The solution here I think is to open the market for more private providers and let the refugees pick and pay for their service, with the government providing a certain amount of financial assistance to the individual asylum seekers. This way the reputation of a certain firm will rapidly hit rock bottom as word about bad service gets out. This will keep pressure high to provide good service.
Solution to what? The profit margins the article quoted seem fairly reasonable, for all we know the Government is already willing to deal with others and no one else can compete. Seeing as the Government is the customer I don't really see why they would want to move purchasing power over to the refugees. There's no reason to assume they share goals.
That profit margin seems really low, unless the contract they have is a cost-plus type where they are guaranteed to have their costs paid plus 3.5% profit. Otherwise the risk seems too high to settle for a profit margin that low.
I wasn't so much disputing the reasonable-ness of the profit margins as much as the policies of the providers. How are you supposed to keep track of how much profit is actually earned? Balance sheets etc. are notoriously easy to manipulate. By letting the refugees vote with their money we need not be concerned with profit margins as the market would(ideally) take care of itself. Win-win for both parties if this kind of system could be made to work. It would essentially be removing the government as an intermediary.
I went to a meetup a few months back and learned how the system works here in Norway. The main reason this is a private industry is scalability issues. There are huge costs connected with establishing the refugee centers, and it's hard to know for how long the center will be in use. At least that's how things used to be. For the the most part of the last 35 years there have been 5-year cycles between 5-15k refugees coming to Norway, but after 2010 it has stabilized at 15k and last year it started rising. Norway accepted 30k refugees last year, and will probably receive another 100k this year. So the industry is "good" now, but at the same time the requirements for these centers and the maximum price the state pays are disproportionate. As noted in the other comments: not much room for profit.
Fair point actually. But I think we can prevent money being poured in those kinds of "services" by implementing some kind of voucher system or one where the money flows directly from the government to the providers, while the refugees still get to decide.
Thanks. I actually do support government helping refugees (although I don't see reason why not do it directly), but my point was that I am pretty skeptical about the "This way the reputation of a certain firm will rapidly hit rock bottom as word about bad service gets out. This will keep pressure high to provide good service." claim. The traffickers actually operate under the condition that you claimed as sufficient for this to happen, i.e. "open the market for more private providers and let the refugees pick and pay for their service".
So unless there is some additional framework that lets people evaluate the results, and takes care of fraudulent offers, I don't think empirical experience shows that the condition suffices.
Here in Czech Republic there is a cottage industry of providing lodging to poor people and immigrants (from government support), and it's not very pretty - expensive with poor quality.
"For 2015, Hero Norway expects revenue of $63 million, with profits of 3.5 percent. "
Title correction: Long-time hospitality business entrepreneurs expand business into providing refugee housing and services. The business made 2.2 Million profits in 2015 operating highly efficient refugee care centers.
My guess is there would be at least that much money wasted if these centers were run by less experienced people in that business sector (e.g. the gov't). Also note: the government regulates the business.
Overall from the article, it seems like a good way to care for the refugees.
Yea the headline has more than a tad bit of click bait to it. It sounds like they're raking in money hand over fist but profits of 3.5% seem entirely reasonable for the work they're doing (and pretty low as for profit industries go).
Without access to their books, it's hard to evaluate their actual profit. But, later in the article there is this quote:
"The Adolfsens claim that theirs is 3.5 percent, but Herning calls that figure “highly unlikely. All the other refugee companies that I’ve looked at have a much higher profit margin.” She says that in handling revenue from nursery schools and nursing homes, the Adolfsens have played a shell game, shifting profits from one business within their conglomerate to another. “I wouldn’t be surprised if they were doing that for Hero as well,” she says."
Also, quick searches seem to indicate that for-profit prisons (in the US at least), an analogous industry, have profit margins significantly north of 3.5%. [1] I wouldn't be surprised if the actual profit margins for the refugee care companies, when all subsidiaries are included, are between 5-10%.
I don't know if there's a perfect solution to refugee care that optimizes spending and societal harmony, but private enterprises running the show with close government oversight (and no shell games), seems like a somewhat happy middle ground.
Their revenue and profit prior to taxes for 2014 was 549M and 27M. Corporate Tax for 2014 was 28 % so 19.4M profit after tax which gives a 3.5 % net profit.
The point made in the article (and the comment about) is that they have a history of playing a shell game with their companies to obscure where they're actually making their money (and possible to maximize tax benefits). Without seeing their actual accounts, those numbers are meaningless as you don't know whether or not they've bought all kinds of overpriced services intended to shift revenue somewhere else, for example.
Who cares if the profit margin is even double that (10-20%). Almost certainly still cheaper than the government getting into the hospitality business, and has the benefit of not creating a permanent bureaucracy.
I am not particularly concerned with the "above-the-table" profit margin. I am concerned with the possibility that using private contractors is prone to abuse, a loss of accountability (shell games) and a race to the bottom for quality of service in a venture where human quality of life is (or should be) the primary goal. Sure, the prime contract might be locked-in to a small profit margin, but I find it hard to believe that the same owners don't have their hand in the pot somewhere lower down in the supply chain. Which would lead to them making more than the prime contract 3.5% profit margin might suggest.
Then again, it's not like public-private partnerships (or project delivery methods in general) are brand new concepts. Governments have somehow managed to get roads and schools (infrastructure) built for a pretty long time. (Not without complaints of overruns and abuse: see any megaproject in the United States.) Though perhaps there is something to be said for the qualitative difference and value of human life that distinguishes a "race to the bottom" for building a road, compared to providing temporary shelter and food for actual human beings.
I agree that it's good that a government saves itself from getting into a "non-core" business so to speak. But I think that without strict oversight from government, refugee support services could turn into yet another field where shady business practices are the norm.
I am uncertain as to why you hold the actions of private individuals in such contempt, but give the government a free pass when it is just as prone to abuse, lack of accountability and poor service. Why is one a devil and the other an angel?
In general there is a formal process that use to remedy the situation with the government that is not available with a private company. Consider getting a parking ticket. At a private lot you are ticketed in error. You call the number listed but they refuse to accept they made an error even if you have proof you paid for parking. Or if you get a parking ticket from the city you can protest the citation by mail, then if it is not overturned you can request an appeal.
You can make use of the court system for resolving torts and contract violations in both cases, whether these courts are hypothetically publicly or privately operated. Actually in the case of a public service, you may become entangled in certain complications related to sovereign immunity, depending on jurisdiction.
(There's also the surprising efficacy of vocally complaining in public. Do not underestimate a private firm's willingness to recuperate damages on its brand image.)
How likely it is that a refugee can effectively argue their complaints in a court?
edit. addendum. These kind of firms have not that much of reason to care about their brand image when it comes to what regular people think about them: their only customers are some government officials (or in car park example, people who own the park space), not the general public.
Refugees by definition have little leverage in general. I think it's a reasonable rule of thumb that any antipathy toward them will be greater expressed by the state that administrates the territory to begin with (and has various political interests to appear tough on something) than by private individuals, who are far more heterogeneous.
In 2007 a boat with 100+ Haitian refugees made it to South Florida. The refugees were immediately detained, then sent to Krome Detention Center (no women) and Broward Transition Center (men/women/children). However, between the 2 facilities there were not enough beds and the remaining were put up in private motels. Even in Miami/Fort Lauderdale Florida, where our main industry is tourism, I think the private motels were far more cost effective than the existing Government infrastructure/detention facilities. And the people making the most money? The contractors of the detention facilities making 1,000'sx profit margins on things like phone cards, sandals, and vending machine food stuffs.
As a side, my legal clinic represented the Haitian refugees who were children in asylum/visa hearings pro bono.
It isn't. A similar situation has arisen in Sweden and immigrant housing in government owned facilities are significantly cheaper than private run ones.
You're very certain for someone who certainly have not checked first.
In 2010, Norway spent on average $11,800 per year per refugee or asylum seeker in government operated centres. This amount covered lodging, health checks, nursery, and co-pay on dental and medical services. I don't know how much of that is the lodging, but it's nowhere near the whole amount.
The prices stated in the article adds up to $11,315 to $27,375 for just the lodging.
That doesn't necessarily mean that it is bad as a way to deal with rapid increases in the required capacity.
Norway has already seen the kinds of shenanigans that can come from private "service" providers on government contracts.
a couple of years back a chain of private schools were found to be siphoning off funds that was earmarked the students. This by setting up companies on Luxembourg that acted as service providers for the schools.
It's not the money waste.
It's the power vacuum that opened up where people established themselves as the good and others as evil.
Big money in being an "anti-racist".
Anyone pointing out that you charge 1600 per hour while living/owning in the most exclusive (homogeneous) parts of Stockholm (Gamla Stan) is obviously a racist.
Obviously none of this shit is related to any form of civil rights issue.
I think you're being downvoted for being aggressive and having a political agenda, but you do have a good point. Of course, we want to spend money to help people in need — but what happens when the people we hire with this money start to charge us a premium for excessive, and completely unnecessary expensive care? $31 to $75 per person per night seems a little bit costly, yes.
But at the same time, I'm can imagine that they can have actual need for that. May be they need to live near all the official organizations and embassies because they will spend a lot of time there? This would explain "exclusive parts of city", for example. May be not. But anyway, it's always better to be more open to opposite point of view and imagine arguments for it.
Oh, I must have missed it. Then it certainly looks reasonable.
But still, I think you agree that we should be able to have a discussion about this without (1) being called "racist" and at the same time (2) being open to possibility that this money is really required.
it has been long argued in many circles that many welfare/assistance programs could be better administered by private companies. entrenched government services have no incentive to improve and how some governments budget they may have actual disincentives to improvement.
does sound like these guys are doing a good job. the best part is that when the need changes they will likely adapt or move into a new business whereas a government support structure would be hard to dismantle
the sad part is that some government officials apparently think profit making in this industry is wrong and that is a very bad sign because once you go down that road no business is safe
I don't think it's the government per se thinking that; they'd probably be happy for someone else to take care of the problem for them, especially if that someone can do it well.
But people, on the other hand, well, that's a different thing. Copenhagen interpretation of ethics is strong in all cultures. The thought that someone is making money on helping is unbearable to many, even if there is no comparable non-profit alternative.
As far as I can tell, this is more expensive than long term government run asylum housing in Norway (hard to compare directly as the costs given for government provision includes a lot of additional costs, but using basic measures for things like nursery provision etc. it'd be extremely unlikely that the actual housing component ends up above even the lower ($31) of those levels).
It may still be an ok deal if the contracts are short term, as there's obvious issues now with forecasting how the refugee stream will be even in the near future, and it's worth quite a bit of money to make someone else shoulder most of that risk.
> the sad part is that some government officials apparently think profit making in this industry is wrong
I haven't seen that. I have seen people question whether some people are profiteering from a difficult situation. This is seen as sort of a national crisis that it would be immoral to take excessive profits from, and there's been others that have e.g. offered up free or significantly discounted hotel rooms and similar (though the cynic in me sees "fantastic high value PR coup" when reading about some of them) that makes it easy to see even relatively modest profit-taking as too high.
I'm politically pragmatic. My agenda is things that work. Very much like PAP during LKY.
I see a lot of shit that doesn't work and obviously I'll fall to one side of it - which happens to be far right as of today.
Perceptions of "being aggressive" is pretty much on par with with my current torque to the right. You're reading too much into it and overvalue interpretation of tone.
My example was a Swedish lawyer that helps 30 years pretend to be 13. He charges 1600 per hour and of course lives in the most secluded and homogenous areas while he calls non-white critics for racists. You have to understand that this can't be sustainable... at all.
I don't mean financially, I mean the concept of black and white notions, especially with sensitive subjects like racism. Though I don't think this particular person is stupid enough to think like that. He knows he's making bank and will make sure to milk it as long as he can.
I actually would have preferred him to be stupid instead of criminally evil.
"Just outside Oslo, a savvy entrepreneur named Ola Moe recently rented a vacant hospital for $10,000 a month, did minimal upgrades, and began charging the government $460,000 a month to house and feed 200 refugees."
Of course, the tax payers are showing up and feeding everyone and staffing the place. So it's free money, right? No work involved at all. Not like he's doing a ton of work and creating value, then charging for it...or anything.
It's also common to overlook that just because there is a house already bought, doesn't mean people can live in perpetually without someone having to spend money. Houses require constant maintenance. Floors won't clean themselves, plumbing won't fix itself when it breaks, etc. Even if people had alternative food and water sources, you can't house them in comfortable conditions without expending money on maintaining those conditions.
It's $75/day/refugee just for food, water, utilities and other misc. expenses. I doubt that he/she is running this facility as a 5 star hotel to charge this high from like $30/day/refugee to the rate above.
If he could profitably charge $75/day and run it as a 5 star hotel in Norway, he should run a hotel as he'd be wildly successful if he could offer what would be bargain basement prices compared to his competition.
Exactly. The government was going to spend money on refugee housing and services anyway. If the brothers can provide suitable accommodations cheaper than anyone else can they deserve the profits.
It is cheaper for short time periods. As you yourself notes: It's cheaper when it competes with hotels.
It is absolutely not cheaper than government run asylmottak (asylym centres/reception).
As an option for short/medium term handling of overflow it is reasonable, as it makes no sense to build more permanent spaces if the refugee flow then quickly subsides. It also makes sense to pay private providers reasonable amounts above cost to shoulder the risk of changes in volume.
But if the base level is expected to stay high for a long period of time, the government have demonstrated very clearly it can run these kind of centres cheaply.
Yes, but the state, not the refugees, are the buyers.
This means that service and quality quickly become irrelevant, and the race to the bottom begins. Before you know it, you have unscrupulous folks taking government cash to lock refugees in a gritty basement without food and basic facilities.
I'm not saying this is an inevitability, but it's the dynamic that this creates - and that's why this should be the responsibility of the state - or set up so the refugees have a choice where they're put.
so your claiming that if wholly government managed they would be more accountable? Really? Who is a government agency ever truly accountable too?
The solution of all this is simple, government sets standards to be met and has inspectors who insure they are met. If the standards are kept and one of them can be a "happiness factor" who cares if they profit.
Plus the added benefit of these private groups is that can iterate faster, are more likely to bring new ideas to the table, and improve the lot of the refugees faster than government agencies which tend to persist problems to extend their own existence
Right, but if you give the refugees freedom of choice in which residential centre they reside, market forces will eliminate poor providers. If you don't give them choice, regulation is necessary, as you say, but you're then back in the realm of self-perpetuating quangos, as you say.
No, market forces will not eliminate poor providers. It may eliminate those who try to beat the market and drop their quality too quickly, but as the options to cut costs are exhausted, everyone will be pushed down to the minimum quality level they can still get away with selling. Regulation can be an effective way to establish a border below which the quality won't drop, thus making the market solution potentially desirable.
If you want to create a market for housing refugees, give the refugees themselves housing credits and let companies compete to provide the services. Supply-side-only solutions rarely work.
I wonder if that's politically feasible in a country this small. They've accepted enough refugees that to simply dump them into the broader housing market would cause a pretty sharp spike in the cost of housing for everyone.
That's when you want to start focusing on supply side, once demand has driven inflation, it may be that the local housing market has the capacity to absorb the extra spending.
Just imagine how much smugglers made off the boats or lifejackets in greece.
Have you seen the piles of lifejackets in greece? They are HUGE. Thousands upon thousands of them across the entire shore. Where are they all coming from and who bought all of them?
You have very low opinion of me to think that I was trying to insult him by just inquiring about his parents national origin. His family name just caught my attention "Heidari" and I thought it was the Persian "حيدرى", that's all.
I thought people here give other people the benefit of doubt and not judge them based on mere speculation.
I completely misread you. I'm sorry. Thank you for the correction, and for repeating a core principle of HN that I also need to be reminded of.
Moderating comments like that is probabilistic, since they don't come tagged with intent. In your case I guessed wrong because the form of the comment was similar to nasty ones (edit: I mean by other users) in the past. Your intent would have been clearer, and the comment more informative, if you had included the detail about the names in the original bit.
I know that moderating a large community like HN can be very time consuming and frustrating at times esp. when mods aim to ensure a high quality level of interaction here and I applaud and appreciate all the mods' efforts to achieve that and if I could offer a suggestion to improve the quality even further, I'd invite everyone when reading comments and replies to give the authors the benefit of doubt and become more tolerant of polite dissenting view.
1) These are random dental hygienists and goatherds, not soldiers.
2) military effectiveness requires leadership and belief in a commander's competence. That is hard to find in the current climate. For these folks, Ned Stark got beheaded a long time ago and they just want to get the hell out of westeros.
It could be that the piece was written some time ago. Or that they hasn't kept up to date with recent developments (like the transporter responsibility to verify IDs on trains/buses on all traffic going into Sweden).
In other words, it might not be intentional and the piece is still interesting and well written in general - disregarding the mentioned quote.
I would like to see a piece about the private sector of refugee centers in Sweden. That would be interesting as well. I have gotten the impression that "Jokarjo AB" is (which "Bert Karlsson" is a proprietor of) a somewhat medium or large player in the Swedish market.
Many people seem to hold an intuition or belief that it is wrong to profit, or profit "excessively" when providing certain types of services, particularly related to "care", survival, or necessities (e.g. "price gouging" laws).
I think this is misguided for (at least) two reasons:
1. Profit allows for the services to be sustainable, rather than charity-dependent.
2. The more profit, the stronger the incentive for entrepreneurs to enter the market and/or innovate.
Figuring out a way to profit and reduce the problems of refugees in any way is win/win for everyone.
You are totally correct -- as long as competition isn't short circuited.
Think regulatory capture and ol' boys networks. Also, there is a ridiculous level of general incompetence among Swedish politicians today; they often do nothing but politics inside the party system from their youth.
> 2. The more profit, the stronger the incentive for entrepreneurs to enter the market and/or innovate.
3. The more entrepreneurs in the market, the tighter the margins will become, due to competition. The price for the service will fall as a result, and the companies will become more efficient.
4. The more low-hanging fruits in terms of efficiency have been picked, the more entrepreneurs will be pressured into saving money on quality of their product - which in this case means quality of care. This is the stage when serious abuse starts. The maximum benefit of a market solution is reached when you can stop companies from progressing from 3 to 4.
Only if the barriers to entry into that market or product/service stickiness are high. Otherwise, customers, unhappy with the quality, will flee to the competition.
To clarify my point - 4 is when all competitors are pressured into saving on the product itself. It's not just about barriers to entry or stickiness - it can be simply because margins are very low. There will always be someone who will sacrifice yet another value in order to be more profitable, and thus will force his competitors to either give up on that value too, or to get outcompeted.
If that is the decision they face, that means customers did not want the thing that was sacrificed, and leaving it out is an improvement.
The danger most people worry about is when the customers are getting a better experience at the expense of individuals who don't have any choice in the matter, like in the prison scenario. But negative externalities are hardly specific to this situation.
I think you may be underestimating just how much crap customers can deal with before they say "enough" (and just how hard is it to coordinate them to say it together). I don't think anyone is happy that they have to replace light bulbs and electric kettles every other year, but we have no choice - the durable options are not on the market. They have disappeared years ago. And in case of housing, I think the conditions could reach a pretty horrible level before people would be forced to seek something else.
My point is that market is too good at making things efficient. Its goal is to make things profitable. Which is a decent proxy for the peoples' goal of making a product or service "good", but those two ideas start to diverge at some point.
Well, the market responds to consumers, who say (much to my chagrin): price/quantity over quality. The fact that these consumers spoil things for people like me who would gladly pay more for quality is another topic. But the market works as expected.
I know exactly how much "crap" customers are willing to deal with. The difference is that unlike you, I don't take it as a given that they are wrong to do so. Is your computer crap because it's not a blue gene? Are you dealing with crap by driving a Honda instead of a Bentley? If people willingly choose conditions you think to be horrible, try to at least consider the possibility that you might be the one misjudging things and not them.
> If that is the decision they face, that means customers did not want the thing that was sacrificed, and leaving it out is an improvement.
This is only true if you don't take sticky prices into account. It is quite well established that sticky prices screw with efficient market theory quite a bit, and the scenario provided by the gp sounds like a good candidate for a sticky price scenario.
edit: After thinking about this a little bit, let me go further. The parent's statement is veering into efficient market theory dogma territory. Causality is much more difficult to determine in macroeconomics than in sciences that have the benefit of controlled experiments. There are significant competing theories to efficient market theory that have things to say about scenarios like this, so a straight declaration of cause without caveats is misleading, particularly since efficient market theory clearly does not hold in many observed scenarios. Above, I'm not saying that sticky prices necessarily are the cause of the results that the gp is describing (or even corroborating that the scenario is something that necessarily happens), I'm just showing that the problem probably isn't as clear cut as the parent suggests.
Profit is from the remaining monies after wages have been paid. Profit is the excess the market will bear above the cost of delivering the services. It is largely unrelated to sustainability; if it weren't that way then giving shareholders/owners the profit would break the company.
So the idea is that private enterprises are able to run refugee centers cheaper and more efficiently than the government. Unfortunately, it doesn't work and is a myth. It's a myth that fits hacker news because we are all entrepreneurs here..
Private companies have just as much waste as the government. One random example: Pension funds. The private ones are all more expensive than the government run ones. A share of the income needs to go to marketing and profits -> higher prices. Common sense.
All across the board it is the same situation, and it has been shown in study after study. Health care, train operators, retirement homes, banks, military... , banks.. When private enterprises take over prices go up and the service level goes down. Again, it's common sense, a number of private companies fighting for market share and profits are more wasteful than one government organization run with zero profit.
I forgot. One counter-example is telecom which has benefited from privatization. But it is an area in which a lot has happened in the last two decades so it is not clear privatization is the sole cause of it.
I'd wager a guess that in some cases prices would rise when private enterprise take over because the government run enterprises are operating at a loss and making up the difference with taxpayer dollars (Amtrak).
The issue is not necessarily ownership, it is the existence of competition. Unfortunately, for most (all?) government services, there is no competition - hence the inefficiencies. But private companies are prone to the same, if they don;t operate in markets open enough.
Competition can also mean inefficiency. A good example is the comparison of the mobile network infrastructure in Sweden and Germany: In lower populated regions you will usually only find one network called Sweden. It's a cooperation of the mobile providers that allows them to save money by not deploying infrastructure four times. In Germany such cooperation is forbidden because it's considered anti-competitive. Subsequently mobile service in Sweden is both better and cheaper, even with a way worse situation (lower population density).
Every time you have competition you have the inefficiency to have some structures several times.
You picked a very specific segment (infrastructure-based services), but in that segment, the "public roads" model needs to be applied: just like roads are public, and used by private cars and private trucking companies for a fee (usually taxes or tolls). Same should apply to cable/fiber networks - the municipality owns the infrastructure, and there is only one cable = no need to dig up the town three times over.
Please elaborate on your random example, being "pension funds".
What pension funds are you talking about?
Are you talking about AP7 (Which has two funds, one equity fund and one money market fund)? (Swedish: "Sjunde Allmäna Pensionsfonden" English: "The 7th General Pension Fund").
I would caution you to be less general and provide more specific statements that you back up by facts. Currently it's hard to realize what you're trying to convey and the provided documents aren't solidifying what you're trying to convey either.
Speaking of the provided links, here are some context of the documents:
1) The "konkurrensens_konsekvenser_pod_2.pdf" document is in Swedish and has the title "Konkurrensens konsekvenser" (English: "The consequences of competition"). The document is 279 pages.
2) The su.se link is a press release from SU (Stockholm University) with the title "Pressmeddelande: Sjuksköterskors arbetstrivsel försämras efter privatisering" (English: "Press release: Nurses work satisfaction worsened after privatization") and it's announcing an article published in "Journal of Occupational and Organizational Psychology, 82, 45-65" by Falkenberg, H., Näswall, K., Sverke, M., and Sjöberg, A. (2009) by the name "How are employees at different levels affected by privatization? A longitudinal study of two Swedish hospitals" (Article in English).
3) The "McNulty_InterimReport2010.pdf" document is in English and has the title "Rail Value for Money Study: Interim Submission to Secretary of State – September 2010". The document is 28 pages.
The studies all support what I wrote. I guess you have to read them in full or find their abstract and read that.
Regarding the pension funds, yes AP7 is one example. It is the fund with the lowest management fee (incidentally has also been one of the highest yielding pension funds). The usual excuse given is that it is a "lazy fund" and "just following the index". But no private actor has been able to offer a similar "lazy fund" with lower fees.
Does AP7 beat Stockholm index? Which is free on most Swedish brokerages. Actually on NordNet all Scandinavian index-funds are free.
You're asking me to believe that a government run by Kaplan, Romsson, 100-dagar-Fridolin and that SSU-Douche who stole money will be the "competent" part in your equation?
There is no black and white. Sometimes smart people in government do better. Sometimes entrepreneurs do better.
You're biased from growing up with intelligent people running Sweden and believe that to still be the case.
Sanandaji would like a word with you....
Both Avanza and NordNet allows you to get free Index-funds. When I say free I mean with no courtage or cut from profits. No costs.
Equating profits with waste is just plain wrong. Profits are economic resources that can be directed toward other uses, while wasteful spending is just that: economic resources essentially destroyed.
Anti-refugee mood is on the surge in Norway. The government just appointed the previous agriculture minister from the far-right party as immigration minister and she recently proposes a slew of tough immigration rules, promised to be the strictest in Europe, for the newcomers.[1]
There are many Norwegians who hate these two guys in Norway :) Take a look at the comment section.[2]
106 comments
[ 2.9 ms ] story [ 162 ms ] threadGood news, the service you describe is already there! It's called "people smuggling".
So unless there is some additional framework that lets people evaluate the results, and takes care of fraudulent offers, I don't think empirical experience shows that the condition suffices.
Here in Czech Republic there is a cottage industry of providing lodging to poor people and immigrants (from government support), and it's not very pretty - expensive with poor quality.
Title correction: Long-time hospitality business entrepreneurs expand business into providing refugee housing and services. The business made 2.2 Million profits in 2015 operating highly efficient refugee care centers.
My guess is there would be at least that much money wasted if these centers were run by less experienced people in that business sector (e.g. the gov't). Also note: the government regulates the business.
Overall from the article, it seems like a good way to care for the refugees.
"The Adolfsens claim that theirs is 3.5 percent, but Herning calls that figure “highly unlikely. All the other refugee companies that I’ve looked at have a much higher profit margin.” She says that in handling revenue from nursery schools and nursing homes, the Adolfsens have played a shell game, shifting profits from one business within their conglomerate to another. “I wouldn’t be surprised if they were doing that for Hero as well,” she says."
Also, quick searches seem to indicate that for-profit prisons (in the US at least), an analogous industry, have profit margins significantly north of 3.5%. [1] I wouldn't be surprised if the actual profit margins for the refugee care companies, when all subsidiaries are included, are between 5-10%.
I don't know if there's a perfect solution to refugee care that optimizes spending and societal harmony, but private enterprises running the show with close government oversight (and no shell games), seems like a somewhat happy middle ground.
[1] http://www.cnbc.com/id/48675641
http://www.proff.no/selskap/hero-norge-as/stavanger/tolker-f...
Then again, it's not like public-private partnerships (or project delivery methods in general) are brand new concepts. Governments have somehow managed to get roads and schools (infrastructure) built for a pretty long time. (Not without complaints of overruns and abuse: see any megaproject in the United States.) Though perhaps there is something to be said for the qualitative difference and value of human life that distinguishes a "race to the bottom" for building a road, compared to providing temporary shelter and food for actual human beings.
I agree that it's good that a government saves itself from getting into a "non-core" business so to speak. But I think that without strict oversight from government, refugee support services could turn into yet another field where shady business practices are the norm.
(There's also the surprising efficacy of vocally complaining in public. Do not underestimate a private firm's willingness to recuperate damages on its brand image.)
edit. addendum. These kind of firms have not that much of reason to care about their brand image when it comes to what regular people think about them: their only customers are some government officials (or in car park example, people who own the park space), not the general public.
As a side, my legal clinic represented the Haitian refugees who were children in asylum/visa hearings pro bono.
In 2010, Norway spent on average $11,800 per year per refugee or asylum seeker in government operated centres. This amount covered lodging, health checks, nursery, and co-pay on dental and medical services. I don't know how much of that is the lodging, but it's nowhere near the whole amount.
The prices stated in the article adds up to $11,315 to $27,375 for just the lodging.
That doesn't necessarily mean that it is bad as a way to deal with rapid increases in the required capacity.
A massive pipe dream.
Norway has already seen the kinds of shenanigans that can come from private "service" providers on government contracts.
a couple of years back a chain of private schools were found to be siphoning off funds that was earmarked the students. This by setting up companies on Luxembourg that acted as service providers for the schools.
Big money in being an "anti-racist". Anyone pointing out that you charge 1600 per hour while living/owning in the most exclusive (homogeneous) parts of Stockholm (Gamla Stan) is obviously a racist.
Obviously none of this shit is related to any form of civil rights issue.
But at the same time, I'm can imagine that they can have actual need for that. May be they need to live near all the official organizations and embassies because they will spend a lot of time there? This would explain "exclusive parts of city", for example. May be not. But anyway, it's always better to be more open to opposite point of view and imagine arguments for it.
Is it? Looks like it includes everything: food, housing, electricity/water, cleaning, admin of frequently changing guests, ...
If they can really provide everything for people for $31/day, there are welfare systems that could switch to save money...
But still, I think you agree that we should be able to have a discussion about this without (1) being called "racist" and at the same time (2) being open to possibility that this money is really required.
does sound like these guys are doing a good job. the best part is that when the need changes they will likely adapt or move into a new business whereas a government support structure would be hard to dismantle
the sad part is that some government officials apparently think profit making in this industry is wrong and that is a very bad sign because once you go down that road no business is safe
But people, on the other hand, well, that's a different thing. Copenhagen interpretation of ethics is strong in all cultures. The thought that someone is making money on helping is unbearable to many, even if there is no comparable non-profit alternative.
It may still be an ok deal if the contracts are short term, as there's obvious issues now with forecasting how the refugee stream will be even in the near future, and it's worth quite a bit of money to make someone else shoulder most of that risk.
> the sad part is that some government officials apparently think profit making in this industry is wrong
I haven't seen that. I have seen people question whether some people are profiteering from a difficult situation. This is seen as sort of a national crisis that it would be immoral to take excessive profits from, and there's been others that have e.g. offered up free or significantly discounted hotel rooms and similar (though the cynic in me sees "fantastic high value PR coup" when reading about some of them) that makes it easy to see even relatively modest profit-taking as too high.
I see a lot of shit that doesn't work and obviously I'll fall to one side of it - which happens to be far right as of today.
Perceptions of "being aggressive" is pretty much on par with with my current torque to the right. You're reading too much into it and overvalue interpretation of tone.
My example was a Swedish lawyer that helps 30 years pretend to be 13. He charges 1600 per hour and of course lives in the most secluded and homogenous areas while he calls non-white critics for racists. You have to understand that this can't be sustainable... at all.
I don't mean financially, I mean the concept of black and white notions, especially with sensitive subjects like racism. Though I don't think this particular person is stupid enough to think like that. He knows he's making bank and will make sure to milk it as long as he can.
I actually would have preferred him to be stupid instead of criminally evil.
"Just outside Oslo, a savvy entrepreneur named Ola Moe recently rented a vacant hospital for $10,000 a month, did minimal upgrades, and began charging the government $460,000 a month to house and feed 200 refugees."
It looks to me that Ola is making a killing here.
Include also the cost of x beds, water, toilet facilities, general staff, operating costs of kitchen facilities, cutlery, dishwashers.
The profit on the difference between $10k and $460k is not $450k.
$460k / 30 days in a month = $15k per day.
$15k / 250 refugees & asylum seekers = $60 / refugee per day. (fed, watered, sheltered, & safe)
From the article, the profit is likely 3.5% of $460k or roughly $16k/month.
It is absolutely not cheaper than government run asylmottak (asylym centres/reception).
As an option for short/medium term handling of overflow it is reasonable, as it makes no sense to build more permanent spaces if the refugee flow then quickly subsides. It also makes sense to pay private providers reasonable amounts above cost to shoulder the risk of changes in volume.
But if the base level is expected to stay high for a long period of time, the government have demonstrated very clearly it can run these kind of centres cheaply.
This means that service and quality quickly become irrelevant, and the race to the bottom begins. Before you know it, you have unscrupulous folks taking government cash to lock refugees in a gritty basement without food and basic facilities.
I'm not saying this is an inevitability, but it's the dynamic that this creates - and that's why this should be the responsibility of the state - or set up so the refugees have a choice where they're put.
The solution of all this is simple, government sets standards to be met and has inspectors who insure they are met. If the standards are kept and one of them can be a "happiness factor" who cares if they profit.
Plus the added benefit of these private groups is that can iterate faster, are more likely to bring new ideas to the table, and improve the lot of the refugees faster than government agencies which tend to persist problems to extend their own existence
Have you seen the piles of lifejackets in greece? They are HUGE. Thousands upon thousands of them across the entire shore. Where are they all coming from and who bought all of them?
http://www.bbc.co.uk/news/world-europe-34675552
There's also a news story today about a factory making fake life jackets, and stuffing them with packaging not proper floatation devices.
http://www.theguardian.com/world/2016/jan/06/refugee-crisis-...
Attitude towards ISIS borders between "don't care" to "they're alright"
Some may hate ISIS, but they like parts of ISIS. Like treatment of infidels, women and LGBT.
http://english.dohainstitute.org/file/Get/40ebdf12-8960-4d18...
Getting radical muslims out of muslim cities has not proved to make them less radical.
My parents wish more "quality control" was imposed. My parents were refugees.
I thought people here give other people the benefit of doubt and not judge them based on mere speculation.
Moderating comments like that is probabilistic, since they don't come tagged with intent. In your case I guessed wrong because the form of the comment was similar to nasty ones (edit: I mean by other users) in the past. Your intent would have been clearer, and the comment more informative, if you had included the detail about the names in the original bit.
Would you behave the same way if he asked German or Norwegian?
This is the verbal version of seeing police permanently gear up with military grade weapons after a terrorist attack.
Surely you understand the irony of it?
I know that moderating a large community like HN can be very time consuming and frustrating at times esp. when mods aim to ensure a high quality level of interaction here and I applaud and appreciate all the mods' efforts to achieve that and if I could offer a suggestion to improve the quality even further, I'd invite everyone when reading comments and replies to give the authors the benefit of doubt and become more tolerant of polite dissenting view.
Thanks for all :)
1) These are random dental hygienists and goatherds, not soldiers.
2) military effectiveness requires leadership and belief in a commander's competence. That is hard to find in the current climate. For these folks, Ned Stark got beheaded a long time ago and they just want to get the hell out of westeros.
This is just ridiculously wrong, and taints the journalistic integrity of the piece.
In other words, it might not be intentional and the piece is still interesting and well written in general - disregarding the mentioned quote.
I would like to see a piece about the private sector of refugee centers in Sweden. That would be interesting as well. I have gotten the impression that "Jokarjo AB" is (which "Bert Karlsson" is a proprietor of) a somewhat medium or large player in the Swedish market.
I think this is misguided for (at least) two reasons:
1. Profit allows for the services to be sustainable, rather than charity-dependent.
2. The more profit, the stronger the incentive for entrepreneurs to enter the market and/or innovate.
Figuring out a way to profit and reduce the problems of refugees in any way is win/win for everyone.
Think regulatory capture and ol' boys networks. Also, there is a ridiculous level of general incompetence among Swedish politicians today; they often do nothing but politics inside the party system from their youth.
3. The more entrepreneurs in the market, the tighter the margins will become, due to competition. The price for the service will fall as a result, and the companies will become more efficient.
4. The more low-hanging fruits in terms of efficiency have been picked, the more entrepreneurs will be pressured into saving money on quality of their product - which in this case means quality of care. This is the stage when serious abuse starts. The maximum benefit of a market solution is reached when you can stop companies from progressing from 3 to 4.
The danger most people worry about is when the customers are getting a better experience at the expense of individuals who don't have any choice in the matter, like in the prison scenario. But negative externalities are hardly specific to this situation.
My point is that market is too good at making things efficient. Its goal is to make things profitable. Which is a decent proxy for the peoples' goal of making a product or service "good", but those two ideas start to diverge at some point.
This is only true if you don't take sticky prices into account. It is quite well established that sticky prices screw with efficient market theory quite a bit, and the scenario provided by the gp sounds like a good candidate for a sticky price scenario.
edit: After thinking about this a little bit, let me go further. The parent's statement is veering into efficient market theory dogma territory. Causality is much more difficult to determine in macroeconomics than in sciences that have the benefit of controlled experiments. There are significant competing theories to efficient market theory that have things to say about scenarios like this, so a straight declaration of cause without caveats is misleading, particularly since efficient market theory clearly does not hold in many observed scenarios. Above, I'm not saying that sticky prices necessarily are the cause of the results that the gp is describing (or even corroborating that the scenario is something that necessarily happens), I'm just showing that the problem probably isn't as clear cut as the parent suggests.
https://www.google.com/search?hl=en&gl=us&tbm=nws&q=fire+ref...
Private companies have just as much waste as the government. One random example: Pension funds. The private ones are all more expensive than the government run ones. A share of the income needs to go to marketing and profits -> higher prices. Common sense.
All across the board it is the same situation, and it has been shown in study after study. Health care, train operators, retirement homes, banks, military... , banks.. When private enterprises take over prices go up and the service level goes down. Again, it's common sense, a number of private companies fighting for market share and profits are more wasteful than one government organization run with zero profit.
I forgot. One counter-example is telecom which has benefited from privatization. But it is an area in which a lot has happened in the last two decades so it is not clear privatization is the sole cause of it.
I was asked for links:
http://www.sns.se/sites/default/files/konkurrensens_konsekve... http://www.su.se/om-oss/press-media-nyheter/pressmeddelande-... http://www.railwaysarchive.co.uk/documents/McNulty_InterimRe...
Maybe use Google Translate to read them.
I'd wager a guess that in some cases prices would rise when private enterprise take over because the government run enterprises are operating at a loss and making up the difference with taxpayer dollars (Amtrak).
Every time you have competition you have the inefficiency to have some structures several times.
What pension funds are you talking about?
Are you talking about AP7 (Which has two funds, one equity fund and one money market fund)? (Swedish: "Sjunde Allmäna Pensionsfonden" English: "The 7th General Pension Fund").
I would caution you to be less general and provide more specific statements that you back up by facts. Currently it's hard to realize what you're trying to convey and the provided documents aren't solidifying what you're trying to convey either.
Speaking of the provided links, here are some context of the documents:
1) The "konkurrensens_konsekvenser_pod_2.pdf" document is in Swedish and has the title "Konkurrensens konsekvenser" (English: "The consequences of competition"). The document is 279 pages.
2) The su.se link is a press release from SU (Stockholm University) with the title "Pressmeddelande: Sjuksköterskors arbetstrivsel försämras efter privatisering" (English: "Press release: Nurses work satisfaction worsened after privatization") and it's announcing an article published in "Journal of Occupational and Organizational Psychology, 82, 45-65" by Falkenberg, H., Näswall, K., Sverke, M., and Sjöberg, A. (2009) by the name "How are employees at different levels affected by privatization? A longitudinal study of two Swedish hospitals" (Article in English).
3) The "McNulty_InterimReport2010.pdf" document is in English and has the title "Rail Value for Money Study: Interim Submission to Secretary of State – September 2010". The document is 28 pages.
Regarding the pension funds, yes AP7 is one example. It is the fund with the lowest management fee (incidentally has also been one of the highest yielding pension funds). The usual excuse given is that it is a "lazy fund" and "just following the index". But no private actor has been able to offer a similar "lazy fund" with lower fees.
You're asking me to believe that a government run by Kaplan, Romsson, 100-dagar-Fridolin and that SSU-Douche who stole money will be the "competent" part in your equation?
There is no black and white. Sometimes smart people in government do better. Sometimes entrepreneurs do better.
You're biased from growing up with intelligent people running Sweden and believe that to still be the case.
Sanandaji would like a word with you....
Both Avanza and NordNet allows you to get free Index-funds. When I say free I mean with no courtage or cut from profits. No costs.
There are many Norwegians who hate these two guys in Norway :) Take a look at the comment section.[2]
1. http://www.nrk.no/norge/_-vi-kommer-til-a-fa-en-asylpolitikk...
2. http://www.nettavisen.no/na24/tjener-to-millioner-i-maneden-...