I don’t know whether
or not it’s the case in New Zealand, but here it is not uncommon for a call for
tenders to include a caveat stating that “the lowest, or any tender
submitted, will not necessarily be accepted”.In other words, the Government, which probably
makes widest use of the tendering process, could award a contract to other than
the lowest, (or highest, if it’s selling some Crown asset), bidder. Or to none of them.
Generally, I believe, such a course
wouldn’t be followed. But the
option, when necessary, is there.It has
been used in certain cases in the past.One
instance I can recall was where the Government called for bids for a form of
timber tenure allowing the long-term removal of a certain volume of ‘pulp-wood’
annually on Crown lands in one of our south-eastern Interior valley regions.
One well-established
lumber company in that region was trying to access enough additional wood to
warrant building a pulp mill, and had already lined up some Japanese backers who
would provide most of the financing and an assured market for the new mill’s
product. Something they had invested a
great deal of time and effort in doing.
The established procedure was to approach the
Government for access to the desired timber, indicating what it was needed
for, and if the Government approved they would then prepare a bid proposal and call
for tenders.Which was deemed necessary
in the interests of fairness, so that everyone else who might be
interested could have a chance to bid. This was duly done, in this case, but it was done at
a time when there was an absolute ‘feeding frenzy’ underway to try
to secure timber harvesting rights for proposed pulp-mills.The bids on this ‘sale’ went absolutely wild, with
some of the potential pulp-wood seekers bidding more for essentially garbage-wood
than good saw logs had been going for just shortly before.
When the very knowledgeable Ray
Williston, then Minister of Forests, (a Socred), received the bids he realized that there wasn’t
any chance whatsoever the ‘high bidder’, nor most of the other
parties that seemed to appear out of nowhere trying to corral this timber, could ever make
a pulp-mill pay at the kind of wood prices they were committing themselves to.He set the whole process aside, under howls
of protest from the ‘high bidder’, and the Opposition in the
Legislature.
But what he did turned
out to be a very wise move that undoubtedly saved the ‘high bidder’,
(which wasn’t the firm originally seeking the wood), from certain
bankruptcy had they, or any of the others, been awarded that timber at the ridiculous prices they’d bid for
it. Later, the original firm who’d
first sought the timber, was awarded it. The ‘feeding frenzy’ was over by
then, (most of the pulp-mills proposed never got past the proposal stage ~ pure
speculative hype ). And that lumber firm built the pulp mill,
which was only ever modestly profitable, even at ‘realistic’
pulp-wood prices, and still operates, though the Japanese are no longer
involved. It did what it was intended to
do.Make the ‘best use’ of
wood that otherwise would have been ‘wasted’ in that region.
I believe the
tendering process can be useful, and in some instances where the Government has
tried to do certain things ‘in house’, (construction ofroads and railways here , for instance, and
particularly ‘maintenance’ on the former), they often seem to have
a very difficult time ‘managing’ effectively and efficiently.
For a good many years
here, in most regions of BC, the Department of Highways was rather derisively
known as the ‘Department of Holidays’.It wouldn’t be unusual to see a Highways
Dept, dump-truck and crew sitting for hours by the side of some road, doing
absolutely nothing for the better part of the day. If you ever asked any of these people how they
could justify that, time after time, they’d often respond by saying that
their ‘foreman’ had told them to go to such and such a road, but
had never told them what for. Or he’d
had them take out the gravel, but ‘forgot’ to tell the grader man
he was to meet them there to spread it. Radioing in, and reminding him, wasn’t
considered to be part of their job. Might embarrass him, in
front of his superiors.Besides,
there’s always tomorrow.
The other thing was
the insistence on using single-axle dump trucks with hydraulic brakes, on ALL
jobs, because if a tandem axle truck with air brakes were used too many of the
Highway’s employees ‘‘didn’t have experience’’,
(nor obviously the desire to acquire any) learning to drive something “that
complicated’.So it took twice as
many trucks, and twice as many drivers, to haul any sizeable quantity of gravel
or asphalt. But hey, isn’t that
what ‘Governments’ are for ~ to provide ‘employment’
?We couldn’t have people out
there not ‘feeling wanted’, could we? Might give them a trauma, or
something.It wasn’t the
same everywhere, there were SOME very good managers
and foremen with ‘Highways’.And ‘employees’, too. But the ‘norm’ left lots
to be desired.
The ‘correction’
here , ‘privatising’ the
whole ‘Maintenance’ process and putting overall regional road
maintenance contracts up for tender every five years or so, initially solved a
great many long-standing ‘management’, ‘motivational’, and ‘efficiency’ problems.But that process eventually created some new
problems, similar to the ones you mentioned re:- NZ
rail and road construction.Where an upcoming would-be contractor,
(after the first five years of privatisation there were many), bid ‘too cheap’, scooped the
contract from the first wave of firms, ( who, by then, knew their ‘costs’
very thoroughly ), and then had to cut back on the services, or ‘forget’
to pay incoming bills, or skimp on machinery upkeep, etc., just to
try to stay afloat.
Mixed up with all
this, unfortunately, is the politician who is an ‘ideologue’.Who believes either all ‘private’,
or all ‘public’, is always best, and will do his utmost to bend ‘reality’
to his particular point of view.The
only ‘reality’, really, is what Douglas said, ”That is
moral which works best.”Whether
it’s ‘private’ this, or ‘public’ that, the
important thing is does it “deliver the goods”, (or “services”),
when we need them, as ‘efficiently’ as possible, without it
breaking us to access them.But even so,
‘‘while we fiddle, Rome burns”, for the REAL problem, the CAUSE of WHY NEITHER ‘public’ NOR ‘private’
can reach their full potential lies elsewhere.
Regards,
Joe
-----Original Message----- From: W.
McGunnigle [mailto:wmcgunn@maxnet.co.nz] Sent:June 5, 20068:28 PM To: socialcredit@elistas.com Subject: Re: [socialcredit] the
"effect" of interest ~ back to Peter
Hi John and Joe
Thanks for your replies. I have always had doubts about the
"tendering" system. Incidently John, from an histroical standpoint,
you are not entirely correct. There is one notable example of the tendering
system failing during the late 1800's. Proir to 1890 it was common practice for
the construction of new railway lines in New
Zealand to be placed out
to tender. However there were so many cases of contract failure that the
government decided that the practice should cease, and they created the public
works department with an NZR subsidiary to handle future road and railway
construction and maintenance throughout New
Zealand. The costs were
carried by the railways dept.(who have always maintained their own roading out
of their running costs), and the roads board (who decided which parts of the
country needed the most roading support). The roads board were funded directly
from the government. Incidently this confirms your contention that
infrastucture development in New
Zealand, particularly in
the transport area, is best handled by a government department. It always
appears more expensive than the tendering system, but has the massive advantage
of an ability for comprehensive long-term planning. It is significant that
since the privatisation fad of the "Rogernomics Era" there has been
little evidence of any rational comprehensive planning for development of our
infrastucture. The deterioration of our roads and railways as well as failure
to provide redundancy for our power supplies are stark evidence of this. We
could also mention the failure of Telecom to upgrade its systems to provide
comprehensive broadband coverage as well.
With
respect to BC Joe, it appears that you have similar problems particularly in
tracing where government funding is actually going. If the BC government was
building infrastucture via a government department or corporation you would be
able to trace every dollar and ensure it was being spent "wisely".
Tendering to a private organisation immediately restricts public access to
financial figures of the tendering company on grounds of "commercial
sensitivity". I believe you have every cause to feel
apprehensive about such actions. I, personally, believe that every dollar
leaving government coffers should be throughly checked, accounted for and
related DIRECTLY to a government project or responsibility. Today too many
governments local authorities and similar governing bodies using public funds
have installed devices into their accounting systems that can be used to
"hide" unwelcome costs particularly debt servicing charges. Estimated
debt servicing costs vary enourmously, but they run as high as 30-40% in some
of those sectors. These however are estimates because, as you say Joe, actually
discovering the true destination of the vast amount of public money spent by
these governing bodies is a long exercise in frustration. I believe this is
another aspect of our continual campaign towards monetary reform and the
implementation of a Socred based monetary system.
Subject: Re:
[socialcredit] the "effect" of interest ~ back to Peter
Nothing really intelligent to say, Bill. Perhaps
someone should investigate why the tendering system seemed to work admirably in
the past but now has the sort of problem you mention. Are conditions
different, or are local bodies staffed with the dregs of public servants after
the best have been forced to go to private enterprise? (This thought is
prompted by some of the actions of drongos in our local body.)
Regards. John R.
From: "W.
McGunnigle" <wmcgunn@maxnet.co.nz>
Reply-To: socialcredit@elistas.com
To: <socialcredit@elistas.com>
Subject: Re: [socialcredit] the
"effect" of interest ~ back to Peter
Date: Mon, 5 Jun 200623:14:29 +1200
Hi Joe
I have been reading your debate with John Rawson with interest, because you
both seem to have a lot in common on the issue. Can I have comments from both of
you on the practice of "tendering" for a job? According to
"orthodox "economists this is supposed to ensure the most economical
and efficient company actually does the job for you. In reality many of those
gaining the job with the lowest tender often go bankrupt doing the job and some
else has to take over. Eventually the final product has created massive cost
over runs.
I would also like
your comments on another international practice. Companies in South
Korea and Taiwan work
closely with their governments when they tender for contracts overseas
e.g.shipbuilding etc. It is common practice for those governments to adjust the
exchange rate of their local currency for the tendering company so that they
can undercut rival companies elsewhere in the world. How could we combat that
sort of competition from a Socred standpoint?
Subject: RE:
[socialcredit] the "effect" of interest ~ back to Peter
(John Rawson wrote;-
) Straight to your second point. Because
I can't build roads to a sufficient standard, can't bribe my own police, run
border controls or build hospitals.
(Joe
replies:- ) Could you currentlydo those things through financing them from
straight taxation without there being an increase in overall ‘debt’
in the country as a whole?
If you could do that, would
your country not be in debt up to its collective eyeballs, and beyond?
Isn’t it more that you CAN’T do that? Nor can any other
modern country?
Look
at your ‘taxes’. If they’re deducted from
labour ‘incomes’ (of individuals)
they’re already included in the ‘prices’ of
consumables. Since it’s the ‘gross’ income before the
tax is deducted that forms part of cost, not the just the ‘net’ pay
you take home. If there’s already a ‘disparity’ between
the overall rate of income
generation and that of price
generation due primarily to ongoing ‘labour displacement’ and a
falling change in the ratio of A
to A+B, what happens?
Taxes are much beloved by Bankers, (long as they’re not singled
out unduly to pay them!) , because they remove
immediate purchasing power from the hands of consumers. And making
‘money’ scarce in this manner tends to increase its
‘value’ in relation to what it will buy. It makes the
Banker’s income, his ‘interest’’ which he will receive
over the life of the loan, more valuable to him, even if the ‘interest
rate’ on loans being made may decline. (This is the same as
with any other merchant ~ the decline in price (of ‘money’, in this
case), broadens the market. You can’t ‘profit’ until
you ‘sell’. Nor can the Banker, until he
‘loans’. Bankers are normally ‘deflationists’, as
Douglas told us.
To
us though, even if ‘taxes’ were supposed to keep consumer
prices ‘down’ (which they really don’t), they just make it
more difficult for us to acquire what we need and want. Since we
don’t have the ‘money’ necessary to take advantage of
acquiring consumables to the extent it’s been removed from us by
taxation. Unless we ‘borrow’ it, as ‘consumer
credit’, that is. And the businesses nowadays couldn’t exist
without that. The only real answer to this is to augment consumer incomes
with debt-free CONSUMER credits sufficient to maintain A
in constant ratio to A+B through time. Taxes might then be for the
provision of ‘services’ best provided through
‘Government’, and with the restoration of adequate purchasing power directly to consumers through crediting them
fully with ongoing ‘capital appreciation’ through the CPD and ND,
(including that of Government infrastructure, if it’s sensible and useful
and increases the ‘real credit’ of the community), could be
restored to that proper function to the extent they’re still necessary.
And I believe very strongly that the function of
hospitals, for example, is to care for the sick, not to make a profit for entrepeneurs. That's borne out in England where just
making the cleaning of hospitals come into that category, so that the aim is no
longer to keep hospitals clean, has resulted in periodical closures because of
"H bugs" etc.
(Joe replies;-) There are several interesting issues
here. On the surface, on a ‘moral’ basis, I agree with
you. It seems to me to be ‘morally’ wrong to believe there
should be anyone ‘profiting’ from the misfortune of anyone
else’s injury or illness. But ‘economically’ is a
‘doctor’ also an ‘entrepreneur’,
or is he not? If he cannot make a “price for his
product in excess of his costs” ~ a ‘profit’, actually ~
could he remain in practice long? Would he remain in practice long?
And would there really be any incentive to enter medicine as a career in
the first place? To go through all the training, to work the hours, to do
that very kind of demanding work, to assume the very real
‘liability’ (not to mention the ‘legal’ one that might
follow!) that in trying to ‘do no
harm’ a mis-diagnosis, or ‘off-day’
with the scalpel or other tools of the trade might cause?
‘Altruism’
there may be in many of us, and give me a doctor who has a genuine interest in
his profession and treating his patient over one who’s just there
‘for the bucks’ any time I’ve need of one, but we certainly
can’t ‘demand’ someone practice medicine just solely
‘for the good of mankind’, and restrict him to no more than his
physical sustenance for so doing , can we? Would
any of us do the same thing, day in and day out, for
that? Maybe there are those amongst us who would. But should any of us ‘be forced’ to do the same thing
for that? ‘Socialists’ seem to think so.
Which begs the question, “What else do they think anyone else should be
‘forced’ to do?”
For if that ‘policy’ is to be applied to
‘doctors’, it certainly isn’t going to end there.
Now to go beyond the MD’s themselves, the business of cleaning hospitals
should most certainly be done by those who know how to do it, and are paid wages commensurate with the very real risks they
incur in pursuing that occupation. We’ve witnessed the very same
thing in ‘privatisation’ here, and it is both a false saving, and
fraught with the same problems you allude to. The ‘problem’
is trying, once again, to ‘re-distribute’
an insufficiency. And it can’t be solved the way current governments are
trying to pursue it.
Now to
look at another side of the issue, ‘profit’ in modern double-entry
accountancy is not analogous to the ‘cash’ profit that might ensue
in a simple ‘barter’ type of transaction where ‘money’
is actually being used as a ‘medium of exchange’. Rather
‘profit’, or change in it, is an indication of the correctness of
some entrepreneurial action. And I believe this has some application in
regards to ‘medicine’ and the provision of overall ‘medical
services’. In North America there has been a long-standing debate over the
virtues of ‘public’ ( supposedly
non-profit ) medical services versus ‘private’ (for profit)
ones. One thing that seems to be overlooked in the debate by those
on the ‘public’ side is the ‘patient’. Doctors
don’t treat ‘disease’, they treat
‘patients’. When you try to pre-determine what
‘diseases’ need to be treated by ‘bureaucratic’ fiat
instead of actual ‘patient’ necessities you’re bound to get
inefficient application of available human and physical resources, higher
costs, and endless waiting lists that can only be shortened by those on them
expiring. And, from observation, that’s exactly what we do get with
‘socialised medicine’. ‘Profit’, it
seems to me, and regarding it in the ‘double-entry’ sense’
could actually be beneficial in determining just what ‘services’
are most in demand, and in attempting to satiate that demand. Presently,
there will problems with this approach. But not from
‘profit’, per se, but from the current deceptive ‘money
system’ that a proper application of ‘genuine’ Social Credit
could correct.
And dealing with your third point, you still have not
demonstrated any mechansm to prevent retailers
gradually increasing the price, steadily subsidised all the way at 2% as it
climbs. Please don't quote competition, which only works to hold prices
down when there is difficulty selling goods etc. If all your timber was going
out as fast as it was produced, even a good honest man like you would begin to wonderr if all his hard work didn't really merit a little
better return, in slightly higher prices. And believe me, the timber
industry in NZ has had the structure of a jungle in the past, and I can't see
it having changed too much.
Is there not always
‘difficulty’ in selling goods when the capacity to produce them
exceeds the ability to consume them? And we have to ‘pay’ for
the provision of that ‘capacity’, but we’re not
‘credited’ fully financially for it’s
creation? Or is the “progress of the industrial arts a
complete fraud?” Most retailers are interested in moving
product. They could put up the price and wait for a buyer who’ll
meet it, but while they’re waiting they’ve got ‘costs’
of their own that are ongoing. And the ‘profit’ they might
make selling a very few items, though it may well be larger per item than that of the merchant who
moves his goods in volume for a lower price, is diminishing from these
‘costs’ each day that product sits unsold. The real
‘competition’ generally doesn’t come from those who do the
same thing you do, only charge the public ‘more’ for it, but from
those who do the same thing you do and charge the public ‘less’.
If you were making a pile of money from growing Callas and other tropicals, how long before every other Northland Kiwi
with a little piece of your Island’s real estate and a horticultural bent
would be trying the same thing? And what happens to the market then?
If you’re not making a pile of money from growing
them, why not?To keep just that from happening,
no?
In lumber, the return
generally has always been ‘on volume’. Trying
to get the ‘costs’ down relative to it. Sure we try to
sneak the ‘price’ up whenever we’re able to, but using the
CPD to subsidise a ‘raise’ in prices to Consumers just
wouldn’t work. The greater problem would be ensuring that the
‘big boys’ didn’t use it to unfairly subsidize predatory
pricing, to try to eliminate the competition through ‘lower’ prices
that couldn’t be matched. There would have to be an agreed
upon minimum profit on ‘turnover’, (not on ‘capital’),
but I don’t think that would be hard to obtain, police, or enforce.
If they want ‘more’ profit, then, they have to find a way to
engender a still higher turnover. Which should mean
‘better service’, and more innovativeness in ‘reducing
costs’.
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Some introductory materials to the discussion topic of this list are at
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RE: 'Tendering"
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