Promises of efficiency through privatization are illusory


tay
+2 / -1
#1  Top Rated Post
David Ball notes (link is external) (external - login to view) that many municipalities are retaking control over their own services after learning that the promises of efficiency through privatization are entirely illusory.

https://www.metronews.ca/news/vancou...sts-study.html (external - login to view)
 
Machjo
+1 / -1
#2
That depends. When we're talking about natural monopolies (as is often the case with utilities for example), those are best left under state ownership or a consumer cooperative. Aside from natural monopolies though, the private sector does usually work best.
 
Walter
#3
Gubmints should be in charge of as little as possible.
 
Machjo
#4
Quote: Originally Posted by WalterView Post

Gubmints should be in charge of as little as possible.

Isn't that what I essentially said? That natural monopolies aside, we should leave it to the private sector? And even then, a natural monopoly could work well in the private sector as a consumer cooperative?

You do realise don't you that competition laws involve government intervention in the economy, and probably even more intervention than to just allow it to function as a consumer coop and certainly just as much intervention as it being government owned?

Do you really propose that a natural monopoly just be left to its own devices?
 
Walter
#5
Quote: Originally Posted by MachjoView Post

Isn't that what I essentially said? That natural monopolies aside, we should leave it to the private sector? And even then, a natural monopoly could work well in the private sector as a consumer cooperative?

You do realise don't you that competition laws involve government intervention in the economy, and probably even more intervention than to just allow it to function as a consumer coop and certainly just as much intervention as it being government owned?

Do you really propose that a natural monopoly just be left to its own devices?

Let the market decide.
 
Tecumsehsbones
+1
#6
Quote: Originally Posted by WalterView Post

Gubmints should be in charge of as little as possible.

Yep. The government should only do that which is socially necessary and cannot be profitable, like search and rescue, criminal justice, defense, and infrastructure.

My heirarchy of solutions is:

1. Is it really a problem in the first place?
2. Leave it to the private sector.
3. Passive governmental involvement (provide tax incentives for the private sector to tackle the problem).
4. Public-private partnerships.
5. Direct government action.

Ask "Is it still really a problem?" at every step, and constantly look for ways to slim down or shut down any government action. "Useless/outdated regulation" audits should be regular, and conducted by entities with a financial stake in getting rid of regulatory garbage.
 
Machjo
#7
Quote: Originally Posted by TecumsehsbonesView Post

Yep. The government should only do that which is socially necessary and cannot be profitable, like search and rescue, criminal justice, defense, and infrastructure.

My heirarchy of solutions is:

1. Is it really a problem in the first place?
2. Leave it to the private sector.
3. Passive governmental involvement (provide tax incentives for the private sector to tackle the problem).
4. Public-private partnerships.
5. Direct government action.

Ask "Is it still really a problem?" at every step, and constantly look for ways to slim down or shut down any government action. "Useless/outdated regulation" audits should be regular, and conducted by entities with a financial stake in getting rid of regulatory garbage.

The tobacco, alcohol, lottery, and sex industries definitely have a stake in the regulation of their advertising.

The municipal sewer syste is a good example of a natural monopoly. Do you propose different commpeting sewer systems? Producing multiple sewer systems could be expensive. I'm not saying you can't privatize a natural monopoly, but it needs to be properly regulated then. A consumer cooperative is one possibility. Another option is to allow only less than 50% market share, but that can undermine economies of scale since mnatural monopolies benefit from that. A consumer cooperative allows for no competition and so benefit from economies of scale while still allowing the consumers to vote on business policy to prevent the monopoly from gaining too much power.
 
lone wolf
Free Thinker
#8
Quote: Originally Posted by WalterView Post

Gubmints should be in charge of as little as possible.

They are - incorruptibility being a biggie
 
Tecumsehsbones
#9
Quote: Originally Posted by MachjoView Post

The tobacco, alcohol, lottery, and sex industries definitely have a stake in the regulation of their advertising.

Which is why we need a countervailing force with a financial incentive to eliminate regulation.

Quote:

The municipal sewer syste is a good example of a natural monopoly. Do you propose different commpeting sewer systems? Producing multiple sewer systems could be expensive. I'm not saying you can't privatize a natural monopoly, but it needs to be properly regulated then.

That's classic economics. Competition except where competition is impossible, regulation in that case. At the same time, constant review remains important. Competition in the early telephone industry was destructive, as various telephone companies refused to interconnect. So regulation created a monopoly and regulated it. Sixty years later, advancing technology made de-regulating the telephone industry desirable, so we did that.

Quote:

A consumer cooperative is one possibility. Another option is to allow only less than 50% market share, but that can undermine economies of scale since mnatural monopolies benefit from that. A consumer cooperative allows for no competition and so benefit from economies of scale while still allowing the consumers to vote on business policy to prevent the monopoly from gaining too much power.

Don't know about Canada, but hereabouts you're perfectly free to set one up.
 
Machjo
#10
Quote: Originally Posted by TecumsehsbonesView Post

Which is why we need a countervailing force with a financial incentive to eliminate regulation.


That's classic economics. Competition except where competition is impossible, regulation in that case. At the same time, constant review remains important. Competition in the early telephone industry was destructive, as various telephone companies refused to interconnect. So regulation created a monopoly and regulated it. Sixty years later, advancing technology made de-regulating the telephone industry desirable, so we did that.


Don't know about Canada, but hereabouts you're perfectly free to set one up.

Would a consumer cooperative in the US face competition laws or would it be allowed to monopolize? Honestly, I'm not sure in Canada. We do have competition laws against natural monopolies, but I can only assume that they apply to consumer coops but don't know for sure.

Also, it's difficult to set up a consumer coop in an industry that the government already has cornered. This would require the government to perhaps privatise it.
 
Tecumsehsbones
#11
Quote: Originally Posted by MachjoView Post

Would a consumer cooperative in the US face competition laws or would it be allowed to monopolize? Honestly, I'm not sure in Canada. We do have competition laws against natural monopolies, but I can only assume that they apply to consumer coops but don't know for sure.

Also, it's difficult to set up a consumer coop in an industry that the government already has cornered. This would require the government to perhaps privatise it.

There's no law against monopolizing in the U.S. There are laws against actions in restraint of trade. If you got a monopoly going on, that's fine, as long as you ain't planning or taking action to maintain your monopoly.
 
Corduroy
+2 / -1
#12
Quote: Originally Posted by TecumsehsbonesView Post

Yep. The government should only do that which is socially necessary and cannot be profitable, like search and rescue, criminal justice, defense, and infrastructure.

Don't forget getting a friendly reminder to renew your driver's license. It's one of the pillars of essential government as laid out by Libertarian theorist Ludwig von Mises. Ayn Rand wrote a book about it called "Lick my stamp, government office monkey." It wasn't popular, but true visionaries seldom are.
 
Walter
#13
Quote: Originally Posted by CorduroyView Post

Ayn Rand wrote a book about it called "Lick my stamp, government office monkey." It wasn't popular, but true visionaries seldom are.

Ain't no such book.
 
Corduroy
#14
Did you look it up?
 
Tecumsehsbones
#15
Quote: Originally Posted by CorduroyView Post

Did you look it up?

For the win.
 
Walter
#16
Quote: Originally Posted by CorduroyView Post

Did you look it up?

Ain't no such book.
 
TenPenny
#17
Quote: Originally Posted by CorduroyView Post

Don't forget getting a friendly reminder to renew your driver's license. It's one of the pillars of essential government as laid out by Libertarian theorist Ludwig von Mises. Ayn Rand wrote a book about it called "Lick my stamp, government office monkey." It wasn't popular, but true visionaries seldom are.



Oddly enough, a couple of years ago, the NB gov't decided to save money by not mailing out notices to renew your vehicle license plates, you were expected to remember it on your own. Of course, they didn't do much to notify people, other than a few newspaper articles.
 
personal touch
Bloc Québécois
#18
Privatization has a remarkable history

The electrical history in Alberta and Canada immediately comes to mind.

One thing led to another when auditing the history of the electrical industry in Alberta,but in the end it was a knowledge lesson like no other!

Trans Alta Utilities was the start,maybe?I think the death of my cousin provoked a start,what webs we weave!
 
MHz
+2
#19
https://en.wikipedia.org/wiki/Califo...tricity_crisis (external - login to view)
Effects of partial deregulation

Part of California's deregulation (external - login to view) process, which was promoted as a means of increasing competition, involved the partial divestiture in March 1998 of electricity generation (external - login to view) stations by the incumbent utilities (external - login to view), who were still responsible for electricity distribution (external - login to view) and were competing with independents in the retail (external - login to view) market. A total of 40% of installed capacity – 20 gigawatts (external - login to view) – was sold to what were called "independent power producers (external - login to view)." These included Mirant (external - login to view), Reliant (external - login to view), Williams (external - login to view), Dynegy (external - login to view), and AES (external - login to view). The utilities were then required to buy their electricity from the newly created day-ahead only market, the California Power Exchange (PX). Utilities were precluded from entering into longer-term agreements that would have allowed them to hedge their energy purchases and mitigate day-to-day swings in prices due to transient supply disruptions and demand spikes from hot weather.[citation needed (external - login to view)]



PG&E yard in San Francisco (external - login to view)


Then, in 2000, wholesale prices were deregulated, but retail prices were regulated (external - login to view) for the incumbents as part of a deal with the regulator, allowing the incumbent utilities to recover the cost of assets that would be stranded as a result of greater competition, based on the expectation that "frozen" rates would remain higher than wholesale prices. This assumption remained true from April 1998 through May 2000.[citation needed (external - login to view)]
Energy deregulation put the three companies that distribute electricity into a tough situation. Energy deregulation policy froze or capped the existing price of energy that the three energy distributors could charge.[13] (external - login to view) Deregulating the producers of energy did not lower the cost of energy. Deregulation did not encourage new producers to create more power and drive down prices. Instead, with increasing demand for electricity, the producers of energy charged more for electricity.[14] (external - login to view) The producers used moments of spike energy production to inflate the price of energy.[14] (external - login to view) In January 2001, energy producers began shutting down plants to increase prices.[14] (external - login to view)
When electricity wholesale prices exceeded retail (external - login to view) prices, end user demand was unaffected, but the incumbent utility (external - login to view) companies still had to purchase power, albeit at a loss. This allowed independent producers to manipulate prices in the electricity market by withholding electricity generation, arbitraging (external - login to view) the price between internal generation and imported (interstate) power, and causing artificial transmission (external - login to view) constraints. This was a procedure referred to as "gaming the market." In economic terms, the incumbents who were still subject to retail price caps were faced with inelastic demand (external - login to view) (see also: Demand response (external - login to view)). They were unable to pass the higher prices on to consumers without approval from the public utilities commission. The affected incumbents were Southern California Edison (external - login to view) (SCE) and Pacific Gas & Electric (external - login to view) (PG&E). Pro-privatization (external - login to view) advocates[attribution needed (external - login to view)] insist the cause of the problem was that the regulator still held too much control over the market, and true market processes were stymied, whereas opponents of deregulation assert that the fully regulated system had worked for 40 years without blackouts.[citation needed (external - login to view)]



Chronology[1] (external - login to view)[2] (external - login to view)[3] (external - login to view)

1996 California begins to modify controls on its energy market and takes measures ostensibly to increase competition. September 23, 1996 The Electric Utility Industry Restructuring Act (Assembly Bill 1890) becomes law.[4] (external - login to view) April 1998 Spot market for energy begins operation. May 2000 Significant rise in energy price. June 14, 2000 Blackouts affect 97,000 customers in San Francisco Bay area during a heat wave (external - login to view). August 2000 San Diego Gas & Electric Company files a complaint alleging manipulation of the markets. January 17–18, 2001 Blackouts affect several hundred thousand customers. January 17, 2001 Governor Davis declares a state of emergency. March 19–20, 2001 Blackouts affect 1.5 million customers. April 2001 Pacific Gas & Electric Co. files for bankruptcy. May 7–8, 2001 Blackouts affect upwards of 167,000 customers. September 2001 Energy prices normalize. December 2001 Following the bankruptcy of Enron, it is alleged that energy prices were manipulated by Enron. February 2002 Federal Energy Regulatory Commission begins investigation of Enron's involvement. Winter 2002 The Enron Tapes scandal begins to surface. November 13, 2003 Governor Davis ends the state of emergency.
 
personal touch
Bloc Québécois
+1
#20
The REA and Trans Alta have a remarkable history of liaisons of privatization,manipulation at its finest

Everything presents itself as just when on paper,over years who and what controls regulation,takes on shaping directives and regulations which are controlled by very few,this is where privatization becomes slippery.
Who and what controls the regulatory processs?
Usually the industry itself,the profit makers,public policy diminishes and opportunities are minimized,public safety is compromised,reciprocal agreements are oversighted with minimal input from the public,tyres conditions evolve over time with of course influencing inputs
How is regulation weakened?tracing this question can be traced back as far as 50 years,but privatization jingle had heightened opportunitie,the self regulation concepts were the buzz,this started in the 70s,80s where there was intent to weaken regulatory insight,many methods and influences succeeded with intentions to bastardized regulatory management,
Safer did not matter

Privatization history is not good
 
Bar Sinister
No Party Affiliation
+1 / -1
#21
Given the fact that private companies have to make a profit; it should be more than obvious that they cannot supply services more cheaply than government. In fact I can't think of a public service that has ever been more cheaply supplied by a private service. I can, however, come up with several public services that are much more expensive due to the fact that they are privately owned, such as dental and eye-care.

Quote: Originally Posted by TecumsehsbonesView Post


That's classic economics. Competition except where competition is impossible, regulation in that case. At the same time, constant review remains important. Competition in the early telephone industry was destructive, as various telephone companies refused to interconnect. So regulation created a monopoly and regulated it. Sixty years later, advancing technology made de-regulating the telephone industry desirable, so we did that..

Not in Canada. A few giant telecom companies dominate and they pretty much charge whatever they can get away with. Competition between these oligopolies seems to be minimal at best.
 
personal touch
Bloc Québécois
#22
The information auditing process of the relationship of the REA and TransAlta exposes certain methods and means I'd directed process,
Community based "boards" became part of the self regulation scheme,
Fondly known as the whiskey and water group,I recall my first PC convention,watching the laisons,understanding the manipulation became significant in understanding diminished capacity of regulation,horrible character people is all I am saying,you need people to mobilize agendas,weakened public policy is no accident
When I entered into the electrical industry,there was a lot of bugle blowing and it was in process of further "privatization "legislation,this came to a big stop when evidence of self regulation was not safe,
What a whiskey and water syndrome that was,
It could be traced way back to the start of the relationship of the REA and TransAlta ,
And of course the Conservative Party
 
Tecumsehsbones
#23
Quote: Originally Posted by Bar SinisterView Post

Not in Canada. A few giant telecom companies dominate and they pretty much charge whatever they can get away with. Competition between these oligopolies seems to be minimal at best.

Yeah, well, Canadians. What're ya gonna do?
 
coldstream
+1
#24
All aspects of the NeoCon/Liberal economic agenda.. Free Trade, Monetarism (free markets in currency and credit), Deregulation (of markets), Privatization (of natural monopolies and utilities).. have ALL failed.
 
Tecumsehsbones
#25
Here's an example of privatization. In Ireland, if you want a phone, you can call Eircom, the government phone company, and within three months they'll come out to hook you up. Or you can walk into a 3 store and walk out ten minutes later with a mobile that works and costs less than Eircom service.
 
Machjo
#26
Quote: Originally Posted by coldstreamView Post

All aspects of the NeoCon/Liberal economic agenda.. Free Trade, Monetarism (free markets in currency and credit), Deregulation (of markets), Privatization (of natural monopolies and utilities).. have ALL failed.

The problem is not with free trade but with lack of planning. For example, privatizing a natural monopoly (except to make it into a consumer cooperative maybe) is generally not a good idea, but that has nothing to do with free trade.

As for charging interest on loans, I agree with placing an upper limit on interest. We need to ban loansharking and other forms of usury by imposing lw maximum rates of interest.

But again, none of this has nothing to do with free trade.

As for deregulation, let's not oversimplify things. A true opponent of deregulation would be praising North Korea. Inversely, we don't want anarchy either. Deregulation is generally a good thing when well planned. You seem to confuse and oversimplify things on all fronts.
 
personal touch
Bloc Québécois
#27
What should and should not be regulated and subsidies is a question no one wants to ask

Public safety should be oversighted?agree?

Making profit at the cost of safety?where is the line?

Window dressing safety when it comes to private industries?is this good enough?
The problem with regulation it is weakened,no dominance,no teeth, no acess to fair process,a million regulations but no processs or access.ZIPO!
This is no accident,who manages the administered processs,are usually the designers of the process.
Privatation and self regulation made sure of this,now Canadians have to pay for this
 
DaSleeper
#28
With your information auditing background, you should start by auditing your posts so they make sense, or quit drinking before you post.
 
Corduroy
#29
Quote: Originally Posted by TecumsehsbonesView Post

Here's an example of privatization. In Ireland, if you want a phone, you can call Eircom, the government phone company, and within three months they'll come out to hook you up. Or you can walk into a 3 store and walk out ten minutes later with a mobile that works and costs less than Eircom service.

Well out in Canada, the CRTC gave us the freedom to pick and choose our own TV channels. So where's your Obama phone now?
 
personal touch
Bloc Québécois
#30
Quote: Originally Posted by DaSleeperView Post

With your information auditing background, you should start by auditing your posts so they make sense, or quit drinking before you post.

Go to sleep
 

Similar Threads

29
The privatization of Hydro One
by tay | Feb 19th, 2017
41
CUPW Blamed For Privatization
by Liberalman | Jan 30th, 2010
2
PROMISES, PROMISES, PROMISES BROKEN
by Martin Le Acadien | Sep 9th, 2005
no new posts