One of the oft-repeated claims of LIEbertarians and CONservatives* is that anything the government can do, the free market can do better. And while that’s patently false, there is at least ONE thing we can say that the private sector does far better than the public – ripping people off.
Don’t believe me? Take a look at your utility bills. If you live in an area with privatized power or any private utility, you’re getting reamed right now. And thanks to the libertarians, privatization and the profit motive have spread like a California brushfire, intruding into places where they don’t belong. If the thought of corporate bean counters controlling your tap water and collecting your highway tolls gives you a rock-hard boner, this post will be a pure anaphrodisiac. But for the rest of us who don’t want that anymore than we want government bureaucrats running the local supermarket, read on and discover why public utilities should stay public. (This post suggested by Advocatus Diaboli.)
1) For-profit utilities cost more and deliver less.
The most famous example of how private utility companies dick over their customers happened in Bolivia in 2000, when Bechtel, shortly after acquiring the bulk of the country’s water supply, immediately jacked up rates across the board to the point where almost no one could afford them. That led directly to mass riots in 2000 and 2005 and played a sizable role in the election of Evo Morales, the Hugo Chavez-wannabe with the Three Stooges haircut, to the Bolivian presidency. (And libertards STILL don’t get how unfettered capitalism leads people to embrace socialism and communism.) But there’s a better example closer to home.
If you’re from the Not-So-Great American Northeast or the Golden Horseshoe, you might remember the Great Blackout of 2003, in which the power grid from Detroit to Manhattan, Toronto to Baltimore shit the bed. Traffic lights, house lights, computers and TVs – all dead. I was working the floor at FuckMart the day it happened and got to go home an hour early as a result. It was the second biggest power blackout in human history, ruining the days of over fifty million people across seven states and Ontario.
Once the possibility of a terrorist attack was ruled out, the American and Canadian governments started pointing fingers. Jean Chretien blamed New York, George Pataki blamed Ontario, and it took a few days for people to place the blame where it belonged – on the tangled web of private energy companies who owned the vast majority of the affected electrical grids. Areas with public/municipal power, such as Quebec, Vermont and northeastern New York, were curiously unaffected by the blackout. And surely enough, the joint U.S.-Canadian commission tasked with investigating the outage traced it to a plant in Ohio owned by private corporation FirstEnergy. The outage occurred because the penny-pinchers there were too fucking cheap to fix their aging, deteriorating equipment. It’s not like anyone’s paying them to keep the lights on or anything!
And while it’s not surprising that the land of the cowardly and the home of the slave would let their utilities be mismanaged by for-profit corporations, how did Kommunist Kanada succumb to the privatization virus? Answer – in the late 90′s, a libertarian asshole named Mike Harris became premier of Ontario and decided, for some reason, that the Ontario electricity grid needed to be in private hands. It was the very definition of a solution in search of a problem. In 1999, Harris’ Tory government passed a law that dissolved Ontario Hydro, the province’s publicly owned power utility, into five separate companies, most notably Ontario Power Generation and Hydro One, both of which were intended to be privately run. Independent analysts determined that it was fuckups on the part of OPG that led to the massive power failures in 2003. The blackout, combined with the usual rate hikes that accompany private takeovers of public goods, led to the Tories being defeated in the 2003 election by Dalton McGuinty’s Liberals. Of course, McGuinty has been as big an asshole as Harris and hasn’t bothered to fix the problem.
(As an aside, the Ontario energy privatization brouhaha is a perfect example of the twisted priorities of neoliberals and libertarians. The part of the government that Mike Harris wanted to privatize was energy, something people need to survive and keep the economy going. He didn’t deign to touch the LCBO or Ontario’s fascist, Prohibition-era alcohol laws, which make the Bible Belt look like Hedotopia.)
How in God’s name can you have a free market in utilities, anyway? There’s only one set of power lines, one set of sewers, and one road network. Any private company that owns them has a monopoly, at least in its local area. Even libertarians realize that monopolies are bad for business. How is a perfectly private libertopia going to deal with this? Are competitors going to be allowed to seize peoples’ homes with eminent domain and build competing highways?
Do I really have to bring up the Enron scandal, too?
The point is is that even from a cost and performance viewpoint, private utilities are inferior to public ones – negating the very reasons libertarians give for privatizing them in the first place. But hey, I call ‘em LIEbertarians for a reason. Even if you care about nothing but your wallet, letting profit intrude into the realm of human necessities is a dumb idea.
2) Privatization is anti-nationalist.
When profit is the prime motivator, important things like tribal loyalty get tossed out the window. In my review of Matt Taibbi’s Griftopia, I mentioned how whole sections of America’s infrastructure, such as Chicago’s parking meters and the Pennsylvania State Turnpike, are being sold off to Arab-controlled sovereign wealth funds flush with oil money. A good percentage of America’s infrastructure is no longer in American hands. The most significant example that no one talks about is National Grid, a British company that owns the bulk of electrical and natural gas utilities in the Northeast. They accomplished this by buying up numerous regional power companies, including the New England Power Company and Niagara Mohawk. Somehow, I don’t think all those soldiers who died at Saratoga and Yorktown to free America from the redcoats’ tyranny envisioned that two hundred years later, those same redcoats would have Americans by the balls like this.
It’s not even solely a matter of patriotism, as having foreign entities control public utilities deprives local communities of capital and causes their economies to stagnate. If power was publicly owned, whenever Alice from Albany or Bob from Boston paid their electric bills, that money would be reinvested back into the community in the form of maintenance for the power plant or wages for the local workers, who would spend that money on food, frivolities etc. Right now, much of it is going to buy some slimy Limey a new Gulfstream Five or give some underworked executive another bonus. The nature of the global economy means that shutting yourself off from international/interstate commerce is impossible and impractical, but neither is there a reason to let foreigners profiteer off the basic necessities of life.
3) Running public utilities for profit cannibalizes the economy.
Capitalism by its very nature disincentivizes long-term thinking – if it isn’t making a profit NOW, it gets slashed, downsized and streamlined until it is. This GIMME MORE NOW attitude can be counterbalanced by a strong, communal culture and a shared sense of morality, neither of which exist in our atomized, individualist 21st century world. Add in the bureaucratization of the economy and you’ve got a recipe for chaos.
Libertarians and CONservatives love to harp about the negative effects of too much government interference in the economy, but they ignore that too little government influence is just as bad. Governments are necessary for market economies to function because they create stability where there would otherwise be none. Libertarians who huff and puff about being “entitled to the products of their labor” conveniently ignore that without a litany of government utilities, from power and water to public roads and police protection, they wouldn’t HAVE any products to speak of. If you doubt the necessity of a central authority to maintain order and provide basic needs, go open up a sushi stand in downtown Mogadishu and see how long you last.
Privately-run utilities are rentiers, and rentiers are fundamentally parasites, leeching off of those who actually produce things of value. A certain amount of rentierism is necessary for an economy to function, but too much will kill the host. If utilities operators are jacking up rates to make more monies, this leaves less money in the pockets of their clients – and since they have a captive customer base, this effect cascades throughout the entire economy. Workers have less money to spend, business owners have less to invest in their businesses, and everyone suffers. Sane economic policy recognizes the need to curtail the ability of rentiers to profit off of everyone else’s misery.
For example, take the aforementioned National Grid. The states in which National Grid operates – chiefly New York, Massachusetts, and Rhode Island – have some of the highest electricity prices in the country. However, Solvay, a suburb of my hometown of Syracuse, isn’t beholden to the Limeys because it has its own municipal power authority. As a result, Solvay residents pay close to sixty percent less for electricity than anyone else in the Central New York area. Power costs are so much lower in Solvay that some businesses are choosing to set up there over Syracuse or other local towns to save money. No solidarity among capitalists it would seem, not when the bottom line is all that matters. Damn that rancid whore Big Government!
Keep in mind that I’m from the area. Solvay is nothing special – it’s a Rust Belt shithole that was hit hard by the outsourcing craze in the 90′s. It has the distinction of being on the shore of one of the most polluted lakes in the world, which got that way because local factories freely dumped waste there (another example of how capitalism short-circuits long-term thinking). But if a grim industrial town that’s been repeatedly buttfucked by NAFTA can not only provide electricity to its residents, but do it more cheaply than a multinational corporation, there’s no reason why New York City or the province of Ontario can’t do the same.
Or hell, let’s take the neverending clusterfuck that is American healthcare. Last week, I got into an argument of sorts with Rob (of the NO MA’AM blog) on the merits of universal healthcare. Specifically, I’m for it, while Rob is a Canadian and against it:
As a Canadian, I am no fan of universal healthcare, and wish it would be abolished.
Plus, once the Americans get universal healthcare, we Canucks will be screwed. You see, it is illegal here to have two tiered healthcare for those who can afford it, so, anyone who really needs healthcare, and fast, runs to the USA and pays cash out of pocket. Once you dopes adopt our system, us Canadians will be screwed, except for medical vacations to Thailand or Mexico. Canadian cancer patients with a sense of urgency, for example, often go to the USA to get their “specialist tests” done in the USA, and then bring them back to their Canadian doctors so they can get treated quicker. It takes about 6-8 weeks to see a specialist here in Canuckistan, even when you are on a critical list, and often you have to see three or four of them, and it is typical for a patient to be given 6 months to live unless radical surgery is done… and then sit on waiting lists for 4 months until all the “specialists” have done their tests before the radical surgery is permitted… so people go to the states, get all their tests done within 2 weeks to a month, bring the results back to Canada, and let the government pay for the expensive surgery.
Also, you will find with universal healthcare, that even more of your funds will go to fund women’s health issues than men’s. At the cancer clinic I went to, there are eleven “support” programs available to patients – things like wigs, yoga, group counselling etc. Of the eleven, eight are for women only, and the remaining three are “unisex.” All this and yet one in two men will get cancer in their lifetime, while only one in three women will. The place should be set up to accomodate men, not women, since men get cancer 50% more often than women, and yet, it is just the opposite.
Universal healthcare is really great if you need a family doctor because you’ve caught a cold, or need a penicillen shot for following too much of Roissy’s advice. But if you are really in trouble, I doubt you would like it.
Why, in the name of God’s green earth, do you think that government will solve your problems, when they have done nothing so far but be the cause most of your problems?
Btw, the East Indian guy who used to work the pay-parking booth at the hospital parking lot got laid off and sent home, in favour of automated machines that were cheaper than the minimum wage… and they raised the price of parking by over 20% at the same time!
Go Big Government!
While it’s true that Canadian Medicare screws over people who need specialist procedures (such as cancer patients), this has less to do with universal healthcare itself and more to do with the Canadian government’s insane policy of preventing its own citizens from obtaining private health insurance. On basic metrics of how a healthcare system performs such as life expectancy, Canada bitchslaps the U.S. in just about every category. Plus, the idea that American healthcare should stay broken so the poor, poor suffering Canucks can eternally avoid fixing the problems in their own system makes me want to go Blame Canada on your asses.
The argument for basic, preventative free healthcare is not only moral but economic – it would liberate private businesses from the need to pony up for their employees’ health benefits. And I’m no doctor, but I’m pretty sure that healthy people can do their jobs more effectively than sick or injured people. Granted, a lot of Americans’ health problems are caused by them being gluttonous pigs. They shovel down truckloads of junk food every day and don’t exercise, then piss and moan when they get their legs amputated to head off diabetes-induced gangrene. But there are plenty of people who live healthy lives yet still find themselves bankrupted due to a stroke of bad luck and an insurance company hellbent on denying their claims. The nature of American healthcare – bureaucratized private cartels who can legally screw over their customers – is a prime example of how excessive rentierism bleeds a society dry.
The fact of the matter is is that economic prosperity and independence are dependent on public utilities being run for the good of all and NOT to make money. Power, water, public transportation, basic healthcare etc. need to be run by the government – preferably local governments – in order to function effectively. Society should be – nay, it NEEDS to be about more than trying to turn a profit as quickly as possible. It’s community or anarchy – your choice.
* – From now on, I’m only going to use the term “CONservative” to refer to conservatives taken in by libertarian dogma, as there ARE good conservatives out there and conservatism informed by libertarianism is nothing but an empty CON. The problem is that nearly ALL conservatives of importance have been assimilated into the Libertard Borg.
{ 66 comments… read them below or add one }
You’re on to something with respect to utilities, Ferd. And I’m not just saying that because we spend upwards of $600 a month on utilities at the peak of the sweltering FL summers, ;) .
I don’t normally agree with your stridently anti-capitalist posts, but given that DCF routinely rips children from the homes of families where the utilities are turned off, this is one area where rates need to be controlled more tightly than they are. Given that power and water are necessities, I’ll have to agree with you this time.
I don’t agree with a fair amount of what you wrote and your initial paragraph was uninformed and unprovable, but I must say I was fascinated throughout. Please don’t go too far to the dark side with AD. You often make compelling arguments, but you really should consider just coming out and going full-blown liberal from here on out. It’s getting to be like the gay uncle who has a “roommate” but is totally straight.
I will civily address a few obvious points of contention as others will slaughter this post mercilessly.
1) You of all people know demographics are a game changer. Of course Canada will have better health metrics since genetically they probably have better stock (the RYU perspective) or what is most likely happening is less NAMs in their midst means less poverty, crime, and freeloading. Not to mention NAMs have much higher rates of heart disease, diabetes, and obesity. Any socialized system collapses under this type of weight. In lilly white Canada or Vermont, this might work to a point (you even wrote an article on this prior which was indeed spot on), but in more “diverse” places, you have to realize this would be an underfunded and abused clusterfuck. You are being disingenuous when you knowingly compare apples to oranges.
2) Capitalism does NOT by its very nature disincentivize long term thinking. As a matter of fact, the opposite is ruthlessly enforced. Only in government can long-term inefficiencies stay in “business” (see post office, federal deficits, etc.). You really should reevaluate this position. Government is the MOST short-sided entity there is. Elections every 2, 4, or 6 years means politicians and by proxy YOUR government will do whatever is expedient right NOW to keep ones position. To hell with long term problems…. have you so easily forgotten social security, medicare, immigration/demographic disasters, public education, crime and punishment? I could go on, but I’d feel like Toby from the Office in that casino episode where he crushed Michael’s soul. You are extremely bright, but sometimes you let faulty arguments that you are only mildly familiar with cloud otherwise decent ponderings.
3) Finally, while I liked most of your discussion on utilities, I can’t help but wonder if this is simply coming from someone who has had a few high electric bills lately and would love other people through the government to subsidize your electrical consumption. Almost any savings gained from a switch from a for-profit company to a public entity would be lost in the gross inefficiencies of the government agency running it. Your public utility has no accountability and if it needs more money because it has too much waste or way too much union issues, or whatever wacky green initiative the local town comes up with then oh well pay us this or start using your own generator.
FB — there are some conservative that would be right up your alley. Read Pat Buchanan’s books, not what some hack says about him in passing. I think you’ll find a ton of common ground.
Bardamu you should read prof Hudson.
He provides more analysis of the things you mentioned ie investment in basic infastructure by the State(not private enterprise is needed to have a functioning first world society.
you think you’re too cool for nationalism, then you say privatization is bad because it’s anti-nationalist… stfu retard
1) Canada does better even when controlling for socio-economic factors (race, ethnicity, income, urban/rural, etc.) The American system totally sucks, but Germany clearly has a superior system to Canada, with its competing nonprofit insurers and the availability of private insurers and doctors for the wealthy. The German system would fit Americans better, I think, so I don’t know why they’re so obsessed with the Canadians and British.
2) Frequent elections, just like short business reporting cycles, encourage short-term thinking, this is true. Large corporations and governments are nearly-identical bureaucracies, but at least you have some local power over government. You know where the commissioner lives and your mayor shops at the same supermarket as his constituents. Subsidiarity (in this case, localism) is even more important than the gov/corp split.
3) Tax private utilities’ economic rents heavily. They aren’t more efficient, they just cut services, sell everything that isn’t nailed down, and refrain from repairing anything. In Germany, we saw this with Deutsche Bahn, which was preparing for privatization.
At any rate, I wasn’t aware that anyone was claiming that privatized utilities are better. The point of privatization is that it’s more politically feasible to privatize a utility than to raise taxes to upgrade the system. Then, when services get cut and prices go up, the politicians can blame the evil privateers. And the politicians get a slice of the transaction for their troubles, of course.
At any rate, interesting article.
Humans are short-term thinkers. Long-term thinkers run multi-generational organizations, for example monarchy or privately owned family business. Corporations are extremely short-term thinking due to the current stock market compensation schemes and the separation between owners and managers. However, there’s no reason why the market couldn’t move back towards more long-term thinking, but this would probably require some legal changes from those short-term thinkers in government…
Yes, this is an important statement. Corporations and democracies face the same problem: “the separation between owners and managers.” Our votes count for little toward government reform because of the entrenched government bureaucracy, and owner’s votes count for little toward corporate reform because of the entrenched corporate bureaucracy (board and management). That’s why I don’t really see the problem as public-versus-private, but big versus little, short-term versus long-term, and distant versus local.
It’s like with voting. Does it matter if we vote? Not really. Does it matter if we privatize? Not really. That doesn’t really address the core problem of a lack of solidarity and subsidiarity, and unresponsive or corrupt powers.
Sadly, once more Ferd shows how he knows shit about economics.
As everyone here knows, there are several economic schools, like Keynesianism, the Austrian School and neo-liberalism. Of those 3 schools, which do you think libertarians identify with?
That’s right, the Austrian School.
Now, ask yourself, which economic school has pushed for the privatization?
Neo-liberalism.
So please, Ferd, shut up with your ranting about libertarians and start ranting about neo-liberalism instead, please. Anyone who claims libertarians, or the Austrian School, has any noteworthy influence on policy-making in today’s world is seriously deluded.
The best service I’ve received is from my electric co-op. The worst was public water at my last house. “You didn’t pay the bill we didn’t mail, so we shut off your water. Please include a $50 reconnect fee as well as $200 for the deposit we initially waived if you want your water back. We’ll be there tomorrow.”
Just because there’s a market failure, doesn’t mean that there’ll be a government success; if the free market can’t handle the problem, more often than not the government – in it’s urge to do something, anything – will make the situation even worse.
In regards to Utilities – as others have said, you’re on to something here. But I’d be looking at the structure of the deregulations. There’s more than one way to run a private entity. We live in an era of corporate socialism – not free market. In almost any industry, small businesses are superior to large companies; lower overhead, more versatile, less systemic inefficiencies. And yet we see an overabundance of large business.
Why? Overregulation. Government regulation doesn’t come from the people, it comes from lobbyists, and inevitably creates standards that the big guys can afford (it makes them all equally less competetive), but it puts the little guy out of business, and usually accomplishes very little.
Deregulation of the Utilities was probably a money grab by vested interests, not a true deregulation, let alone a well structured one. Don’t throw the baby out with the bathwater, I’m saying.
As for private roads – there are a number of ways this could feasibly be done (one proposal, but not the only proposal: http://www.youtube.com/watch?v=A1gp9_oCafM ).
I think you’re making a mistake in equating Corporate Run Government with Free Market Corporations. Consider the anti-statist position deeper – it’s not The Solution (not yet, anyway), but neither is what you’re proposing.
This sounds it like was written by Rosanne Barr.
This makes In Mala Fide redundant, given I can find the same sermons from CBS, NBC, ABC, PBS, CNN, MSDNC, Time, Newsweek, New York Times, Washington Post, DailyKos, HuffingtonPost, and just about any movie produced by Hollywood.
Granted, such outlets don’t throw in an adolescent I-hate-the-world nihilist pose. Rest assured, the progressives are nihilist to the bone; it’s just nihilism, Murican-style.
Peace out everyone.
I assume you aren’t talking about America’s history of *actual* slavery and instead are using the term slave in the Marxist/anarchist/emo-trenchcoat-wearing-postmodern-crybaby fashion.
The only way that we could even remotely be considered slaves is in the sense that 10, 20, 30, 40% of our work and productivity goes towards paying taxes that we mostly can’t avoid. But being a former state worker and now a committed LIEberal, you don’t see forced taxation as slavery. You’re mad at rich people for being rich and you want to pretend that they are holding you in bondage. You’ve become a class warrior – an occupation that is fueled by jealousy and an inferiority complex.
Oh dear. The “class warrior” stuff is rearing its idiotic head again. Nobody minds someone working hard and earning a profit from their labor. It’s the obscene economic rents some of them collect, signifying an unearned transfer of wealth from the bottom to the top, and from owners to managers, that leads to the decline of the working and middle classes. Any “rich person” who does not see that they’re shooting holes into their own ship with such a tactic is either stupid, wicked, or living abroad, and therefore not someone I give a damn about. Those who live here and don’t want to see their country degrade into a toilet, and are willing to use ethical business practices, are welcome to their earnings. Nobody begrudges them a return for their productive labor, but speculation is not productive labor or even a vital service. It is pure rent-seeking and should be heavily taxed and discouraged.
Sadly, once more Ferd shows how he knows shit about economics.
Well, yes. But he’s still interesting enough that we all show up to lecture him on what he doesn’t understand, and argue with each other in the comment threads. The economic and political posts on here are my favorites actually, and I’ve been glad to see that there’s been more of that lately.
Feminists, sluts, and feminist-sluts can eventually be rather dull topics. They aren’t exactly multifaceted, are they? How many ways can you sodomize an Independent Woman? Wait… nevermind. I don’t want to know.
The “private” utility companies you mention in the article are actually government granted monopolies. Laws prevent other firms from entering the market in any given area, thus the utility companies are granted monopoly privilege which they use to rape your bank account. Calling this private enterprise is as laughable as saying the same of the military industrial complex.
You are painting a fuzzy picture of actual libertarianism (which has less to do with free markets than it does with the legal concepts from which they follow), and then arguing against this phantom.
Captian, you beat me to it.
To equate “deregulation” and “privatization” with “free markets” is a complete misnomer. Than again, this is par for the course in our fascist, corporatist state.
The Government grants cartel privilege to some corporate entity (who, of course, donated massive sums to the Government officials campaign coffers). The Liberal media and all the left wingers (and I guess we can include Ferd here) than have a field day screaming about the horrors of the “FREE MARKET” and “CAPITALISM” and the conservatives than respond with a defense of FREE MARKET CAPITALISM…when the reality is our system is corporatist fascism under cover.
In this way, America continues to be consumed with a complete misdirection and argue about “capitalism vs. socialism” and avoid facing the truth that our system is truly the original definition of fascism.
The system allows just enough capitalism in small markets, and just enough government sponsored socialism to keep everyone divided and arguing against both ideologies and not focused on the reality.
I agree with Ferd’s basic premise here, I just say he’s using the wrong words to describe what is actually going on.
“Even if you care about nothing but your wallet, letting profit intrude into the realm of human necessities is a dumb idea.” – So Ferd, we should open up government groceries? Worked well for the Soviets.
“neither is there a reason to let foreigners profiteer off the basic necessities of life.” – Yes, those damn foreigners profiting off my desire for fresh fruit in the New England wintertime. I should just go without bananas and everything else, just eat old apples from my root cellar. Oh, and coffee, aside from Kona (Hawaii). Let’s fuck those foreigners over and quit being caffeinated, don’t want those brown bastards making a dime off of us.
“go open up a sushi stand in downtown Mogadishu and see how long you last.” – Actually aside from the huge issue of not having police to keep order, anarchy suits business and consumers over there quite well. See that libertarian rag the NYT for the story: http://www.nytimes.com/2000/08/10/world/mogadishu-journal-somali-business-thwarted-by-too-free-enterprise.html?pagewanted=all&src=pm
Please don’t confuse libertarians with minarchists and anarchists, they are different points along a continuum, like libs and socialists, conservatives and monarchists.
There is a role for government, but LIEberals and CONservatives alike generally perceive every problem as being not enough government. It is usually traced back to bad regulation or policy or rent-seeking that they try to fix with more bad regulation and policy that attracts more rent-seeking. Could we try, just once honestly try, to turn the ratchet of government in the direction of smallness? Not heavily regulated, but totally hands the fuck off, and see what happens?
It’s not really fair to pin all this on libertarianism. This is crony capitalism exploiting libertarian ideology as a fig leaf. Libertarians are impotent retards who simply don’t get how the world works. It’s cruel to pick on those hapless retards when their fantasy is merely being peddled by ideologically vacuous oligarchs playing a shell game with our tax dollars.
Libertarianism? Nope! Chuck Testa!
http://www.youtube.com/watch?v=LJP1DphOWPs
My utility bills are raising because of the false monopolies enforced by my municipal and provincial governments (I live in Toronto, Ontario)
Love ya Ferd but I usually stop reading your economic posts by the second paragraph.
The “private” utility companies you mention in the article are actually government granted monopolies. Laws prevent other firms from entering the market in any given area, thus the utility companies are granted monopoly privilege which they use to rape your bank account. Calling this private enterprise is as laughable as saying the same of the military industrial complex.
That’s actually an excellent point because we don’t have the option of choosing our utility company. There is no free market competition to drive down costs. And our rates are scheduled to rise again in January. The government mandated monopoly means that by definition our electricity isn’t privatized. In truth, very little of our economy is when you get outside the realm of small business.
I’m afraid that it’s actually for worse than that. Because of Canada’s harsh winters we would expect them to have far worse health outcomes. The American Health Care System has more than failed, it can’t even hold a candle to a naturally disadvantaged country like Canada.
See how I did that? I just picked whatever variable was against Canada and only talked about that. I also didn’t bother to prove my claims.
Kinda like you.
HL:
I agree with the last part at least. I think that a lot of terms are being juxtaposed on Ferd’s end without really teasing out which words he thinks libertarians are juxtaposing as well.
I might agree with some of what Ferd writes, but too many of his words get in the way.
Does a free market in utilities actually exist? NO. Therefore can we deal with reality? Privatization of utilities is a scam pushed by conservatives/libertarians.
I’m from California and there was a similar deregulation fuck up that led to rolling black outs, astronomical rate hikes (which the state lawmakers wouldn’t dare pass onto the public) plus the Enron raping. And all for what? California’s power generation had worked fine since the days of Edison. It had made California a major economic powerhouse. Deregulation was a solution in search of a problem. Something pushed by industries using conservative/libertarian rhetoric and getting the same yokels who support such drivel into voting for it.
I want to ask, accepting the argument that foreign companies do own capital in America, is it OK that American companies own capital in other countries?
Solyndra. LightSquared. Warren Buffet’s ownership of railroad monopolist Burlington Northern Santa Fe railroad.
I’ve lived in parts of California that were serviced by private and public power utilities. I’ve had a much better experience with public power from lower rates to better service.
The demand for public power is growing and the state’s largest private power company PG&E got an initiative on the ballet to basically make it impossible for local governments to establish public power. Their propaganda consisted of the typical conservative/libertarian talking points. Despite the billions they spent the voters of California rejected their arguments. The people of this state are harder to fool than is commonly believed.
To my knowledge Asian countries (which have been major capitalist success stories) do not permit foreign ownership of their utilities. Nearly all foreign investment has to come in the form of a joint partnership. Contrast this with Africa and South America which embraced “the Washington consensus” model and have failed repeatedly to develop. Nationalist driven economic policies appear to be much more effective than neoliberal ones.
Has anyone ever noticed that libertarians argue EXACTLY like liberals?
Whenever you criticize feminism or multiculturalism or any other liberal bugaboo, they will accuse you of being “ignorant.” Whenever you criticize any libertarian bugaboo, THEY accuse you of being “ignorant.” See Andreas’ comment:
Swap out “economics” for “women,” maybe add a jibe about how I’m a loser living in my mother’s basement and Andreas would be indistinguishable from a feminist.
The fact that conservatives let these left-wing tax cheats basically take them over is one of the greatest tragedies of our time.
castricv:
That’s why I said utilities should be run by local and state governments. I’m not stupid. I wouldn’t trust the idiots in Washington to do a decent job.
O RLY? Better tell that to the corporations that are struggling to get in the black for their quarterly earnings report. Look at dying industries like radio to see this dynamic in action, like the recent Cumulus-Citadel merger. Corporate radio companies are presently engaged in a death spiral – they keep firing local DJs/hosts to lower their expenses, which causes ratings and ad revenue to drop, which causes them to fire more people in a never-ending cycle. When you have to impress your stockholders every three months with a positive earnings report, anything beyond that window becomes a meaningless abstraction.
I live in an area with municipal power. It’s not cheap by any means (high energy prices are unavoidable in the NE), but I pay less than I did in Albany, where power is privately run (National Grid). The online stats back this up – electricity is cheaper in Vermont than in New York.
Really? Solvay, New York apparently didn’t get the memo – as I mentioned in the post, their municipal power authority charges them less ($0.04.5/kilowatt hour) than the rest of the National Grid-owned Syracuse metro ($0.16/kilowatt hour). And like I said, Solvay is a Rust Belt shithole. If they can manage it, so can richer cities/counties/states.
Meh, I used to be a big fan of Buchanan – read a couple of his current affairs books (Where the Right Went Wrong and State of Emergency), but his passive-aggressive anti-Semitism and dour attitude wore on me. I might have to start paying attention to him again.
Andreas:
So Megan McArdle, Will Wilkinson, Radley Balko, Kerry Howley, Dave Weigel, Reason magazine, the Cato Institute, the Koch brothers and the entire libertarian Beltway establishment are all Austrians? Coulda fooled me.
The fact that conservatives let these left-wing tax cheats basically take them over is one of the greatest tragedies of our time.
Ferd, that is the most intelligent thing you have ever written on this blog. Doubly impressive coming from a neo-socialist.
JHB:
Economic left != social left. The media is socially left but NOT economically left, because they’re controlled by big corporations. Wake me when MSNBC gives a show to an authentic populist like Alexander Cockburn or Robert Lindsay, not SWPL partisan hacks like Cenk Uygur or Rachel Maddow.
GLP:
It was a rhetorical flourish. I suppose you also believe I think Canada is actually communist, too?
Captian:
Please inform me how utilities can work any other way. Like I said, there’s only one set of power lines, one set of sewers, one road network. Turning these entities into private corporations entails creating monopolies, unless you’re okay with a world in which someone can bulldoze your house to build a new freeway.
Robert Lindsay? What, CNN wants to run a show based solely on tracking down Bigfoot?
Ah, so you didn’t mean it. What exactly did you mean? This is a common theme of many of your posts of late. It’s all flourish and anger and frothing at the mouth, but then you want us to follow you back to level-headed and non-flourishing conclusions.
Matt:
“Crony capitalism” is a fictional concept libertarians and CONservatives made up to deflect blame for the financial crisis from their economic policies. What you call “crony capitalism” is the end result of three decades of go-fuck-yourself atomized libertarianism, starting with Reagan and culminating with Obama. In a world as big and massively scaled as ours, “small government” leads inevitably to the current state of affairs.
So Solyndra, LightSquared, and Warren Buffett’s ownership of most of monopolist BNSF stems from libertarianism? I’d like to see the flow chart for that one. Maybe AD has one stored up his ass.
In a world as big and massively scaled as ours, “small government” leads inevitably to the current state of affairs.
So Ferd, are you saying that “small government” has led us to this place? I’m trying to follow your reasoning here but you lost me with that one.
GLP:
No. In case you didn’t notice, I criticized Bechtel’s once-monopoly on the Bolivian water supply in the post. Thing is, foreigners (and third-worlders specifically) are much better at defending themselves against foreign capitalist abuses than American are. When Bechtel tried to gouge Bolivians for drinking water, they rioted. When National Grid gouges New Englanders or New Yorkers for natural gas or electricity, they write snotty letters to the editor. Who’s smarter?
He put it in quotes to denote that it didn’t mean what it says. “small government” has actually led to centralization and big government.
GLP:
Maybe I didn’t mean anything? Not everything has to have a deep meaning behind it. I’ve stated repeatedly that I blog in part to entertain myself and others. This entails being funny and clowning around. If I was dry and serious all the time, no one would read this shit. People don’t read blogs for rigorous intellectual arguments, they read them for polemics and amusement.
GLP, Terri, Alte:
Monopolies are created by a laissez-faire attitude towards business, the libertarian/CONservative belief that the private sector ALWAYS > public sector, as encapsulated by Reagan’s quip that “government is not the solution to the problem, government IS the problem.” It’s as stupid as the socialists arguing that the public sector ALWAYS > private sector. The right answer is that the government and private enterprise have their proper roles in life, and that neither are intrinsically superior to the other. The trusts of the Gilded Age like Standard Oil came about not by government interference but a LACK of government interference, and were ended by Roosevelt and Taft’s trust-busting.
Also remember that government to you and me is not the same as government to Koch Industries or Berkshire Hathaway. I mentioned this in my Griftopia review – for ninety-nine percent of Americans, the government is a watchdog, for the top one percent, it’s a lapdog.
Ferd, you may want to check out the essays of Wendell Berry.
Cenk was basically let go from MSNBC for rattling too many cages.
http://www.youtube.com/watch?v=iwgBjkucSXM
LMAO
So that’s who you mean when you use the epithet LIEbertarians?
I agree.
Megan McArdle? She voted for Obama and urged others to do so too…lol.
Now here’s where I take issue:
Wrong.
Monopolies are created when BIG business (i.e. corporations) get there cronies and ex-executives appointed to Government regulatory agencies, who than pass create regulations that end up being merely a cost of doing business for giant corporate entities, but are effective means of driving small competitors out of the market and potential new entrants to the market from being able to compete because they cannot afford the regulatory costs imposed.
Government is not always the problem.
Business is not always the problem.
Our problem is when Government and Business get into bed with each other to create our current fascist State.
Ferdinand:
The trusts of the Gilded Age came about precisely because of political influence in the business realm. Rockefeller, JP Morgan, and other so-called robber barons had enormous political influence. Just as today – and as Taibbi has written extensively on – many former SEC, FDIC, and other financial industry government workers trade off between working for the feds and for Goldman Sachs and other Wall Street banks.
You’re fighting to punish that on the business side; small-gov’t libertarian types are fighting it on the government side because that’s where the real coercion lies.
@GLP
You’re fighting to punish that on the business side; small-gov’t libertarian types are fighting it on the government side because that’s where the real coercion lies
Wrong target.
The problem with Austrian Economics (Of which I have a huge amount of sympathy for) is not with regard to the free market as being an efficient allocator of resources it’s with regard to its understanding of the rational economic agent.
People in a Austrian economic environment are free to make what they consider is in their best economic interest, but this assumes that are capable of making good decisions (See people of Walmart). There is a lot of cognitive science evidence that the average person is good at short term thinking and crap at long term thinking this means that people are quite capable of making short term rational yet long term irrational decisions.
Consider two airlines. One invests heavily in safety and hence its prices are higher, the other cuts costs to the bone and its prices are cheaper. The average punter flys with the cheaper one when he takes a holiday putting financial pressure on the good one. The good airline has the option of cutting saftey to the bone to match the other airline’s cost structure or go out of business.
What happens in real life is that good airline goes out of business, the bad airline starts having a few planes drop out of the sky and then the proles clamor for more government regulation (which is inefficient) to regulate the crappy airlines. Libertarianism paradoxically feeds the growth of the government beast.
Good utilities are capital intensive. The way to destroy a good utility is to buy up a competitor, cut operating costs (i.e capital re-investment, wages, etc.) to the bone and let the free market do the rest. An efficient market that is not long term sustainable is not an efficient market. What matters is not the cheapest price, but the cheapest sustainable price.
Seconded. Also Joel Salatin.
Did anyone else catch FB’s crazy gravatar earlier?
I agree with this article wholeheartedly.
Back when Ma Bell had the state owned telephone business the rates where low and you could get live operator assistance.
The the state sold it to ‘private’ Verizon,the rates doubled and no live operators anymore.
Consumers power went ‘private’, sold the taxpayer funded power lines to a 2nd hand company, now the electric rates have doubled due to transmission line fees.
This is theft from the public to corporations, and enforced monopoly to an entity that has no responsibility to the consumers, but to the profit margin.
Same with the hospital systems, the public used to own a large share and they where regulated, now they are profit driven and the quality of care has decreased and the cost has escalated.
The spurious arguments here promoting free markets and capitalism ignore the fact that it is in fact crony monopolistic corporatism.
This is why the country is going to hell in a hand basket, and the free thinkers here “feel” it’s a great idealogy,but ignore the outcome.
There is a time and place for govt regulation: to protect the peoples infrastructure, not to protect a corporations bottom line.
The only reason this is happening is that the politicians get paid off.
A slice of the pie as one commenter added.
Yall could argue anything goes in the name of privatization, now couldn’t ya?
How bout I say you have to buy one brand of vehicle because the state gave one auto company a private monopoly, and that it would cost $100,000 for a piece of crap.
Oh you would still argue in theory this was great.
Class warrior my ass, it is common sense.
Stop selling out your fellow man on fine words and false theories.
Oh yeah, I will add the infrastructure is crumbling, when that bridge collapses while you’re on it, you can praise the profit motive.
When the gird goes down while mom is on the hospital life support you can argue the same.
Alte:
Yeah, Chuck used that picture in his latest post about me, and I thought it was so funny that I wanted to use it as an avatar. I changed it when I realized that too many people might think that the picture is what I actually look like (in RL, I have a shaved head and goatee + mustache and I don’t wear baseball caps).
For some reason I pictured you looking like Celine.
“How bout I say you have to buy one brand of vehicle because the state gave one auto company a private monopoly, and that it would cost $100,000 for a piece of crap.”
Nobody is trying to stop you from driving a Lada.
Great cars! I heartily endorse you buying one.
The political spectrum is like a horseshoe, not a straight line. Communism and monopoly capitalism/corporatism are nearly identical in practice. Freedom lies in the bell of the horseshoe, as well as the kind of Capitalism that is beneficial for society – ie. Mom & Pop shops… except when the Leftards target the “rich” and trot out billionaires as their justification for passing anti-Capitalist laws, it is Mom & Pop who takes it up the ass the most.
People think the government is more noble and less likely to engage in corruption because the government is “abstract” and therefore most people envision it as perfectable, somehow, in their own minds. The problem is that government is made up of the exact same kind of people that are all around you – all fallable, and all succeptable to greed and corruption, just like your worst greedy Capitalist.
Government officials as well are motivated by the power principle, just like Capitalists. The difference is that Capitalists are motivated by profit, while Government is motivated by inneficiency. Both camps want to increase their power base – it is human nature. Whereas the Capitalist does it by increasing profit and driving those profits back into his business to create more profits, the government official does it by being innefficient and running himself overbudget each year, so he can come with his hand-out claiming he needs a larger budget for the following year. Next year, he will again grow his empire through innefficiency and come in over budget, with his hand out again.
This is why my province has a funding shortage of $500,000,000 to $600,000,000 each year for our “free” healthcare, all the while, more and more hospitals are closing down, and each one has less and less beds. It is the same for the police, the schools, the fire department, and every other goddamn thing the government touches.
For some reason I pictured you looking like Celine.
I was confused for a moment, as I don’t look like Celine Dion. Oh, duh. Like the author. Comment not directed to me. Nevermind. I chickened out and took down my own pic, and then I was surprised that you’d put yours up — and then such a strange one.
Sorry for the derailment.
If America was an actual democracy, then people would think the government was better cause they could fire the government if it misbehaved where they can’t fire entitled rich people.
This is pretty simply, so I can only assume your are being a deliberate tard refusing to understand basic reality.
And I’m right, aren’t I? You imagine yourself clever for ignoring basic facts.
“And while that’s patently false, there is at least ONE thing we can say that the private sector does far better than the public – ripping people off.”
I don’t know- Ponzi and Madoff have nothing on Social Security.
Something that I’ve noticed crop up often is the idea of the “public,” but what is that in the modern context? We are no longer a single people with similar beliefs, desires, and goals, so how can there be a notion of “the public interest?” We’ve replaced organic communal bonds with service-based monetary transactions all so the individual can be free from everything. Free from worry, free from work, free from productivity, from truth, from obligations, from duty, from honor, from other people (parents, children, spouses, and friends) and we wonder why we suffer from massive civilization corruption, rampant graft, and an inability for the government or the private sector to come up with an efficient and equitable solutions? Today we talk about utilities, tomorrow it will be something else, and ever onward after that.
This is a crisis which encompasses the whole West and in my mind is one of faith/belief. Unless that can be fixed, and I don’t know if it can be without great suffering, discussions like your article FB are interesting but will never generate a solution as it addresses symptoms of the problem, but no the problem itself.*
*I understand the analogy is not totally perfect because you do need to treat major symptoms while dealing with the disease proper, but what I am trying to get at is that the symptoms themselves are basically untreatable so long as this particular affliction persists.
Something like “retail contestability” has been introduced in places – the infrastructure remains the property of the government, which sells the utility product to a number of private corporations (presumably at a fixed wholesale price). These corporations then sell it on to private consumers, working like any other business to increase efficiency for the sake of market dominance. So, the consumer connects to the government-owned grid via the intermediary of a private corporation that earns its money by managing the retailing, monitoring and billing services.
If anyone knows more about how this works, please let us know.
Alte:
There’s no way to heavily tax speculation, and only speculation. At its base, after all, speculation simply consists of buying stuff with the expectation that prices will go up, and then selling it later for more if your expectation is right. Now you can’t really tax expectations, so which part would you tax more heavily, the buying or the selling? Either way, you end up hitting the majority of people that aren’t speculators. Even most people who sell things they previously bought (like, say, retailers) aren’t speculators.
So discouraging speculation by taxation is not feasible. What would work though is to simply not force interest rates to artificially low levels, and to stop bailing out those banks that got burned on speculation. That would mean the end of loans for speculative purposes for the most part. You’ll get a lot less speculation if people have to do it with their own savings.
You could tax rents progressively. So a return up to 10% could be taxed at 0%, returns up to 20% could be taxed at 10%, returns up to 30% could be taxed at 20%, and so on. The goal would be to discourage rent-taking and encourage reinvestment. I don’t know if it’s feasible, but it seems better than taxing wage-income, which has been earned through actual labor.
That is a bit rich from a guy who posts profanity-laden rants about LIEers and CONmen.
You, and your good friend Advocatus Diaboli, write pieces full of dour outlook spitting venom at everything. I am not sure how Buchanan is worse, other than he avoids the “stylish” profanity and total nihilism.
DU:
The difference between me and Buchanan is the difference between an angry street protester and an emo kid who slits his wrists and cries about the meaninglessness of life. Buchanan just comes off as a profoundly unhappy and depressed person. He’s got no mirth, no joy in his writings.
If America was an actual democracy, — PT Barnum
If you want to claim things about the virtue of Democracy and how things “should be,” perhaps you ought to go to your founding documents and discover exactly how much weight the Founding Fathers placed in “democracy.” (You might want to also find out, conversely, how much weight people like Karl Marx placed in democracy).
See how I did that? I just picked whatever variable I felt like addressing in your snot-mouth reply and only talked about that. I also didn’t bother to prove my claims.
This is pretty simply, so I can only assume your are being a deliberate tard refusing to understand basic reality.
And I’m right, aren’t I? You imagine yourself clever for ignoring basic facts.
No ferd Laiz-fairee economics do not lead to monopoly as there will always be other competitors that may outcompete you. For example a good example of a so called :”monopoly” was Standard oil(although it is not as it had competitors in other parts of the world) when it stopped innovating and driving down prices its market share dropped from 88% to 64% as is competitors outcompeted it.
Cartels and monopolies can only be sustained by government coercion
http://mises.org/daily/2317
http://mises.org/resources.aspx?Id=edc53d73-e43b-428b-ad42-915398d71e2e
Here in Brazil telephony was a government monopoly for most of its existence, until around the ’90s.
That’s how it worked back then: you asked for a phone line, and paid what the government required for the privilege, i.e., about $2K (raw, as I didn’t adjust for inflation, so it’d be way more in current terms); then you’d wait for 4 years, and get your one line; as a sort of bonus, you received “possession” of your line, and could resell it, what lead to an interesting gray market of people desperate to get a phone Right Now (new businesses, which couldn’t function without a phone line, evidently) and people willing to sell them said “urgent” line for a small premium (think $5k+).
Compare to how things are now, after 20 years of privatization: you as for a phone line, and pay the installation fee, which goes for $35; and in a week it gets installed. On the “downside” (ahem…), you don’t “own” your phone line anymore — not that it’d be useful for anything if you did.
The problem then isn’t in utilities being privately owned or not. It’s on how the rules are set. If you do it right, you can have private ownership of utilities work fine; if you do it wrong, no amount of government ownership will help.
In short, what you describe sounds to me more like a comparison of bad private ownership of public utilities vs. good government ownership of public utilities. It couldn’t but result in a the government owned ones winning the comparison. And the same can be said of my example of the telephony sector in Brazil, in which the (good) private ownership clearly wins from the (bad) government ownership.
What I’d like to know is at what one arrives when comparing instances of both being done right, or both being done wrong. The outcome isn’t, I suspect, as clearly cut.
{ 2 trackbacks }