A few months ago, Mike Huemer published a pithy defense of business in general, and big corporations in particular. Some highlights:
Now, I have had personal experience with individuals, corporations, and government. All three are, of course, sometimes unsatisfactory. But my experience with large corporations is way better than my experience with either individuals or government — better from the standpoint of my ending up feeling satisfied, or being made better off by interacting with them.
Thus:
Customers of big corporations are often unreasonable and disagreeable, and the company puts up with it and bends over backwards to make the customers happy. Example: I buy a product at a big chain store, take it home, cut off the packaging, then decide, for no particular reason, that I don’t like it anymore. I take it back to the store to return it. Dialogue: “Is there anything wrong with it?” “Nope, I just don’t want it anymore.” “We’re very sorry, sir.” Then they give me my money back. That’s the sort of interaction that I typically have with big corporations and their representatives. (In case this isn’t obvious: in that story, I’m the one who’s being a jerk.)
And:
The attitude conveyed by most businesses is “You’re the boss.” “Welcome!” “We’re so happy to see you!” “Thank you, and have a nice day.” “Let us know if anything about your experience is not to your liking.” Etc. Sure, the employees are not really sincere in these expressions of emotion. But at least the business thinks they should act like they care about you.
The government has no such idea. The attitude conveyed in everything they do is “We’re the boss,” and they have no interest in pretending to care about you. Do what we say, give us your money, then get out. If there’s anything about your experience that is not to your liking, you can go **** yourself. (Note: Not actual quotations.)
Sometimes, you see an irate and unreasonable customer loudly berating an employee of some business over the business’ perceived failure. The employee generally listens patiently and tries to fix the problem. Try doing that to one of the government agents who are there to “serve and protect” you. You’ll probably wind up in jail, if not in the hospital.
Since I’ve made similar arguments in the past, my admiration for Mike’s essay is no surprise. Yet as I read, counter-examples and complexities sprang to mind. When is business unresponsive? When is government responsive? And why? My thoughts, in no particular order:
1. Though I’m homeschooling all four of my kids now, I’ve often interacted with public school teachers and administrators in my parental role. And I couldn’t help but notice: Almost all K-6 teachers are excruciatingly nice. Not a one has ever told me to “go **** myself.” Indeed, I routinely got good results from a single phone call or email. In my experience, if you don’t care for a teacher, public schools swiftly reassign your child. Furthermore, if you ask them to go easy on your kid, they will.
2. Still, there are plenty of things you can’t get public schools to do by asking. You can’t get them to spend more time on math and less on music and art. You can’t get them to focus more on learning and less on kids’ feelings. You can’t get them to harshly punish trouble-makers so the rest of the kids can learn in peace. My point is simply that on some dimensions, public schools were genuinely eager to please me.
3. The same holds in public universities. If college students complain to their professors or ask for special treatment, we usually appease them. And said students are rarely afraid to ask.
4. Mike focuses heavily on customer service, where business has a blatant edge over government. Government workers, on the other hand, usually have a much better deal than similarly qualified private-sector workers. Compared to the private sector, for example the average U.S. federal worker has similar pay, much better explicit benefits (insurance, pension, vacation), and awesome implicit benefits (job security, low standards).
5. We all know a few notoriously unresponsive businesses. Verizon is infamously frustrating to deal with. T-Mobile overcharges me a few dollars every month; they fix it when I complain, but there’s no cure in sight. Expedia makes is so hard to redeem your COVID-19 flight credit that I’m tempted just to give up.
6. On reflection, even these aggravating companies do a great job on most dimensions. FiOs works well. T-Mobile is still cheap after they overcharge me. And in normal times, Expedia is fantastic. But these shortcomings still confound me. Why can’t every business work as seamlessly as CostCo and Amazon?
7. Why does government ever seem to work well? The best story: Tax funding gives government immense slack. They get paid almost regardless of what they do, and almost never go bankrupt. This is ordinarily a recipe for crummy behavior. However, if you combine defective incentives with strong intrinsic motivation, the picture changes. Most bosses, for example, want their workers to like them. In the public sector, bosses can pursue this goal with little fear of losing money or worse. And so they do, leading to grossly inflated compensation – and lifetime employment of incompetents.
8. Public schools, similarly, can stonewall parents. To take one glaring example, they can take their normal budget, then decline to deliver in-person classes. Still, if you ask a nice person – like a kindergarten teacher – to do a nice thing that doesn’t cost them anything, they do it. Perhaps the most extreme example is the lavish funding for special ed. No one enjoys saying “No” to handicapped children – and if tax-payers pay your bills, you never really have to say it.
9. Flip side: If you ask a nice person to do good thing that doesn’t sound nice, the fact that it doesn’t cost them anything doesn’t help you. As a parent, I tried to get public schools to give my kids more math and less music and art, but they refused with beatific smiles. “Oh, well we believe in educating the whole child…”
Question for discussion: What exceptions to Huemer’s rules have you experienced?
READER COMMENTS
Kendall
Sep 28 2020 at 11:49am
I think public libraries are incredibly well-run. If you request a book, most major libraries will get one immediately. They also do a nice job holding items, and like public school teachers, the vast majority are incredibly nice.
The private sector could theoretically have a service like a Netflix for the library, but then we’d probably have a million copies of Harry Potter, and they’d rarely want to order books that I might want sparingly.
Thomas Sewell
Sep 29 2020 at 1:51am
You mean like Kindle Unlimited? It’s true, they do have literally an unlimited copies of Harry Potter available to borrow and read, but they also publish a ton of Indie authors you won’t find elsewhere, including libraries.
The authors get paid by the number of pages read by readers, covered by a small monthly subscription fee, which seems to work out to a decent system overall.
Matthias Görgens
Sep 29 2020 at 11:39pm
There’s also Wikipedia and countless free websites.
James Strong
Sep 28 2020 at 1:11pm
Public libraries are a good example, I think. Generally helpful staff, clean facilities, and a huge collection of well organized books and other materials. I’ve had nothing but very positive experiences at them.
Adam Michalik
Oct 6 2020 at 11:38am
This is not true in certain big coastal cities, where public libraries act as de facto extension of homeless shelter systems.
Seth Green
Sep 28 2020 at 1:44pm
Corporations for whom you are the product rather than the customer are unlikely to say “You’re the boss.” “Welcome!” “We’re so happy to see you!””
Example: if you get locked out of your instagram account (possibly due to employee malfeasance), unless you happen to know someone in the right position (or have a lot of reach on social media!), Facebook/Instagram will offer you little help: https://twitter.com/dannyjhall/status/1310231730591346689
Example: YouTube might delete your channel without any explanation:
https://www.youtube.com/watch?v=hAEdFRoOYs0
discussion here: https://news.ycombinator.com/item?id=24571038
I believe that both of these people got their problems addressed, but would you or I have been able to? Only after a lot of frustration and hair-pulling, I think. And that experience is more similar to, say, trying to file your taxes without specialized software or an accountant.
Daniel Carroll
Sep 28 2020 at 1:45pm
Public schools are in the cross hairs of parents, media, administrators, and politicians. Therefore, they are eager to please everyone, as long as it doesn’t upset the balance between those powerful constituencies. You can’t get more math and science and less art and music because enough vocal parents and media disagree, and it would be painful and costly for schools to accommodate you. Suburban schools also get more funding (and more high achieving high income families moving into their district, which in turn increase property values which taxes are based on) by paying attention to test scores and academic achievement along preset criteria.
Think of public schools as a bundle – the cost of unbundling for specific parental requests is too high given their funding structure, powerful constituencies, and need for standardization.
Verizon, T-Mobile, and AT&T operate in an oligopoly where switching costs are high, relative to the money and hassle saved, unless you use prepaid phones. The service is mostly automated, and service touch points are very limited. In addition, many if not most customers don’t pay close attention to their bill as long as it is in the ball park. In my experience, AT&T pushes that beyond the limit with in-house TV service, as they tried repeatedly to jack up my bill 100% over a few years with slowpoke DSL service. I now use cable, and my cable provider does it as well, just not as aggressively, and their Internet service is better.
Retail is highly competitive and service sensitive. They are highly incentivized to bend over backwards to accommodate customers.
Thus, the simple model: government bad, business good, may work in the abstract. However, the economics vary across industries, and will drive outcomes that differ from that simple model.
Matthias Görgens
Sep 29 2020 at 11:41pm
Competition and ease of market entry might be better explanatory variables than public vs private.
Ben
Sep 28 2020 at 2:01pm
Exceptions in customer experience occur once you reach the limit of the span of control of the individual you’re interacting with at the company.
In Huemer’s example of returning unwanted merchandise the company associate he’s interacting with has been granted a span of control to accept the return and refund the money. The retailer has already priced this into their model and built a budget for these returns. In fact – the best retailers (Nordstrom’s) give a lot of decision-making authority to their front-line team members and the result is engaged employees and enthusiastic customers.
Where a business gets less responsive and moves towards a “you can go **** yourself” attitude is when you point something out which is beyond the individual’s span of control. Example: explaining that it’s obvious that their staffing model would benefit from a review of queuing theory. The team members and store managers aren’t going to care because team members don’t get paid to care and managers (especially in big business) have their cost targets pushed down to them. If you get in touch with a regional manager, they may start caring because this could be within their span of control but everyone before that person will politely tell you to **** off and not be responsive.
With government agencies we just hit this point very quickly. Agencies are not built to be responsive and there is no decision-making authority pushed down to the front lines (big exception is actually the Police, Fire Dept, etc which is why cops can let you off w/ a warning vs a ticket). Front line government team members (think DMV) have a sense of powerlessness because they can’t change anything. DMV Customers are powerless because they know the DMV has no competition and so every transaction is a miserable experience of unenthusiastic customers engaging with unengaged employees to partake in the delivery & receipt of crappy service.
As an aside using How to Win Friends and Influence Others can be very powerful to at least make the experience less bad because the transaction may involve some smiles.
AMT
Sep 28 2020 at 2:11pm
I think most importantly businesses might be superficially “nice” to customers, but that doesn’t mean they aren’t trying to extract as much of your consumer surplus as possible, and particularly in nefarious ways. I would recommend this very interesting book that discusses common business practices that will probably make you think we are a bit further from perfect competition than you thought:
https://www.amazon.com/Rents-How-Marketing-Causes-Inequality/dp/1732511209
After reading it I thought, yeah, all of these examples seem a lot closer to what you see in reality than the economic theory.
Floccina
Sep 28 2020 at 4:37pm
I’ve wondered why Government schooling and healthcare are not much worse than they are. I think it is because teachers, MD’s and RN’s etc. consider their professions a calling/charity. They do that work in part as a rewarding act of charity. Some people would teach school for free.
Compare those professionals that with most other school and hospital staff, an example would be the people who work in the cafeteria. Different story.
Fazal Majid
Sep 28 2020 at 7:38pm
And then the government also includes people who will literally willingly go die for you, e.g. if you foolishly go traipsing around in Afghanistan and are kidnapped by the Taliban, requiring Special Forces to rescue you, or if you are caught in a fire and firefighters have to come extract you.
Ben
Sep 29 2020 at 6:54pm
So of we are going beyond service sector then private sector checks these boxes too. examples:
Blackwater (or whatever they call themselves these days),
Private fire fighters exist for both wildfires and oil rig fires. More examples likely exist but these are 1st that come to mind,
Healthcare has a lot of private sector doctors and nurses who will care for you regardless of ability to pay. Theoretically they bbn put life on line if you have communicable diseases (eg Ebola)
Taxi drivers will engage in the life threatening task of moving you from point a to b on public roads
Coal miners, fisherman, and others in resource extraction have higher risk of on the job death than non-military, non-police roles in government.
Conceivably the private sector takes far more risks on your behalf than the government does.
Vivian Darkbloom
Sep 29 2020 at 1:38am
I would cite the major express delivery services as an exception to the rule. My experience is in France so that may be a contributing factor; however, too often I’ve received very bad service, including customer service to solve problems. Drivers will often lie about the reasons they were unable to deliver (customer not at home, wrong address, etc) probably to improve their metrics which are geared more to increasing margins than improving customer experience. This routine deception is known and tolerated. Waiting a full day for a package that never arrives is common. Call Center Customer service is often very unhelpful and disconnected from the rest of the organization. I think the reason these businesses are less responsive than others is that the “customer” on the receiving end (where most problems arise).is not the same as the real customer on the sending end who has actually already paid for the service and who is usually not aware of problems with delivery. The discontunity of the person(s) paying and the persons receiving a service seems to be a common denominator of express delivery services and government.
Doctors are usually not “large corporations”; however, here I think that the profit motive does not necessarily equate with better customer service. It is routine to make an appointment for a certain time and have to wait up to an hour or more to actually see the doctor. Sure, unexpected things happen; however, this is almost certainly more due to the fact that doctors know they can bill more in a day if there is never any delay between appointments (probably taught in medical schools). After a very lengthy wait I once asked the doctor if he thought his time was worth more than his patients’. An underestimated cost of health care is the billions of dollars of opportunity time incurred by patients.
Phil H
Sep 29 2020 at 2:12am
I’m a bit worried about the nature of the question. Originally, and still today to some extent, I think (some/many/all?) businesses evolved to provide us with inessentials.
That is to say, the way they attracted customers was precisely through providing them with a good experience. That’s the point. That’s what they’re for.
Governments and individuals, on the other hand, are (have always been viewed as) necessary. It just wasn’t the same schtick. So I worry that comparing how pleasant my interactions with businesses are vs my interactions with government is a bit like comparing a trip to the funfair with a trip to the dentist. Dentists can and should make the experience more pleasant. But that’s not ultimately what they’re there for.
This is a rather unformed idea, so feel free to criticise. But it somehow seems an odd comparison to be making.
Jens
Sep 29 2020 at 3:25am
Businesses exist to satisfy customers. Governments exist to manage conflict.
Duncan
Sep 29 2020 at 2:38pm
I work in the IT department of a federal government agency, and I routinely provide a level service that you never get from a business. I mean this in both senses – my clients receive amazing service in some ways, and abysmal service in others.
For example, if my client asks for a new monitor, they get it within a few minutes for no charge. However, if they ask for a certain software program to be installed, they wait 6-8 weeks for approval for a license from headquarters.
Of course you probably see this type of thing in businesses as well, but I feel that the reason it’s more common in government agencies is two-fold:
They tend to be extremely large and uniform
All of the funding comes from the top
Nearly every aspect of my work is controlled by nationally standardized processes, and those processes allocate resources in a way that cannot possibly take into account the needs of each client. This is true of any large business, but federal agencies span the entire nation, which means their scope is necessarily massive. Also, as Ben noted in his comment, “Exceptions in customer experience occur once you reach the limit of the span of control of the individual you’re interacting with at the company.” This limit is reached very quickly when everything is standardized across the country.
My clients also don’t pay for anything they receive. This is common when providing internal services for an organization (teachers usually don’t pay their maintenance department to change a light bulb in the classroom), but with government, even the citizen requesting the product doesn’t pay. This means that the agency has a drastically reduced incentive to entice clients with more goods and services. In many ways clients are actually discouraged from making requests (think wait times in single payer healthcare systems). Sure, we have various metrics for determining client satisfaction (surveys, reports, etc.), but when clients can’t shop somewhere else and don’t pay for anything, then it’s impossible to know if you’re providing a good product.
We would think of an extremely large, standardized organization that doesn’t need to entice its clients, we would expect it to provide poor service. But I think that’s only looking at one side of the coin. The real problem is a misallocation of resources. Sometimes this means that you have to tell clients that they can’t have a $20 ergonomic mouse, and sometimes it means giving them all new $1,000 tablets that they didn’t ask for (and didn’t like). The problem isn’t that the organization has no incentive to provide a good product, it’s that all of the information is all heading in the same direction: from the top to the bottom.
Matthias Görgens
Sep 29 2020 at 11:34pm
I live in Singapore. Basically all my interactions with our government are of the competent and helpful kind normally associated with business.
Jens
Oct 1 2020 at 2:53am
It seems difficult to me (as others have noted) to call a problem a problem of the individual level that consists in the fact that in one place individuals systematically make bad decisions and in another (comparable) place individuals systematically make good decisions. Of course, the distinction between a good decision and a bad decision can be completely relativized. One then says: The good decisions there are bad decisions here and vice versa. But if I remember correctly, Caplan rejected this kind of relativism elsewhere. Therefore this text surprises me a little. Someone like Donald Davidson might have said that the same configuration of mind would have made bad decisions here and good decisions there, and that therefore it makes no sense to separate mind and place (in making a moral judgment).
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