data. You might, but you ain't sharing.

Now back to the start: my neighbourhood has 5 waste companies providing a service. I believe that service is interchangeable, undifferentiated, a commodity if you will.

You believe wrong. The services are differentiated, you described the differences yourself. I linked to the definition of commodity, so please don't use terms of the art incorrectly anymore if you want to be taken seriously.

So all of your assumptions here are wrong. Might that lead to an equally incorrect conclusion?

Replacing the 5 companies with 1 would eliminate the redundancies, continue to provide exactly the same service, and thereby be more efficient.

Yet the world is full of algorithms that determine just the opposite. How do you explain that? You think we are lying?

What does efficient mean? Lower cost for one, since we've eliminated redundancies. I'm not going to pretend to care about the others, but yes, there is pollution, damage to roads, etc.

So the most important thing to you is to call a system efficient because the costs are operation costs are lowest on YOUR street? That ought only interest you if you own part of the bottom line. Because nothing forces the trash co to pass that savings on to you. Especially if there is no competition.

not_alice

07-10-2010, 02:57 AM

Like trashy pickup in a cul de sac.

It would have to be a mighty big cul de sac to start talking about economies of scale. But at that point, is it really a cul de sac?

I'm starting to think you really don't get it. 5 trucks means 5 investments, 5 crews, more gas than one truck would consume and more traffic than one truck would produce.

We mentioned that. None of that proves any thing, those are jsut some of the parameters of a model. Maybe smaller trucks are more efficient. Heck, maybe competitive companies hustle and hedge their fuel costs well (hello Southwest Airlines). Maybe small trucks have less labor and maintenance, same if they are new. Modern small trucks need only a driver, the lifting is done by joystick inside the truck. So you have a minimal crew, and less insurance than driving a big truck perhaps. More nimble in traffic, saves time making turns on corners, etc.

None of what you suggests means 5 trucks can't work better - they can.

Yeah the trucks that pick up in my neighborhood operate something like a zone defense, that sort of dynamic coordination can be pretty efficient. BUT 5 trucks from 5 different companies are not coordinating and if they are then they are not really 5 different companies are they?

They don't need to coordinate. Look at baseball teams - 30 teams each coordinating their own travel, but in the end, I bet the global travel model is pretty close to optimized. they don't need to consult with each other to fly the best routes individually, nor do they seek each other out to share trips where they can.

Yes this town is awash in white papers.

The internet and your library certainly are. These have been areas of active research since at least WWII.

Sam Stone is one of our resident libertarican/Republitarians. We might be reading stuff into what he says.

You might be, but you would be wrong. I am no Repblican, but I am in the same field, and I assure you there is not one iota of anything "agenda" in anything he wrote in this thread. It is pretty straight shooting. I would tell you if it was otherwise.

If a competitive marketplace for phone carriers is important and reducing the barriers to entry are important in the cell phone industry then I would say, no I don't think it is ideal.

You don't think the US wireless market has been and is competitive?

Lets say it was a cul de sac, can't you see any metric by which you could say that one company would be more efficient than 5 companies knowing only that there are 5 trash companies coming into the cul de sac?

No one is interested in jsut the culdesac - if some company wants to specialize in cul de sacs, I say let 'em! Maybe tey can make a profit with only one truck.

OTOH, if the residents there are so convinced, they can collude to all use the same service, and then, problem solved, only one truck!

If all kitchen salt is the exact same combination of atoms then why isn't it a commodity? Is it because it is in different size packages, I know commodity contracts have standardized sizes.

If you are buying raw salt of standardized quantity and quality on a market exchange, which you quite possibly need never take possession of before you can sell it, then you probably have a commodity on your hands.

What you get at the supermarket, not so much. That is a finished product.

Hellestal

07-10-2010, 06:43 AM

What's funny, is that if you take that statement apart you get:
1. redundancy is inefficient
2. redundancy between 2 competing companies is competition.
3. redundancy is competition
4. competition is inefficient.

That is what I am trying to get at.You don't even need to break it down like this. If you want to know the economics, inefficiency is an inherent part of monopolistic competition--that is, whenever there are competitive conditions, but also clear product differentiation by brands, trademarks, and so on.

The length of this thread puzzles me. This inefficiency isn't controversial. It's a straightforward, extremely well-known part of micro.

It's most often the case (though not always) that the inefficiency is completely made up for, and then some, by the numerous advantages of private competition. But the chief question seems to be: "Is there an inefficiency from private competition?" The answer is almost always "yes", and that's true even in the many many many cases when private markets are indisputably the best choice.You still don't get it. I know you think you're smart, and you probably are, but you still don't get it.These are old pit threads, so you shouldn't bump them, but you might be interested to read this (http://boards.straightdope.com/sdmb/showthread.php?t=551290) and this (http://boards.straightdope.com/sdmb/showthread.php?t=504433).

emacknight

07-10-2010, 08:45 AM

Yes you do otherwise you wouldn't be harping on how if there was one company there would be less trucks.

Are you calling me a liar? What I care about is the much larger debate about government provided vs private industry.

If having 5 trucks serving the 10 houses on my street was more efficient, each company should have 5, meaning there should be 25 trucks.

Maybe your city is the size and shape of a tic-tac-toe board or something. Otherwise, we don't have enough data. You might, but you ain't sharing.

You have all the data you need, asking for more is just your way of avoiding the issue. The size and shape of the city is the same whether 1 company provides the services, 5 companies, or 25. All of the little factors you think you need are the same for the 5 companies as they are for the 1. The number of cats running across the street doesn't change if the government takes over the process, nor does the wind direction.

Although it has been pointed out that more trucks create more congestion meaning that with 5 or 25 or 125 companies, traffic will continue to get worse. But I'm not concerned with that.

You believe wrong. The services are differentiated, you described the differences yourself. I linked to the definition of commodity, so please don't use terms of the art incorrectly anymore if you want to be taken seriously.

I'm going off the wiki link you sent, "a good [or service] for which there is demand, but which is supplied without qualitative differentiation across a market."

I believe you suggested yourself that a company could contract to another. The only differentiation is entirely superficial, I wouldn't know if a different company took my trash, as long as it met the commodity requirements of "took trash."

So all of your assumptions here are wrong. Might that lead to an equally incorrect conclusion?

No, not necessarily.

Yet the world is full of algorithms that determine just the opposite. How do you explain that? You think we are lying?

I don't think you understand what's going on here. You yourself admitted you've never seen a privatized system. I think if you presented one of those algorithms it would be for an entirely different problem. As an example, Sam Stone keeps mentioning Fedex because he thinks I see a small inefficiency. I don't, I see the larger inefficiency of the entire system.

So the most important thing to you is to call a system efficient because the costs are operation costs are lowest on YOUR street? That ought only interest you if you own part of the bottom line. Because nothing forces the trash co to pass that savings on to you. Especially if there is no competition.

I thought the most important thing was to get the trucks off my street, which is it now?

The most important thing to do is compare a system where 5 companies operate, vs 1 large one, where the one large one could be the government.

As I run out the door, allow me to offer you one piece of advice:

If the only tool you have is hammer, every problem looks like a nail, and every nail looks like a problem.

not_alice

07-10-2010, 02:58 PM

Are you calling me a liar? What I care about is the much larger debate about government provided vs private industry.[QUOTE]

No , not a liar, just insufficiently informed. Must suck to be you in this thread, especially after people have been gracious, and you wagged your dick at people.

Seriously, what you are talking about is a well established area of public and private research encompassing several fields (Operations Research and Economics among them). These are qualitative fields, not descriptive ones. You have to do the math if you want to be taken seriously.

If having 5 trucks serving the 10 houses on my street was more efficient, each company should have 5, meaning there should be 25 trucks.

If your street was the only one we cared about, then sure. Haven't I been asking you to define what you meant by "inefficiency"? Because whatever it is, I assumed you meant you were concerned by a much larger problem than your street. Was I incorrect?

If it is only your street, then the problem is not much larger than tic-tac-toe, and then frankly, it won't be very interesting.

But even at that size, there are issues - why does your local supermarket have 15 checkout stands, each with a separate line, only 5 of which are open most of the time, while the bank next door has 5 tellers but only one line?

You think that is random? Or perhaps that there is some math behind it, to optimize something, to make it as efficient as possible over the long haul?

You have all the data you need, asking for more is just your way of avoiding the issue. LOL no, take me at my word. If you provide what I am asking for, then you might see otherwise.

I think the issue is you didn't realize that this is a qualitative problem, and now you are stuck. It is you that is going to have to accept that you are going to leave with a half answer here if you don't want to assist.

The size and shape of the city is the same whether 1 company provides the services, 5 companies, or 25.

But the size and shape might affect what the optimum number of providers is. Not all cities are laid out the same you know. If you do a little research into the TSP, you will see the solution is sensitive to the number of nodes and the cost of going between them. That means a rational firm will consider the cost in deciding to enter to market or not.

All of the little factors you think you need are the same for the 5 companies as they are for the 1.

Not really. One company might have a different cost of capital. Another might have a different cost of labor - maybe it is a family firm and everyone works cheap. Another might have different costs of marketing. Another might only be interested in enough business to run one truck, not covering the whole city.

All of these things can affect the global measures of efficiency. None of them have been addressed by you.

The number of cats running across the street doesn't change if the government takes over the process, nor does the wind direction.

When I ask for wind direction, then you can point out that is not needed. How about you explain why what we have asked for are as irrelevant as wind direction, just for kicks and giggles?

Although it has been pointed out that more trucks create more congestion meaning that with 5 or 25 or 125 companies, traffic will continue to get worse. But I'm not concerned with that.

That is a partial answer at last to what you consider efficiency to mean. At least you say what it doesn't mean in part, and that is fine. Others might very well consider traffic congestion as important. That is why I asked, way back in probably single digit post numbers. Glad you are finally starting to express an answer!

I'm going off the wiki link you sent, "a good [or service] for which there is demand, but which is supplied without qualitative differentiation across a market."

Then you misunderstand and might want to do some further research.

I believe you suggested yourself that a company could contract to another. The only differentiation is entirely superficial, I wouldn't know if a different company took my trash, as long as it met the commodity requirements of "took trash."

That wasn't me. But what you describe is not a commodity in the economic sense, it is maybe what a guy-on-the-street would say, but it is wrong.

When all of the companies offer the same exact service, and you have no choice as to who your company is, and they (and other who are not trash companies at all!) buy and sell the rights to get your trash on an open exchange, then come back and ask if your trash service is a commodity or not.

No, not necessarily.

But maybe! So that is a YES!

I don't think you understand what's going on here.

You think wrong.

You yourself admitted you've never seen a privatized system.

No, I said I never saw a place where there were 5 companies.

I think if you presented one of those algorithms it would be for an entirely different problem.

You think wrong. the point of asking you to help provide the data to build a model is so that the correct tools can be used to solve it. There are no preconceptions on what the form of the model will be, nor what the approach to analyzing it will be.

As an example, Sam Stone keeps mentioning Fedex because he thinks I see a small inefficiency. I don't, I see the larger inefficiency of the entire system.

Yet you are either unable or unwilling to state what the measure of this inefficiency is. Is it gallons of gas used? Air pollution released? Cost of retail service? Traffic congestion? could be a zillion things, or even combinations of them.

But if you can say it is inefficient, can you at least try to share with us what the measure of inefficiency is that you are using? If not, why not?

I thought the most important thing was to get the trucks off my street, which is it now?

I don't know, you won't tell us.

The most important thing to do is compare a system where 5 companies operate, vs 1 large one, where the one large one could be the government.

OK, fair enough. What exactly are we going to measure about the two different systems in order to compare them? Might we generalize in order to measure n companies, where n >=1?

If the only tool you have is hammer, every problem looks like a nail, and every nail looks like a problem.

You are the guy who brought the OP, and has the closed mind about how to solve it. Sam Stone and I, being pros at this, are willing to look at the system first and try to describe it (with your help) before even hinting at what an approach to solve it might be.

You OTOH are skipping all that and jsut plucking a "solution" out of the air. Itis not a solution, at best it is a hypothesis that is untested for truth.

Would it help you to look at it that way? Let your solution be a hypothesis instead?

Dr. Love

07-10-2010, 05:11 PM

not_alice

07-10-2010, 05:45 PM

not_alice, I've been reading this mess of a thread, and I think that I can translate emacknight's argument into a somewhat more precise Operations Research language. As I'm reading emacknight's argument, it is:

The system is purely a vehicle routing problem. If you like, you can think of it as similar to the Traveling Salesman Problem, with some modifications, e.g., there are multiple salesmen (perhaps a variable number), each salesman has a capacity for sales, etc.
The objective function (the definition of “inefficiency”) could be the total cost of the system.
Both the single provider (e.g., 1 company) and multiple provider (e.g., 5 companies) cases have a constraint that each customer must be visited exactly once.
The multiple provider case also has the constraint that each customer can only be serviced by a particular provider.
Therefore, the feasible region in the multiple provider case is a subset of the feasible region of the single provider case.*
Therefore the optimal solution to the single provider case will not be worse than that of the multiple provider case.

Thats a good start, but ...

He seems to object to the TSP, although I agree, that is probably a big component of it.

You aren't really defining "total cost" - to whom? what units? measured when?

Your first "therefore" claim doesn't necessarily follow, for reasons stated oft in this thread. Particularly, the cost structures for each company might differ and probably do. As an extreme example consider if company A (the single company provider) has to pay its labor X, and Companies B, C, D, E, F combined pay their labr < X, and all else is equal. Then what?

Since the 2nd "therefore" relies on the first, we can dismiss it as conjecture for now.

Look, since you are moving towards a mathematical description, which is great, then you should extend your model, and if you which to assert things such as "therefore", then it should be no problem to present a proper proof of the assertion.

not_alice, notice that nearly every point you've been arguing is completely superfluous.

Says you.

I gave an objective function in 2,

Uh no you didn't. Maybe "function" doesn't mean what you think it means.

but the same argument works for any objective function.

You could make the supposition, but you haven't proved it, because it is not provable as a general case. I already gave a counter-example.

Similarly, the argument works regardless of the size and shape of the city, or any other factor you (in all seriousness) stated or emacknight (sarcastically) stated.

Feel free to present your proof, or at least summarize your experience and training in this area. I think if you try to actually work it through, you will find you are wrong. Nothing wrong is using the hypothesis under discussion, but please try to remain open to the possibility it is not correct.

emacknight, your argument (if I understand it correctly) is correct as far as it goes,

Exactly. You might not understand correctly. Not because of you, but because he isn't stating himself with sufficient clarity to support his claims. I think more or less you did summarize what he has said pretty well, BTW.

The real world is more complicated than mathematical models,

Perhaps the real world as a whole is, but the trash problem we are discussing most certainly is not.

and far more complicated than thought experiment models.

Well said.

What not_alice has been trying to say is that there are myriad reasons why 5 may turn out not to be true.

And they are all quantifiable and predictable in advance, with experience and effort. We don't knwo if, in the OP's town 1 or 5 (or 2 or 30) companies are optimal, nor the number of trucks that are needed. We simply don't have enough data in this thread to make a decision, or even build a proper model.

Examples? The OP had not made even a rudimentary guesstimate of the capaicity of the trucks, the time it takes them to stop, pull over, lift the trash and replace it, and move along. No guesstimate of the distribution of the fullness of the trashcans on pickup days. No description of the distribution of houses in the city, not the road systems, nor the situation at the dump(s), or where the trucks are stored each night, or if the trucks might be used on other days in other cities, or the costs of the trucks, or the obligations of the company to pay the city, etc.

Or, baring that, there could even be computational reasons why a multiple provider system would come closer to optimal efficiency than a single provider system.

Not sure what you mean by "computation reasons" to be honest.

I hope this helps you understand each other. If not, I fully expect to receive the full measure of each of your vitriol.

LOL this is GD, not the pit. I figure readers are learning, if nothing else, how to spot bogus arguments that look good - sort of an extended mathematical literacy example if nothing else. Because we are all exposed to claims like the OP all the time, in the media and elsewhere, maybe even in our own intuition.

BTW, one thing I thought about earlier, since OP is focused on one truck for sure being the best solution to accomplish a job.

What if we define the job as "transport the people on his street where they need to go during the day". Would he advocate that the most efficient economic method to accomplish that is to make everybody share one vehicle, maybe a giant bus or something like that, that takes you where you need to go, picks you up, and so forth?
* For anyone who doesn't study these problems for a living, this might be translated (with some loss) to “The single provider could use the exact same truck assignments as the five companies do, but a single provider could also use options that multiple providers couldn't.”[/QUOTE]

Dr. Love

07-10-2010, 07:00 PM

Your first "therefore" claim doesn't necessarily follow, for reasons stated oft in this thread. Particularly, the cost structures for each company might differ and probably do. As an extreme example consider if company A (the single company provider) has to pay its labor X, and Companies B, C, D, E, F combined pay their labr < X, and all else is equal. Then what?
This is not the model that I'm using. If you feel the need to include labor costs, put it in the objective function. They are not part of the constraints. My only point is that, under a simple vehicle routing problem model of the garbage system, like the one I presented, the mathematical content of emacknight's argument is correct. Throughout this thread, the main point of contention is that emacknight assumes this type of model and you reject it, but neither of you really acknowledge this fact.

Uh no you didn't. Maybe "function" doesn't mean what you think it means.
I assure you that it does. I'm not going to write out an explicit objective function because (1) vBulletin doesn't provide a way to write math notation (2) I don't want to waste time defining what will end up being dozens of parameters and variables and (3) you seem to really enjoy nit-picking, and I don't want to slog through dozens of pages of modeling minutia that will go no where in terms of resolving this argument.

You could make the supposition, but you haven't proved it, because it is not provable as a general case. I already gave a counter-example.
What exactly do you want a proof of? The only thing that you've taken issue with is this:

Let A be a set defined by a set of constraints M1 (i.e., x is in A if and only if x satisfies all constraints in M1), and B be a set defined by the sets of constraints M1 and M2. Then B is a (not necessarily strict) subset of A.

Perhaps the real world as a whole is, but the trash problem we are discussing most certainly is not.
Oh, but it is. What if the union workers go on strike, does your model take that into account? What if Al-Qaeda bombs the garbage dump? What if the union workers are all members of Al-Qaeda? The simple fact is that no model can take into account all real world situations, even for something as simple as a garbage pick-up. The models just wisely choose what possibilities are too ridiculous to put into the model.

Not sure what you mean by "computation reasons" to be honest.
Mostly the fact that many problems are in NP. For a sufficiently complicated TSP there's not enough computer power in the world to solve it in a reasonable amount of time.

LOL this is GD, not the pit. I figure readers are learning...
As far as I can tell, no one is learning anything in this thread.

not_alice

07-10-2010, 07:32 PM

This is not the model that I'm using. If you feel the need to include labor costs, put it in the objective function.

You haven't describe a model or a function. Both will have variables, equations, etc. This is one of my big problems with this thread. People are using terms of art incorrectly, and then asserting that they know what they are talking about. You might as well be saying the sky is green on a sunny day, to be frank.

They are not part of the constraints.

I am sorry, which part of the invisible model described the constraints and their relationships?

My only point is that, under a simple vehicle routing problem model of the garbage system,

Define "simple".

A single truck routing model is essentially a TSP, which is pretty much the poster child for "not simple". This has been well known for many decades. If you have a "simple" solution, then you have your hand in Warren Buffett's *and* Bill Gate's wallets my friend, and hats off to you! Seriously, it owuld be that big of a deal to show that there is other than a brute force solution to a TSP (and by extension all NP-Hard problems).

like the one I presented, the mathematical content of emacknight's argument is correct.

No, to be frank again, it is just evidence of amatur analysis, with the poster(s) unwilling to say "Hmm, maybe there is something to learn here".

Throughout this thread, the main point of contention is that emacknight assumes this type of model and you reject it, but neither of you really acknowledge this fact.

If you get what he is thinking, then please provide the full model, with actual equations and all, and then we will go from there, OK?

Until then, there is nothing to discuss but that the OP postulated a hypothesis which has not been subject to any testing whatsoever.

I assure you that it does. I'm not going to write out an explicit objective function because (1) vBulletin doesn't provide a way to write math notation (2) I don't want to waste time defining what will end up being dozens of parameters and variables and (3) you seem to really enjoy nit-picking, and I don't want to slog through dozens of pages of modeling minutia that will go no where in terms of resolving this argument.

What, your keyboard does not thave +/-/= keys? Scribble it would with a pen and post a link to it if you must. "Dozens of variables"? Meh.

Try me. If you have something to show, then show it. Don't pretend that "the margin is too small for me to show the model and proof" here. I pretty much call BS if you want to stick on that tack, because you don't really need "mathematical notation" to describe these models, and even if you did, you can get pretty far without it, and some verbiage. Give it a try - you are the one that said how simple the model is.

Here is a start:

Let n(c) be number of companies, where n(c) >=1
Let n(h) be number of houses in town, n(h) >=1
Let H(i) be the company choice of house i, where i= 1..n, and H(i) <= n(c)

....

See how it might go?

What exactly do you want a proof of?

That the most efficient system of trash pickups necessarily precludes 5 trucks on the OP's street. That is his claim - he saw 5 trucks, and offers it as evidence that the system is inefficient by "total cost" whatever that means.

I already showed how the cost could in fact be less with 5 trucks than with 1.

So prove his claim is always true, and by implication that my counter example is false.

The only thing that you've taken issue with is this:

Let A be a set defined by a set of constraints M1 (i.e., x is in A if and only if x satisfies all constraints in M1), and B be a set defined by the sets of constraints M1 and M2. Then B is a (not necessarily strict) subset of A.

Why not build a model of actual trash pickup in the OP's town first. Then maybe we can move to a more general principle. Make the case with the problem as presented first.

Oh, but it is. What if the union workers go on strike, does your model take that into account?

If it is a concern, sure, labor supply, availability and costs are likely part of it. Strike or not, you have to take into account sick days, weekend availability, shift differentials, etc. These can vary from company to company, so yeah, now you are thinking!

The simple fact is that no model can take into account all real world situations, even for something as simple as a garbage pick-up.

These are weasel words that I bet come from someone who has never built models at all. I asked earlier, and I ask again - can you share your experience in these sorts of matters, so readers can judge your qualifications?

Seriously, it is not so hard to build a model, nor are the constraints you describe hard to model. For a pro.

The models just wisely choose what possibilities are too ridiculous to put into the model.

And nothing either I or Sam Stone presented so far falls into that category.

Mostly the fact that many problems are in NP. For a sufficiently complicated TSP there's not enough computer power in the world to solve it in a reasonable amount of time.

Ah, so now we have gone from "the trash problem is simple" to "We are talking about an NP hard problem after all".

OK, well, then, how are you going to model it and solve it then? The trash is piling up while you think about it :)

As far as I can tell, no one is learning anything in this thread.

As long as you are speaking for yourself, I would agree with that, but I think you are about to get through it :)

gonzomax

07-10-2010, 08:58 PM

Be patient. Soon enough, like cable, one of the garbage companies will buy up the rest. Then that pesky competition goes and your price options will disappear, your rates will climb and service will get worse. Companies don't like competition. Customers do. They will eliminate it.

Dr. Love

07-10-2010, 09:16 PM

Define "simple".
That the model can be written down in a reasonable number of lines. The TSP, for example, can be written in 5 lines. The models you're asking us to write will surely require hundreds of equations. Worse than that, I think you're also asking for real world parameter values! If you are, enjoy the feeling of moral superiority that comes from winning an internet argument because no one else was willing to do months of research to win said argument. I'm simply not doing that much work unless I'm getting a paper published out of it. Maybe if you pay me to do it.

What, your keyboard does not thave +/-/= keys?
My keyboard doesn't have a key of the Greek letter Sigma. Below, I'm going to use "S" to represent the summation symbol.

What exactly do you want a proof of?

That the most efficient system of trash pickups necessarily precludes 5 trucks on the OP's street. That is his claim - he saw 5 trucks, and offers it as evidence that the system is inefficient by "total cost" whatever that means.

<snip>

Why not build a model of actual trash pickup in the OP's town first. Then maybe we can move to a more general principle. Make the case with the problem as presented first.
Wow. You have no idea what I'm actually arguing. I haven't built, and emacknight didn't build, a model because it isn't necessary to do so explicitly in order to demonstrate the point. If you really want to play this game, maybe I will. I can make a simple TSP-based model of an uncapacitated garbage collection problem. Then, if you really feel that the model is lacking, we can discuss that. But first, let's make sure we're on the same page about the TSP.

Suppose we have a graph (V,E), where V is the set of vertices and E is the set of edges. Associated with each edge (i,j) in E there is a cost c_ij for taking that edge in a tour. We are given decision variables x_ij, binary values, x_ij = 1 if edge (i,j) is used in the tour, and is zero otherwise. The TSP is given by

min S_{(i,j) in E} c_ij x_ij
subject to
S_{j in V : (i,j) in E} x_ij = 1, for all i in V
S_{i in V : (i,j) in E} x_ij = 1, for all j in V
S_{i in K, j in K : (i,j) in E} x_ij <= |K| - 1, for all K that is a proper subset of V
x_ij in {0,1}, for all (i,j) in E

Do you understand this? If so, tell me why the third constraint (S_{i in K} S_{j in K} x_ij <= |K| - 1, for all K that is a proper subset of V) is needed to model the TSP.

not_alice

07-10-2010, 09:19 PM

emacknight

07-10-2010, 09:34 PM

No, a package of salt is not a commodity to you in that way. It might be a kitchen staple, but not a commodity. This (http://en.wikipedia.org/wiki/Commodity) is good enough for my purposes right now.

Let's say that initially everyone is assigned a trash company at random so every one has the same market share.

But via marketing, they are allowed to try to get people to switch.

Every week, people will switch. Some will leave Company A, some will arrive, this is called churn.

So what you're saying is that clients will switch back and forth between companies, based on little more than marketing and perhaps price. As if to suggest there isn't much difference between the service provided, that a change in price won't negate. Sounds to me like each company is providing the same service.

Oh, and when Dr. Love said, "I assure you that it does. I'm not going to write out an explicit objective function because (1) vBulletin doesn't provide a way to write math notation (2) I don't want to waste time defining what will end up being dozens of parameters and variables and (3) you seem to really enjoy nit-picking, and I don't want to slog through dozens of pages of modeling minutia that will go no where in terms of resolving this argument."

He wasn't talking about his keyboard.

not_alice, you seem to REALLY like modeling. Why not play with this as a fun little challenge. Write a little model that has trucks picking up trash. Then write a model that has 5 companies picking up trash from the same area as the first, where they each get a random* subset of the original client base. We'll be here discussing the topic at hand, let us know how it goes.

*I don't give a fuck what word you'd like to use there, or what definition you'd like to use. Enjoy.

not_alice

07-10-2010, 09:40 PM

That the model can be written down in a reasonable number of lines. The TSP, for example, can be written in 5 lines. The models you're asking us to write will surely require hundreds of equations.

How many lines have been written avoiding writing those hundred so f lines?

besides, that was partly our point - it is not as simple as you think. Not that 100s of lines are going to phase Sam Stone or I. Check in when you get into the millions....

Worse than that, I think you're also asking for real world parameter values!

Hey, the OP described a real world problem as simple, and others jumped into agree.

You can make guestimates to start, that is fine. That is how it goes - I said upthread, in the real world these are iterative and collaborative efforts.

I am pretty sure the OP can identify the truck models, and form that much will become apparent, particularly capacity. He can oberve the time it takes to pull over and dump the trash and then move on, let us know the mean time and std deviation. That would be a good start, but not hard to do.

If you are, enjoy the feeling of moral superiority that comes from winning an internet argument because no one else was willing to do months of research to win said argument.

LOL I guess that is a concession coupled with sour grapes.

But remember, the OP said he has been observing this already since "last year", that means at least 7 months, maybe even up to 19 months. Really, he can't guesstimate the truck capacity or the service delivery times yet, but he is certain of the absolute hypothesis he presented?

I'm simply not doing that much work unless I'm getting a paper published out of it. Maybe if you pay me to do it.

Yawn. Get the truck capacities off the web, and ask the OP for the distribution of service times. Or even guesstimate from watching n your own neighborhood if you have something similar. I live on a similar street, but I am rarely awake when the trash guys come by. But how hard can it be? Find a truck and follow it for an hour. That's a good start!

My keyboard doesn't have a key of the Greek letter Sigma. Below, I'm going to use "S" to represent the summation symbol.

OK, traditionally in such cases, we use sum(...), but S is fine I suppose.

Wow. You have no idea what I'm actually arguing.

Yeah, that's true! But you have now idea of what this thread has been about until you jumped in. You are somewhat off topic from what I can tell, but close enough and willing to write an equation that you might get pulled back in for the better.

I can make a simple TSP-based model of an uncapacitated garbage collection problem.

what does "uncapacitated" mean?

Then, if you really feel that the model is lacking, we can discuss that.

I think Sam Stone and/or I suggested that exercise about 150 posts or so ago.

But first, let's make sure we're on the same page about the TSP.

Suppose we have a graph (V,E), where V is the set of vertices and E is the set of edges. Associated with each edge (i,j) in E there is a cost c_ij for taking that edge in a tour. We are given decision variables x_ij, binary values, x_ij = 1 if edge (i,j) is used in the tour, and is zero otherwise. The TSP is given by

min S_{(i,j) in E} c_ij x_ij
subject to
S_{j in V : (i,j) in E} x_ij = 1, for all i in V
S_{i in V : (i,j) in E} x_ij = 1, for all j in V
S_{i in K, j in K : (i,j) in E} x_ij <= |K| - 1, for all K that is a proper subset of V
x_ij in {0,1}, for all (i,j) in E

Do you understand this? If so, tell me why the third constraint (S_{i in K} S_{j in K} x_ij <= |K| - 1, for all K that is a proper subset of V) is needed to model the TSP.

Why? Did you copy and paste it from somewhere? A generic TSP is pretty standard stuff.

The more interesting parts are the modeling of the costs, and maybe an explanation as to why you are prepared to model this as a TSP as opposed to any of a zillion other ways to do it.

Because whichever type of model it ends up being, # trucks and # companies are going to be parameters, and it is the resulting sensitivity analysis that is going to prove or disprove the OP's hypothesis.

Oh yeah, there is the secondary hypothesis too - that all of this is going to be "simple". How will we know when we cross that line? :)

not_alice

07-10-2010, 09:51 PM

So what you're saying is that clients will switch back and forth between companies, based on little more than marketing and perhaps price.

Why they do it or how they are incented doesn't matter. They do it in every competitive service, be it phones, wireless, ISP, tv, supermarket shopping, car buying, whatever. People have loyalty, but only so far. So sorry, you can claim the products are undifferentiated, and always will be, but then you would have to make the same for Verizon vs. ATT vs. Sprint vs ... Sure there is a lot of overlap of service, but there is a lot of difference too.

As if to suggest there isn't much difference between the service provided, that a change in price won't negate. Sounds to me like each company is providing the same service.

Yeah but you think posted the OP and are defending it to the death too. Don't blame you, since early on you pulled your dick out to posture. Doesn't make you right about anything though.

Oh, and when Dr. Love said, "I assure you that it does. I'm not going to write out an explicit objective function because (1) vBulletin doesn't provide a way to write math notation (2) I don't want to waste time defining what will end up being dozens of parameters and variables and (3) you seem to really enjoy nit-picking, and I don't want to slog through dozens of pages of modeling minutia that will go no where in terms of resolving this argument."

He wasn't talking about his keyboard.

LOL I type everything here using a keyboard, I assumed all of us do. What pray tell *was* he talking about when he said the editor doesn't provide a way to write math notation? How does he interact with the editor other than via keyboard?

And aren't you getting a little snippy anyway?

not_alice, you seem to REALLY like modeling. Why not play with this as a fun little challenge. Write a little model that has trucks picking up trash. Then write a model that has 5 companies picking up trash from the same area as the first, where they each get a random* subset of the original client base. We'll be here discussing the topic at hand, let us know how it goes.

That IS the topic at hand, and I have been trying to get information from you to create a model to test your hypothesis, but you are not forthcoming. The only quantitative thing you have shared is that you think your dick is big, so I should pay attention to you.

But maybe , without alluding to your dick, you might find a way to take a deep breath, and reconsider what aspects of your OP you might write differently if you had to.

Just to remind you what you said, here it is in its entirety:

Government Waste vs Market Inefficiencies
The debates involving health care and UHC, and now debates about farming, tend to present the notion of government waste as repudiation for socialist policies. The most recent being food rotting in government warehouses in Venezuela and the inability of government to distribute food. A simple fact hard to refute.

But today is garbage day in my little neighbourhood, which means the free market is demonstrating inefficiencies.

All of the past cities I've lived in had garbage removal as part of city taxes. Most of the time it was a government run program, but some times it was an external company like Waste Management. And in each of those cases government waste was apparent. All of the typical complaints people have of government programs existed.

My city, on the other hand, has 5 separate companies offering waste removal--sounds like the perfect free market scenario. Each company has an incentive to optimize their routes so as to minimize drive time, to provide the best customer service, and to fuck up the least. Which should result in lower prices and a better product. All of the best parts of the free market we're promised.

Except for one simple problem: 5 separate trucks are going to drive by my garbage today before one of them stops to take my trash. The free market is providing 5 times as much garbage collection as we need. A process that to me is insanely inefficient,a that repetition is built into the price. So where government could contract to a single company, instead with have the same process run 5 times.

So on this issue, which is better and which is worse? Full government take over of the service? Government contract leading to the inevitable sweet heart deal. Should we have government intervention to force efficiencies? Should we allow/prevent collusion between companies? Or continue to accept this aspect of inefficiency.

Anything in there strike you as a claim that is not supported, but maybe could be if you put in the effort? Anything at all?

emacknight

07-10-2010, 09:57 PM

With regards to TSP.

Are we all clear that the issue at hand is comparing 1 large TSP vs 5 small TSP working in the same area, where the 5 small TSPs draw from the client list of the large TSP?

And are we all aware that of these 5 companies, the city contracted with one of them (WM) to collect recycling, where every house has recycling (tax funded)?

Personally, I don't like using this data set, too many oranges. But two questions stand, [1] do you think the collection process that WM uses for recycling looks like the system they use for their trash collections (first is entire set, second is it's market share from first set).

[2] Do you think the collection process that WM uses for recycling looks like the entire 5-company system? By that, do you think they generate 5 client sets from the original, then divide that set to 5 trucks {or however many trucks the 5-companies use}?

Why or why not, please phrase your answers in the form of a question.

Dr. Love

07-10-2010, 10:18 PM

How many lines have been written avoiding writing those hundred so f lines?

besides, that was partly our point - it is not as simple as you think. Not that 100s of lines are going to phase Sam Stone or I. Check in when you get into the millions....
Sure, when you're using AMPL or LINDO or even C. vBulletin doesn't have quite the same capabilities.

Yeah, that's true! But you have now idea of what this thread has been about until you jumped in. You are somewhat off topic from what I can tell, but close enough and willing to write an equation that you might get pulled back in for the better.
Perhaps you can enlighten me as to what I missed? The OP started out with a statement that he sees "too many" garbage trucks going down his street, and the garbage system was inefficient because of this. A number of posters remarked, correctly, that this observation was not sufficient to show that the system is inefficient. Much argument and a little dick measuring ensued. At some point, the OP conceded that he had not put up enough information to judge the efficiency of the system, and put up a different, subtler and more theoretical argument that the system is still inefficient. So far as I can tell, no one has directly addressed this new argument.

what does "uncapacitated" mean?
See, this is one of those terms of the art. It means that some elements of the problem (in this case garbage trucks) don't have a limited capacity. See also the Uncapacitated Facility Location Problem and the Uncapacitated Lot Sizing Problem.

Why?
I'm not sure that you can.

Did you copy and paste it from somewhere?
I used a reference to make sure I didn't write it down wrong. I also changed the notation of the index sets to better suit my planned expansion of the problem to a garbage collection model.

The more interesting parts are the modeling of the costs...
You've hit on one good reason why the model I'm trying to communicate--the model that I think emacknight is imaging--is not an accurate model of reality. The implication from point 5 to 6 (from feasible regions to objective values) depends on the fact that the costs are the same for all companies involved. There are some models out there for which 5 and 6 are both true statements. If you understand the assumptions under which they are true, and why those assumptions do not hold, then maybe some learning can take place in this thread.

and maybe an explanation as to why you are prepared to model this as a TSP as opposed to any of a zillion other ways to do it.
You brought up TSP. I'm just running with that.

Dr. Love

07-10-2010, 10:27 PM

emacknight

07-10-2010, 11:05 PM

Yawn. Get the truck capacities off the web, and ask the OP for the distribution of service times. Or even guesstimate from watching n your own neighborhood if you have something similar. I live on a similar street, but I am rarely awake when the trash guys come by. But how hard can it be? Find a truck and follow it for an hour. That's a good \start!

You keep asking for stuff that isn't relevant. Either you don't understand what's going on, or you think that's a masterful debate tactic. In either case we've all been ignoring it, but you haven't caught on.

All of the supposed variables you think you need don't matter. Pick a truck capacity, pick a population, pick a street length, pick the colour of the kitten hiding behind the bin, pick the mittens that the kitten wears.

You are comparing 1 large company vs 5 small ones. Make the trucks the same, the time it takes per pickup the same, labour costs the same, the number of kittens wearing mittens, even throw in some terrorists and snow. All the same. Each time you ask for an irrelevant piece of information, your appeal to authority gets weaker and weaker. But the amusement I get from it grows.

emacknight

07-10-2010, 11:21 PM

emacknight, I think I understand your argument. Tell me if I have it right:

Suppose we have a complete listing of the route that every truck (for each of the five companies) follows. Call this list S1. Imagine an alternate universe where only WM picks up trash, and suppose that we have a complete listing of the routes taken by every truck in this case. Call this list S2. You argue that alternate universe WM could, if they wanted to, use S1 to route their trucks. But they don't. They use S2. There must be some benefit to S2 over S1, i.e., S2 must be more efficient than S1.

Another way to say it: any complete list of truck routes that is implemented by the 5 companies could also be implemented by alternate universe WM.

Are these correct?

Yup, that's it.

And once you do that, you can also go the other direction:

Given that S1 is made up of 5 routes, we can call them S1_sub_n, n is 1-5, representing each of the 5 companies.

Do any of the S1_sub_n mimic S2, a single provider going to assigned houses. Or do any of them mimic S1, a collection of 5 routes to what could be considered a random assignment of the entire set?

My assertion is that S1_sub_n, n=1-5, will resemble S2, and that the probability that any of them resemble S1 is P, where P approaches 0.

Damuri Ajashi

07-10-2010, 11:24 PM

It would have to be a mighty big cul de sac to start talking about economies of scale. But at that point, is it really a cul de sac?

We mentioned that. None of that proves any thing, those are jsut some of the parameters of a model. Maybe smaller trucks are more efficient....

None of what you suggests means 5 trucks can't work better - they can.

I don't think anything is going to convince you that 5 trucks and 5 crews covering the same block are "LIKELY" to be less efficient than a single truck with a single crew. Its all up in the air until you get granular detail.

They don't need to coordinate. Look at baseball teams - 30 teams each coordinating their own travel, but in the end, I bet the global travel model is pretty close to optimized. they don't need to consult with each other to fly the best routes individually, nor do they seek each other out to share trips where they can.

You don't think the baseball schedule is centrally coordinated?

You don't think the US wireless market has been and is competitive?

You asked if the auction system was anything less than ideal and I gave you an example of when it has been less than ideal. When 4G systems roll out, you will see the two market giants grabbing even larger shares of the market as almost every phone manufacturer is going to happily manufacture phones for them and then scratch their heads as they try and figure out if its worth making phones for this substandard signal range and sell them to dozens of smaller carriers. The smaller carriers have now taken to trying to get the larger carriers to let their customers roam on their networks the way that long distance carriers can use AT&T's networks.

What advantages do you see to having up to 7 overlapping systems of cell towers in the same area?

Lets take railroads for example. Sure you could see a use for multiple railroad tracks from Pittsburgh to Detroit but as some point are you really getting much out of the nth set of railroad tracks?

emacknight

07-10-2010, 11:30 PM

Just to remind you what you said, here it is in its entirety:

Anything in there strike you as a claim that is not supported, but maybe could be if you put in the effort? Anything at all?

Anything in there spell out exactly what I considered the goals of the comparison/efficiencies to be? You know, the goals/efficiencies you kept asking for over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over?

Damuri Ajashi

07-10-2010, 11:32 PM

OTOH, if the residents there are so convinced, they can collude to all use the same service, and then, problem solved, only one truck!

In my area, we used to have dozens of trash companies and it caused all sorts of problems with traffic. So the country passed a law saying that residential trash bins had to be 40 gallons and within 2 years most neighborhoods were served by one or two trash companies. In fact companies started to standardize pickup days so that your trash is picked up Tuesdays and Fridays, no matter which company you use and recycling is on Thursdays.

If you are buying raw salt of standardized quantity and quality on a market exchange, which you quite possibly need never take possession of before you can sell it, then you probably have a commodity on your hands.

What you get at the supermarket, not so much. That is a finished product.

OK so when you say commodity, you are talking about commodities as defined by the futures exchanges. I think people use the term commodity more colloquially than that. I think people (other than you) have been using the term commodity to mean substantially indifferentiable products or services.

emacknight

07-10-2010, 11:44 PM

Dr. Love

07-10-2010, 11:57 PM

Do any of the S1_sub_n mimic S2, a single provider going to assigned houses. Or do any of them mimic S1, a collection of 5 routes to what could be considered a random assignment of the entire set?
I don't understand what it means that "S1_n mimics S2."

emacknight

07-11-2010, 12:06 AM

Why they do it or how they are incented doesn't matter. They do it in every competitive service, be it phones, wireless, ISP, tv, supermarket shopping, car buying, whatever. People have loyalty, but only so far. So sorry, you can claim the products are undifferentiated, and always will be, but then you would have to make the same for Verizon vs. ATT vs. Sprint vs ... Sure there is a lot of overlap of service, but there is a lot of difference too.

First, it never occurred to me that you might be a chic.

Yup, you pointed to quite a few services that are undifferentiated. It requires a tremendous amount of marketing to make us think ATT has more coverage, or is it Verizon. I know it's the one with the blue map, or was that the Democrats. Which one has the iPhone? I know Republicans have the droids, or was it the clones.

Also, add gas stations to that list. I like the one that has the extra clean gas that cleans my car while I drive, and offers giant sodas. Unless that's the one that spilled a bunch of oil, in which case I like the one that didn't spill oil, assuming that one has any sized soft drink or sweet tea for a dollar.

Oddly enough, I was in 6 gas stations today, and couldn't tell you which company I used. I know one of them was across the street from a Freedom station because I turned to my wife and yelled, "freeeeeeeeeedoooooooom." She then pointed out how there were 3 gas stations on this single intersection, but only 2 on the 106 miles we biked before getting there.

It's almost as if the free market has a hard time dealing with products that are undifferentiated. Resulting in a lot of overlap and redundancy.

But if we've learned one thing in this thread: redundancy within a company is inefficient, redundancy between companies is competition, and that competition eliminates inefficiencies.

emacknight

07-11-2010, 12:15 AM

I don't understand what it means that "S1_n mimics S2."

Sorry, it's really late.

If you looked at the routes of any of the 5 smaller companies, S1_n, what would it resemble:

S1 is the complete collection of all the small companies, S1 = sum(S1_n, n=1-5)
S2 was the route created by a single company over the entire area

For some reason I'm picturing fractals, perhaps because Colbert did a thing with the Mobius Melt sandwich, and the MandleBLT Set.

I think each smaller set looks like S2. And that if any of the smaller companies were to farm it out to 5 sub-contractors, S1_n would look like S1, a collection of smaller routes.

not_alice

07-11-2010, 12:40 PM

With regards to TSP.

Are we all clear that the issue at hand is comparing 1 large TSP vs 5 small TSP working in the same area, where the 5 small TSPs draw from the client list of the large TSP?

No, not at all. I have mentioned several ways to model it, and I can think of lots more. We don't have enough data or even a sense of what we want to come out of the model yet, so why pin down the method right now?

Why or why not, please phrase your answers in the form of a question.

Why are you continuing to use verbiage instead of building a quantitative model?
That's my question.

not_alice

07-11-2010, 12:49 PM

Sure, when you're using AMPL or LINDO or even C. vBulletin doesn't have quite the same capabilities.

So far as I can tell, no one has directly addressed this new argument.
Because it is BS and already demonstrated as wrong by the counter arguments that preceded it. The "new" argument does not address any of the issues raised prior, so why bother changing topics?

reality. The implication from point 5 to 6 (from feasible regions to objective values) depends on the fact that the costs are the same for all companies involved. There are some models out there for which 5 and 6 are both true statements.

It has been said many times in many ways on this thread it is unlikely that the cost structures are the same for each of the 5 companies, nor would any of those models necessarily apply to the cost structure of a single provider service.

Not that minimizing the overall internal cost of the system is really what he cares about is it? I dunno, I keep asking, but he never quite says. If that is is, then why does he care? Seems like a meaningless statistic to me, for the purposes he wuld be using it for anyway. Because, as I noted earlier, if you don't tie it to the retail costs, then so what?

And unless you are an investor in *all* of the companies as a group (some sort of trash collection index) then who else would care what the overall system costs are relative to other ways of doing it?

If you understand the assumptions under which they are true, and why those assumptions do not hold, then maybe some learning can take place in this thread.

Cute! You deem lecture me about the points I have been making for 4 pages now.

You brought up TSP. I'm just running with that.

I brought up other models too.

What Sam Stone and I said was that in any case like this, you have to start by defining the parameters of the problem, and decide what you want to know about the system *before* you choose a model. so far, precious little of this has taken place.

not_alice

07-11-2010, 12:52 PM

You keep asking for stuff that isn't relevant. Either you don't understand what's going on, or you think that's a masterful debate tactic. In either case we've all been ignoring it, but you haven't caught on.

All of the supposed variables you think you need don't matter. Pick a truck capacity, pick a population, pick a street length, pick the colour of the kitten hiding behind the bin, pick the mittens that the kitten wears.

You are comparing 1 large company vs 5 small ones. Make the trucks the same, the time it takes per pickup the same, labour costs the same, the number of kittens wearing mittens, even throw in some terrorists and snow. All the same. Each time you ask for an irrelevant piece of information, your appeal to authority gets weaker and weaker. But the amusement I get from it grows.

Really? You don't think truck size matters? Then why not devise a truck that is big enough to park on the whole street that can pick up 10 cans at once? Or why not simply use an old fashioned mini pickup?

You are a silly boy. Put your dick back in your pants.

not_alice

07-11-2010, 12:54 PM

Yup, that's it.

And once you do that, you can also go the other direction:

Given that S1 is made up of 5 routes, we can call them S1_sub_n, n is 1-5, representing each of the 5 companies.

Do any of the S1_sub_n mimic S2, a single provider going to assigned houses. Or do any of them mimic S1, a collection of 5 routes to what could be considered a random assignment of the entire set?

My assertion is that S1_sub_n, n=1-5, will resemble S2, and that the probability that any of them resemble S1 is P, where P approaches 0.

So your argument is simply that because you could drive one truck on the route (sure, such a rute exists), there is NO possible way under ANY circumstances to improve on the "efficiency" of that by using more than one truck?

Can you improve on your mythical measure of efficiency in ways that don't involve adding another truck? If so how? If not, why not?

Magiver

07-11-2010, 01:12 PM

Assuming that they all get full up they are covering up to five times as much territory to do so. This means gas, this means man hours this means inefficiency.
It doesn't mean man hours or fuel inefficiency because fewer trucks and men are used per company. You always have overlap within the different zones in any competitive market or otherwise there would be no competition.

In the purest sense, competition is inefficient use of resources but it is the most efficient form of cost control.

not_alice

07-11-2010, 01:13 PM

I don't think anything is going to convince you that 5 trucks and 5 crews covering the same block are "LIKELY" to be less efficient than a single truck with a single crew. Its all up in the air until you get granular detail.

Neither Sam Stone or I said anything other than that - we don't have enough information on the particulars of this case, but that it is certainly possible that 5 trucks are more efficient.

When you say "more likely" what do you mean? That if you measure all one truck solutions, for all values of all parameters, against all n-truck solutions for all values of all parameters (and the parameters are not likely to be the same), you come out better one way or another x% of the time.

It is Sunday, so I plead that as an excuse, but what is the exact point you are making? My intuition tells me there are infinite independent cases in each, so how will you compare?

You don't think the baseball schedule is centrally coordinated?

The schedule is, but the traveling isn't. My understanding is each team has a "traveling secretary" - fairly high level position - to deal with travel

BTW, creating a centralized baseball schedule is no trivial modeling matter either....somewhat better now that teams don't share stadiums with other uses such as football as much as they used to, but still...actually, relatively easy to model compared to this topic, so worth doing for fun sometime.

You asked if the auction system was anything less than ideal and I gave you an example of when it has been less than ideal.

thanks for the insight. Its getting off topic form here, but I will just say I was thinking of the initial auctions in the US compared to various European auctions. I was thinking more of the failures of the auctions themselves due to poor acution design than any resulting issues to consumers. IOW, was the auction itself effective for the purpose intended?

When 4G systems roll out, you will see the two market giants grabbing even larger shares of the market as almost every phone manufacturer is going to happily manufacture phones for them and then scratch their heads as they try and figure out if its worth making phones for this substandard signal range and sell them to dozens of smaller carriers. The smaller carriers have now taken to trying to get the larger carriers to let their customers roam on their networks the way that long distance carriers can use AT&T's networks.

Getting off topic enough maybe for its own thread, but I'd ask why the smaller ones are in the market at all then? How do they justify that to their investors? That they will be acquired and earn ROI that way?

What advantages do you see to having up to 7 overlapping systems of cell towers in the same area?

I live in a rural enough area that towers are not overlapping in many cases. I live on the very edge of Sprint service for instance, and have had a tower engineer out to my place, and he took me to the local tower.

The local tower came to Sprint via an acquisition before I lived here. they are no interested in repositioning the antennas now that the town has grown, or adding new towers.

But they are happy to let me roam on the other towers. So without the overlapping towers (which still barely cover me) I would have no service at all.

Lets take railroads for example. Sure you could see a use for multiple railroad tracks from Pittsburgh to Detroit but as some point are you really getting much out of the nth set of railroad tracks?

Of course. No one is saying more is always better. It depends on the parameters of each situation.

But someone IS saying fewer is always better, regardless of the parameters. EMacK seems to not even accept that there are parameters to his problem, as he keeps presenting a proof that does not contain any parameters. Weird!

not_alice

07-11-2010, 01:14 PM

Anything in there spell out exactly what I considered the goals of the comparison/efficiencies to be? You know, the goals/efficiencies you kept asking for over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over and over?

Feel free to remind us specifically.

not_alice

07-11-2010, 01:19 PM

In my area, we used to have dozens of trash companies and it caused all sorts of problems with traffic. So the country passed a law saying that residential trash bins had to be 40 gallons and within 2 years most neighborhoods were served by one or two trash companies. In fact companies started to standardize pickup days so that your trash is picked up Tuesdays and Fridays, no matter which company you use and recycling is on Thursdays.

Sounds similar to where the OP is now I guess. Note that you are pointing out some of the parameters we have addressed - do all the trucks come on the same day? Are the bins standardized or not?

OK so when you say commodity, you are talking about commodities as defined by the futures exchanges. I think people use the term commodity more colloquially than that. I think people (other than you) have been using the term commodity to mean substantially indifferentiable products or services.

Yes, that is true. But we are trying to achieve precision, and it is wrong to say the products at he OP's house are not differentiated. He might not care about the differences, but they are there. Others might care.

That's not an uncommon situation in general - maybe we need a better word than "commodity" for it. But my understanding, based on the menu of different services offered by the OP, is that there is differentiations, just that his needs falls squarely in the overlap of the services, and not in the differences, so he doesn't care much.

not_alice

07-11-2010, 01:22 PM

Oops, just realized we need to clarify another point:

We are comparing 1 large company vs 5 small companies.

We are NOT comparing 1 truck vs 5 trucks.

Sorry if any of you were half way through your models.

So from that, each company can use as many trucks as they want/need. But it should be noted, the 5 small companies will have to use at least 1.

Yes, we covered that.

Any model comparison would have to address from 1->n companies, each of which has from 1->t trucks, among many other things of course. Companies are of course free to choose the number of trucks they deem best.

I thought of something late last night I want to ask you.

You say you see 5 trucks on your street. Does that happen every week? I also wonder what happens as the trucks move further away from your street - do they all follow the same path around town like a train?

not_alice

07-11-2010, 01:27 PM

It's almost as if the free market has a hard time dealing with products that are undifferentiated. Resulting in a lot of overlap and redundancy.

If only the government would make that competition go away and decide where a single gas station company should be.

You are missing the bigger point - all of the industries you mention are delivering *standardized* products. Woud you, for instance prefer that gasoline or telephone service NOT be standardized, so that products were not interoperable?

Maybe you would prefer a car that only used Freedom gas, and phone that can only call other Verizon phones. Would that be sufficiently differentiated in your mind? Why do you think that *doesn't* happen?

But if we've learned one thing in this thread: redundancy within a company is inefficient, redundancy between companies is competition, and that competition eliminates inefficiencies.

"We" have learned no such thing.

not_alice

07-11-2010, 01:29 PM

Sorry, it's really late.

I think each smaller set looks like S2. And that if any of the smaller companies were to farm it out to 5 sub-contractors, S1_n would look like S1, a collection of smaller routes.

Now you are going to say that trash pickup schedules are *fractal* in nature?

Do you even know what that means mathematically?

not_alice

07-11-2010, 01:32 PM

Originally Posted by Damuri Ajashi
Assuming that they all get full up they are covering up to five times as much territory to do so. This means gas, this means man hours this means inefficiency.

But not necessarily 5x more gas. Maybe smaller truck is more efficient than bigger truck.

Same with labor. Maybe bigger truck has more labor costs. Or maintenance costs.

Until you list it all out, you can't really know how it is.

Haven't I said this before? :)

gonzomax

07-11-2010, 04:29 PM

Size breeds its own inefficiencies. When IBM wanted to make a home PC to get into competition they went outside the company for the whole thing. They knew that with all the layers of management and people involved in all the projects, that it would take too long and cost too much in house. That is when the door opened for Gates.
Yet in America we have buyout after buyout, merger after merger and pretend efficiency is one of the reasons for allowing them. It stifles competition and development of better products, and allows them to set prices. There is no good from allowing oligarchy. We are less competitive, less creative and charge more.

emacknight

07-11-2010, 09:32 PM

It doesn't mean man hours or fuel inefficiency because fewer trucks and men are used per company. You always have overlap within the different zones in any competitive market or otherwise there would be no competition.

In the purest sense, competition is inefficient use of resources but it is the most efficient form of cost control.

There, that's the debate I wanted to have.

So you said, "competition is inefficient use of resources." Why are we okay to have resources wasted to competition, but not in a government run program? Waste is waste.

In any city that has city trash removal, residents (tax payers) have an expectation that not only is trash removed (the minimum acceptable standard) but that their money isn't wasted.

I'm not trying to create a strawman, I really believe people would lose their shit if W5 (is that still on the air?) ran an expose showing government run dump trucks driving in circles. Heads would roll. And I seriously doubt anyone would say, "well, at least they employed lots of people, and bought lots of gas."

I consider WM to be an extremely well managed company, and made a shit ton of money off them when it popped back in February. I plan to add them back to my portfolio within the next few weeks (3.8% dividend, low P/E ratio, and it just broke above its 30 moving average). I have every confidence that both their residential collection and recycling collection is as efficient as it can be. But if I ever heard that they had a system that looked like the amalgamation of all 5 companies (S1), I'd short them as fast as I could.

Likewise, if a government run system had the level of redundancies found in S1, I'd be pissed.

So why is that level of redundancy tolerated in the free market? It will still cost money, and that has to come from somewhere.

I want to eliminate the redundancy, but somehow maintain enough competition to control pricing. I also want a pony.

Replacing the 5 companies with 1 will eliminate the redundancies, and should cost less to operate that the total of 5 companies. But without competition, there is no reason for them to pass the cost off to the consumer. Putting in price controls encourages shortcuts leading to disaster. I like the thought of having yearly bids for the city contract. Competition for the contract will drive the price down. But I'm not sure what would happen to the other 4 companies in the mean time.

I was also thinking more about this churn effect. Right now, the only thing stopping me from switching companies is information: I don't know what all the others are charging right now. If someone was to collect that information and display it on a large digital sign, I'd be switching back and forth weekly. We could have a little mercantile market for trash removal.

As I said before, the free market has a really hard time dealing with undifferentiable products and services. Imagine a commodities market for cellphone time.

Garbage just happens to be one of those weird ones that we all need, and in most places the government takes care of. Ditto for electricity, water, sewage, natural gas, roads, and snow removal.

None of those examples make sense using the 5 company system. Like I said, we'd have 5 lines running to each neighbourhood. 5 gas lines, waterlines, sewage lines.

I was stuck behind a city bus this afternoon waiting to turn right, and it gave me a LOT of time to consider: what if there were 5 independent bus companies offering public transport. They'd all be running on the same major routes, making the same stops, and I'd get to wait behind 5 of them. It's actually a fun thought experiment. I imagine companies would team up with major destinations like malls, so one company would have exclusive rights to stop there, everyone else would have to stop down the street and take an overpriced shuttle bus. They'd all go for the most profitable routes and times, so service would drop off in less used areas. Good times.

Magiver

07-11-2010, 09:41 PM

There, that's the debate I wanted to have.

So you said, "competition is inefficient use of resources." Why are we okay to have resources wasted to competition, but not in a government run program? Waste is waste.
. I'm not really sure how to frame your argument or a response to it. When I think of government waste I think of my tax money not being efficiently spent which is a function of return on investment. When I buy groceries I don't think of the redundancy of having 5 grocery stores in the community I go to. In fact I actually drive past a store that is considered to be within walking distance of my house.

emacknight

07-11-2010, 09:59 PM

I'm not really sure how to frame your argument or a response to it. When I think of government waste I think of my tax money not being efficiently spent which is a function of return on investment. When I buy groceries I don't think of the redundancy of having 5 grocery stores in the community I go to. In fact I actually drive past a store that is considered to be within walking distance of my house.

Exactly. There is something about government waste that angers us.

I started this thread based on that premise. I couldn't help but imagine if a government run waste service operated like the collection of 5 companies (using S1 instead of S2). There would be massive waste, inefficiencies, and redundancies. All of that would be a waste of our tax dollars.

But in a free market, providing an undifferentiable product, we have that same (or comparable) level of waste and redundancy. But it exists between the companies, not within them.

Waste is waste. The costs have to come from somewhere.

I think that this level of intracompany waste (a term I just coined) gets neglected or ignored by proponents of free market solutions. They see the savings and innovations offered by competition, but fail to see the cost of overlap.

Magiver

07-11-2010, 10:19 PM

If the private sector is cheaper than the government service then it is more efficient. The idea of government "forcing" efficiency is a fantasy shared by all and experienced by none.

Damuri Ajashi

07-11-2010, 10:54 PM

There, that's the debate I wanted to have.

So you said, "competition is inefficient use of resources." Why are we okay to have resources wasted to competition, but not in a government run program? Waste is waste.

I think the most common answer to that is that there is nothing that limits government waste while competition will tend to minimize waste. Now that doesn't mean that government can't do things better than the private sector if your goals are not the natural results of a free market.

For example a free market does not educate all children, it doesn't even educate all smart children. It will tend to educate all rich children. So if you think educating all children to some minimum level is important, you will not be able to rely on the free market and the government will have to step in, they don't actually have to run the schools but they do have to collect taxes and fund the schools and then you can have all sorts of policy debate and make all sorts of value judgments how that funding works.

Similarly the free market will not provide health care to all Americans, and the current state of the private sector is even worse because the overhead associated with underwriting, claims adjustment and executive compensation accounts for 30 cents of every health care dollar that runs through health insurance companies while government health care (medicare, medicaid, and VA) only consumes about 2% of all claims it processes. We don't have to run all the hospitals but we do have to tax and fund the system, you can have policy debates and make value judgments about how that funding will work.

what if there were 5 independent bus companies offering public transport. They'd all be running on the same major routes, making the same stops, and I'd get to wait behind 5 of them.

Not exactly the same thing but most airline traffic falls into this pattern.

If the private sector is cheaper than the government service then it is more efficient. The idea of government "forcing" efficiency is a fantasy shared by all and experienced by none.

Markets tend to strive for efficeincy without government encouragement. It when the market cuts corners to achieve that efficiency that the government usually has to step in. One area where government involvement can CREATE efficiency is in health care where we can replace health insurance companies that have 30% overhead.

Magiver

07-11-2010, 11:30 PM

Markets tend to strive for efficeincy without government encouragement. It when the market cuts corners to achieve that efficiency that the government usually has to step in. One area where government involvement can CREATE efficiency is in health care where we can replace health insurance companies that have 30% overhead. Yes, there are ways government can intervene in things like health care. Bulk purchase of drugs is one of them. The purchase of drug patents is another. Then you have to add back in the bureaucracy. Unfortunately, there are no comparative models between private and universal health care because governments ration it down to an apples and oranges comparison.

emacknight

07-12-2010, 09:04 AM

Yes, there are ways government can intervene in things like health care. Bulk purchase of drugs is one of them. The purchase of drug patents is another. Then you have to add back in the bureaucracy. Unfortunately, there are no comparative models between private and universal health care because governments ration it down to an apples and oranges comparison.

Right. With a lot of the previous discussions about private vs public, the apples vs oranges part bogs down the real comparison.

Which is why trash removal provides such a fascinating data point, it's either picked up or it isn't. I find it hard to say one company picks up trash better/worse than another as long as it gets picked up. Since the service provided is undifferentiated there isn't much for comparison other than costs.

There isn't much point opening it up to private industry, since market forces will create the redundancies we see here, we're no better off. Trash removal is one of those services we all need, sure you could nitpick the hell out of that point, but why? We're all producing trash, it has to go somewhere.

From here we can start to re-examine social services. As I mentioned a few posts ago, having 5 companies offering public transit would be a mess. 5 buses all serving the same profitable street at the same profitable time, no buses serving the unprofitable ones. A case could be made that society is worse off for it, since we've got 5 times the buses bogging down traffic.

We've also looked at power, water, sewage, and natural gas. Why should any of those be different?

I don't know enough about cellular service in the US to really comment, but it's one thing to have 5 companies offering phones and accessories, but then we look at the real service provided to see it's hard to differentiate. We have a minimum acceptable standard when it comes to service, "did my call go through yes/no."

And then gas stations, we have a standard for what is sold as gas, other than that companies compete based on the size of the softdrinks offered. So private means gas stations are where they're profitable, but not where they are needed.

So can we work our way up from this towards health care? Is there a minimum acceptable standard, a commodity level of service in the health care industry?

Obviously when it comes to plastic surgery there is significant variation in the service provided. But what about other medical services. An appendectomy has become pretty routine, now defined as, "did they get it out yes/no."

Could we establish a public/private system where government provides the commodity level services (those needed by everyone, perhaps family medicine and ERs) and allow private industry to compete where there is variation (services people will choose to pay for like chiropractic)?

Damuri Ajashi

07-12-2010, 11:54 AM

Sam Stone

07-12-2010, 12:04 PM

The study of Medicare efficiency vs private insurance is not complete until you look at the amount of fraud that takes place under Medicare. Most of the 30% of overhead in the insurance industry is ultimately about the prevention of fraud.

Magiver

07-12-2010, 02:14 PM

Right. With a lot of the previous discussions about private vs public, the apples vs oranges part bogs down the real comparison.

Which is why trash removal provides such a fascinating data point, it's either picked up or it isn't. I find it hard to say one company picks up trash better/worse than another as long as it gets picked up. Since the service provided is undifferentiated there isn't much for comparison other than costs.

There isn't much point opening it up to private industry, since market forces will create the redundancies we see here, we're no better off. Trash removal is one of those services we all need, sure you could nitpick the hell out of that point, but why? We're all producing trash, it has to go somewhere.

From here we can start to re-examine social services. As I mentioned a few posts ago, having 5 companies offering public transit would be a mess. 5 buses all serving the same profitable street at the same profitable time, no buses serving the unprofitable ones. A case could be made that society is worse off for it, since we've got 5 times the buses bogging down traffic.

We've also looked at power, water, sewage, and natural gas. Why should any of those be different?

I don't know enough about cellular service in the US to really comment, but it's one thing to have 5 companies offering phones and accessories, but then we look at the real service provided to see it's hard to differentiate. We have a minimum acceptable standard when it comes to service, "did my call go through yes/no."

And then gas stations, we have a standard for what is sold as gas, other than that companies compete based on the size of the softdrinks offered. So private means gas stations are where they're profitable, but not where they are needed.

So can we work our way up from this towards health care? Is there a minimum acceptable standard, a commodity level of service in the health care industry?

Obviously when it comes to plastic surgery there is significant variation in the service provided. But what about other medical services. An appendectomy has become pretty routine, now defined as, "did they get it out yes/no."

Could we establish a public/private system where government provides the commodity level services (those needed by everyone, perhaps family medicine and ERs) and allow private industry to compete where there is variation (services people will choose to pay for like chiropractic)?
What you're proposing is a planned economy. It doesn't work. We have a history of it in the United States that shows how quickly it falls apart as you increase the size of the group. It's not the efficiency of labor that kills the attempt but rather the absence of reward for the people doing all the work. As we speak, we have a state where the doctors are threatening to pull out of Medicaid because of the low payment received by the government. That's a whole thread by itself.

We lean toward limiting government utilities to services requiring a physical right-of-way. It's grossly impractical to have multiple sewer systems running down a street. The same goes for phone lines, utility poles, water lines and roads. All that has to travel through public and private land. It's chaos to have a road torn up for 1 utility line.

Efficiency is not the goal in these situations. It's practicality. We depend on public utility commissions to keep private charter prices in line. As we can see in California, that doesn't always work when politicians stick their nose in it. When utilities are purely a government venture we don't even have the benefit of a utility commission to ride shotgun over prices. It is VERY common in my state for public employees to double dip their salaries (retire and get rehired for double the pay). This maintains the highest wage rates instead of the efficiency of a revolving work force where salaries start lower and build higher. It also screws the employment workforce.

Can a government efficiently run a service directly? It's technically possible civil service jobs and unions drag the likelihood of that down. Better it is done at the very least by private charter utility and regulated by politically insulated PUC's.