Could utilities be privatized
I have always felt utilities must be public, and I have never objected to the city Government's means of producing them, because its means is not coercive. But recently, I read something written by the Mises institute that explained that utilities could be private and competative...and that what we witnessed during the late 19th century was not a free market utilities system. I am no expert on this, but I figure you could have multiple primary sewer and water lines running under the streets, and smaller lines that connect those lines to houses that go over and under eachother, and electricity could be sold by allowing access to a grid that each company runs their electric lines through. WHAT DO YOU THINK? COULD UTILITIES BE PRIVATIZED?
Yes
Side Score: 4
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No
Side Score: 5
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Casper brings up a point when saying that you probably wouldn't want to privatize them... but that's about it. The fact that the monopolies have already been formed is sort of the reason why I'd say that privatization in this field is tricky. The utility companies that have taken advantage early on in the past century to take government and citizen money to provide a service with no consideration for demand are the luckiest bastards since Rockefeller and Carnegie. Government in bed with prioritized business leads to these monopolies, but once the monopolies are created and dependency is made, it's quite difficult to reverse it all. Not that you can't, but most people wouldn't like the short term costs of it all. As well, to completely remove government may not even end the monopolies. Competition could open up and will have a better chance, but these Frankensteins that government creates are going to make it quite hard for smaller business to compete. In transition to a flourishing Free Market, we have to somewhat (but not go crazy) undo what government has done. Look at Microsoft and Apple as an example. Because of government, Microsoft was a Monopoly, but then the government sued them for being a monopoly which forced Bill Gates to fund a competitor... Apple. Apple went in the direction of consumer based products making them a wildly great competitor to Microsoft. Today, we have many different computer based companies all appealing to consumers, with Microsoft and Apple being the largest companies providing the most goods and services. Is it possible to trim Microsoft and Apple even more? Possibly. One way would be to remove most intellectual property laws and patent laws that keep small, competing businesses from having a chance against Microsoft and Apple that patent just about any program they can get their hands on. I'd say do the same for the utilities. We can't just assume that a transition to a Free Market after all the damage that government has done would actually be better for us. It won't necessarily be worse, but if we are hoping for efficiency and consumerism, competition must be encouraged. It's quite discouraging when government creates Monopolies. Eventually, utilities would become consumer based instead of central based. Like most businesses, utilities would also focus on usability in competition. Look at how many of our technologies today work well with other types of technologies and even have specific functions to do so (smart phones, tablets, social networks, consoles, tvs, players, etc.). Over time, consumerism brings about an efficient and usable system for the people who are demanding. But as long as these monopolies exist, we can not hope to see any attempt for these utilities to compete. They don't need to, so will never work hard enough to attract consumers. We either pay this one company or we don't get the service. Side: Yes
It is my understanding that people claim these industries could not work in the free market, because they are "network industries"...which therefore gives a unique advantage to the largest companies. But there are two "network industries" that were deregulated in the US, that are thriving...they being industrial rail and telecommunications. Side: Yes
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They are natural monopolies/oligarchies, similar to social networks their value depends on their network of pipes, electrical lines and so on. Once a single company reaches a critical mass, their economies of scale will be low enough that the price barrier would be too high for the risk for any other company to try to get in the industry. Once this is done, basic utilities will be ran for profit, with no accountability to the people they serve.(unless by some magic a non-profit owns and develops them, but typically a non-profit limits capital accumulation and makes it difficult to compete with other forms of business) Rather due to the necessary nature of the product they could treat it like gas prices are now, and raise the price to relatively just below the breaking point of a societies way of life which allows them to rely on that product. Further more, for the period in which companies did compete they would all build their own separate networks leading to massive redundancy. This might not be the case if you could stop vertical monopolization, or create a regulatory body like the ISOs over them. However, with multiple middle men, the price increases. So yea, you could theoretically privatize them. However, you probably wouldn't want to. Side: No
But without barriers to entry would such monopolies be possible or would utilities resemble what has been proven in all other markets...without barriers to entry, monopolies are almost impossible http://en.wikipedia.org/wiki/ Side: Yes
You can make the link go directly to the intended section by copying the link AFTER you've clicked on the section in the table of contents. Like this: http://en.wikipedia.org/wiki/ As well, I agree with the criticisms, but I feel that you should explain to Casper how it fits your position. I won't do it because I already pointed out what I feel are the most vital points on monopolies in my post much earlier. Side: Yes
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Businesses create barriers to entry naturally though greater capital accumulation, that is why you tend to have oligarchies where there are just a few large companies in any given industry. Occasionally one of the oligarchies will gain an upper hand, and you'll end up with a monopoly. For example, if there are 5 mines and 5 companies to mine them. They start out with equal means of production and market shares, and are in perfect competition in-till one increases their efficiency somehow and starts making some more money than the others. Eventually one of the others want to sell out of the industry to pursue other opportunities, so naturally the more efficient one buys a second mine. From the beginning no other company could enter the mining industry due to there only being 5 mines, and the only way there could continue to be 5 would be if a Different company decides to diversify into the mining industry and buy a mine at a higher price than what one of the other companies could buy it for. With corporations, if one company stock price falls due to images of bad working conditions or similar, the other companies would just buy as much stock as they can, especially if the industry is expected to do well in the near future. Now lets see if we can expand this to areas with out such limitations on basic resources. You still have the price of machines keeping out competitors. Capital goods tend to be expensive and 2 to 4 times the price of a worker making a high income, then you have marketing, and so forth to gain a market share, etc. Banks would have to be able to give credit out to high risk investments for there to be a good chance of stopping oligarchies from developing, they would rather give large lines of credit to the oligarchies than take high risk of funding a competitor. So well most industries may have more flexible resources which are less limited, they practically might as well be as limited as a natural resources. Side: No
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