atw: Re: National Broadband Network and empathy
- From: "Geoffrey Marnell" <geoffrey@xxxxxxxxxxxxxx>
- To: <austechwriter@xxxxxxxxxxxxx>
- Date: Mon, 23 Aug 2010 10:58:30 +1000
Rod,
You have mostly skirted my questions. The closest you came to a direct
answer was this:
<quote>
Your comment about privatisation of the electricity market failing to
deliver lower electricity prices. D'uh! That's because State owned
electricity is subsidised through theft (taxes) from other sources!
</quote>
I gave two examples in an early email of giving that is not theft: a present
to my wife and my willingness to pay taxes. You call taxes theft because you
don't want to pay for what you use. I don't consider it theft (and thus the
misunderstood parallel with gift-giving). Electricity is an essential
service. Completely privatise it-that is, have no government involvement at
all, including a watchdog to scrutinise and prevent price-gouging-and you
will find pretty soon a growing sector of society that will find the
ever-increasing price rises difficult, and then impossible, to meet. I don't
want to see a society where a growing number of people can't afford the very
basics of civilised living. You talk of benevolent CEOs. How many of those
are there? Most companies are publically listed and thus have (or have a
voodoo belief that they have) an over-arching responsibility to maximise and
grow dividends for shareholders. Most shareholders are relatively wealthy;
and most of that group couldn't give a rat's about the welfare of the less
fortunate.
As long as unfettered capitalism is profit-driven (and obsessed with
growth), I don't want to give the private sector a level playing field.
There is profit in the working poor (which is why America is such a wealthy
country: it shits from a great height on those who have never had the
opportunity or good luck to benefit from never having to worry about paying
for a civilised life).
Folk who bray on about user-pays often ignore the indirect benefits they get
from taxes. You might never use a highway, but you benefit from the lower
prices of the goods that are transported on them. You might be childless (as
I am) and so have no direct need for schools. But by golly I do have a need
for doctors, lawyers and accountants who I expect and need to be educated. I
might not have a mental problem and so have no need for mental health
services. But if a loony burns down my house, or a troubled friend commits
suicide, my life is all the poorer. I might never use trains. But without
trains, my roads will be impossibly clogged, the air I breathe more deathly
than otherwise and the poor will be housebound, unable to travel to work and
probably more inclined to crime just to get by (thereby upping my insurance
premiums not to mention messing with the lives of those who have been
robbed). The list goes on endlessly.
It's not a question of whether you use something; it's a question of whether
you benefit from it.
And who, in the private sector, is likely to build (without government
subsidy) a road from Hay to Jerilderie? Who will build schools for those
whose parents cannot afford private education? Who will provide mental
health services to those whose health issues prevent them from earning a
living to pay for mental health care? And who will run the train system?
No-one seems to be able to do so in Victoria without massive government
subsidies. You can't leave everything to the private sector. They either
have no interest in it or they'll price-gouge in the interest of
shareholders, thereby eventually denying essential services to the poorest
sectors of our community. If you want a society where folk rob just to
sustain a basic standard of living, where the mentally disturbed wander the
streets knifing innocents they think are chasing them, where there are not
enough doctors because schools and universities are only profitable if they
exclude the poor, if you want folk to fight over ever-dwindling supplies of
wood just so that they can keep warm in winter because energy has been
priced solely to maximise profit, if you want to walk to work because there
are no trains or buses, if you want greed-bloated arbitrageurs to bring the
world economy to its knees when their house-of-cards investment instruments
start eating their own tails, then vote for the User-Pay Party of the
Unfettered Capitalism Party.
Rod, you play to two ends of the spectrum: capitalism and communism. To
reject one is not to embrace the other. Calling me a Leninist/Marxist is
about a silly as it gets. The only way to a civilised society free of the
misery of the Hobbesian jungle is a mixed economy where no-one feels they
are denied opportunities by the greed and corruption of politicians AND the
captains of industry. The best way to stop that (warts and all) is grant to
a body of people (called politicians) the right to operate on our behalf
for the balancing right that we can throw them out of office if they do not
act in our collective interests. You need taxes for that. If tax is theft
and theft is such a big deal to you, my guess is that you are an anarchist.
If so, you had better keep watch over your shoulder, or you might get
attacked before you attack. And who could you complain to ...
unhypocritically?
Cheers
Geoffrey Marnell
Principal Consultant
Abelard Consulting Pty Ltd
T: +61 3 9596 3456
F: +61 3 9596 3625
W: <http://www.abelard.com.au/> www.abelard.com.au
Skype: geoffrey.marnell
_____
From: austechwriter-bounce@xxxxxxxxxxxxx
[mailto:austechwriter-bounce@xxxxxxxxxxxxx] On Behalf Of Rod Stuart
Sent: Sunday, August 22, 2010 6:33 PM
To: austechwriter@xxxxxxxxxxxxx
Subject: atw: Re: National Broadband Network and empathy
Sorry for the delay. I've been busy making a living. Here are a couple of
quotes.
"Giving money and power to government is like giving whiskey and car keys to
teenage boys."
"Every government is a parliament of whores. The trouble is, in a democracy,
the whores are us."
P.J. O'Rourke
First of all, as I had tried to explain before, government can only function
through coercion. It is exactly the same sort of coercion as is involved
when the mafia extorts weekly payments from a shopkeeper for "protection".
It is through force or threat of force.
Nothing involving government is voluntary - as it would be when a private
ompany does something. One way or another, there is compulsion in every
overnment activity:
. The government forces someone to pay for something;
. The government forces someone to do something; or
. The government forcibly prevents someone from doing
something.
There is no other reason to involve government. What basis is this for a
society, in which an elite group of individuals is allowed to extort from
the remainder?
The proposed NBN is a good example of this. Everyone is forced to "invest"
in the capital cost whether it is of any use to them or not. Furthermore
there is already discussion about forcing people to sign up if it comes by
their door. And in a free society, it can't be an "investment" if a person
can't sell it.
Several of the comments on this list carry the usual leftist disdain for
profit. Profit is a good thing. Potential profit provides the incentive for
voluntary investment. In the case of the NBN, there is a very real
possibility that it will be obsolete technology long before the project is
viable for sale (the implementation plan suggests up to 20 years). In order
to persuede people to invest in such a scheme requires "risk capital", so
must have some potential for profit far more than the "risk-free rate".
Some of the folks on this list that just ache for faster download speeds and
someone else to pay for them probably don't realise the size of the
expenditure. $43.6 billion is enough to purchase a million SUV's five meters
long (for instance a Pajero might cost $43,600). So as a graphical indicator
that amount would purchase SUV's arranged tail to bumper from Hobart to
Karratha. And there is a pretty good chance that before it is finished it
would purchase Prado's to line the road back again.
Governments are run by politicians, not businessmen.
Politicians can only make political decisions, not economic ones. They are,
after all, first and foremost in the re-election business. Because of the
need to be re-elected, politicians are always likely to have a short-term
bias. What looks good right now is more important to politicians than
long-term consequences even when those consequences can be easily foreseen.
The gathering disaster of Social Security has been obvious for years, but
politics has prevented needed reforms.
Politicians tend to favor parochial interests over sound economic sense.
Consider a thought experiment. There is a national widget crisis and Sen.
Stephen Conroy is chairman of the Senate Widget Committee. There are two
technologies that are possible solutions to the problem, with Technology A
widely thought to be the more promising of the two. But the company that has
been developing Technology B is headquartered in Sen. Conroy's state and
employs 40,000 workers there. Which technology is Sen. Conroy going to use
his vast legislative influence to push?
Politicians need headlines.
And this means they have a deep need to do something ("Sen. Conroy Moves on
Widget Crisis!"), even when doing nothing would be the better option.
Markets will always deal efficiently with gluts and shortages, but letting
the market work doesn't produce favorable headlines and, indeed, often
produces the opposite ("Sen. Conroy Fails to Move on Widget Crisis!").
Governments use other people's money.
Corporations play with their own money. They are wealth-creating machines in
which various people (investors, managers and labor) come together under a
defined set of rules in hopes of creating more wealth collectively than they
can create separately.
So a labor negotiation in a corporation is a negotiation over how to divide
the wealth that is created between stockholders and workers. Each side knows
that if they drive too hard a bargain they risk killing the goose that lays
golden eggs for both sides. Just ask General Motors and the United Auto
Workers.
But when, say, a school board sits down to negotiate with a teachers union
or decide how many administrators are needed, the goose is the taxpayer.
That's why public-service employees now often have much more generous
benefits than their private-sector counterparts. And that's why the public
school system has an administrator-to-student ratio 10 times as high as the
Catholic school system.
Government does not tolerate competition.
Some governments create state insurance to compete in the auto-insurance
marketplace with profit-seeking companies. Eventually the product becomes
subsidised by tax dollars. Has a government entity ever competed
successfully on a level playing field with private companies? I don't know
of one.
Telstra is a case in point. It is what it is and behaves the way it does
because it began as a State monopoly. You are correct when you say "Telstra
ain't free enterprise".
Government enterprises are almost always monopolies and thus do not face
competition at all.
Your comment about privatisation of the electricity market failing to
deliver lower electricity prices. D'uh! That's because State owned
electricity is subsidised through theft (taxes) from other sources!
Competition is exactly what makes capitalism so successful an economic
system. The lack of it has always doomed socialist economies.
Telstra's origins date back to 1901, when the Postmaster-General's
Department was established by the Commonwealth Government to manage all
domestic telephone, telegraph and postal services, and to 1946, when the
Overseas Telecommunications Commission was established by the Commonwealth
Government to manage international telecommunications services.(The process
was called "postalization," a word that should send shivers down the back of
any believer in free markets.) But despite the promise of lower prices,
practically the first thing the Post Office did when it took over was . . .
raise prices.
Cost cutting is alien to the culture of all bureaucracies. Indeed, when cost
cutting is inescapable, bureaucracies often make cuts that will produce
maximum public inconvenience, generating political pressure to reverse the
cuts.
Successful corporations are run by benevolent despots.
The CEO of a corporation has the power to manage effectively. He decides
company policy, organizes the corporate structure, and allocates resources
pretty much as he thinks best. The board of directors ordinarily does
nothing more than ratify his moves (or, of course, fire him). This allows a
company to act quickly when needed.
But the Commonwealth government was designed by the to be inefficient, and
inefficient it most certainly is. The Prime Minister is the government's
CEO, but except for trivial matters he can't do anything without the
permission of two separate, very large committees (the Commons and Senate)
whose members have their own political agendas. Government always has many
cooks, which is why the government's broth is so often spoiled.
Government is regulated by government.
Some have noted that "all monopolies should be regulated". Government
ownership would be an unregulated monopoly. It is government's job to make
and enforce the rules that allow a civilized society to flourish. But it has
a dismal record of regulating itself. Imagine, for instance, if a
corporation, seeking to make its bottom line look better, transferred
employee contributions from the company pension fund to its own accounts,
replaced the money with general obligation corporate bonds, and called the
money it expropriated income. We all know what would happen: The company
accountants would refuse to certify the books and management would likely --
and rightly -- end up in jail.
But that is exactly what the Commonwealth government (which, unlike
corporations, decides how to keep its own books) does with entitlements.
Already within the current administration, run rumours of doing just that
with folks' Superannuation.
Capitalism isn't perfect. Indeed, to paraphrase Winston Churchill's famous
description of democracy, it's the worst economic system except for all the
others. But the inescapable fact is that only the profit motive and
competition keep enterprises lean, efficient, innovative and
customer-oriented.
On 20 August 2010 10:26, Geoffrey Marnell <geoffrey@xxxxxxxxxxxxxx> wrote:
Hello Rod,
It's good to see the passion return to this list, but can I ask a favour.
For the edification of all those still interested in this thread, can you
provide some solid, empirical evidence that the private sector is always
more efficient than the public sector. Here is my anecdotal evidence to the
contrary. I have, over many years, been employed by both sectors and have
contracted to both sectors. While inefficiency (encompassing waste,
mismanagement and general ineptitude) has been fairly evenly spread across
both sectors, the instances of greatest inefficiency I has witnessed were in
the private sector. Two segments in particular stand out: start-ups (who
seem to think that money grows on trees) and the large, long-standing,
highly profitable behemoths (lulled by blinding complacency into thinking
that they must be doing the best they can). Nothing came close in the public
sector.
Secondly, do you think that the private sector can always provide services
more cheaply than the public sector? I mentioned yesterday that governments
can fund their activities more cheaply than private companies, and they are
not driven by shareholder appetite for profits and ever-increasing profit
growth. But let's look at some examples. The anti-government government of
Jeff Kennett privatised electricity in Victoria, assuring voters that this
would lower electricity prices. Of course, the exact opposite occurred.
Likewise water distribution. And take a look at Melbourne's privatised
public transport system. Grossly inefficient, more and more expensive and
incapable of retaining private-sector interest without the government
tipping in a few hundred million dollars every year. So here's a case where
necessary infrastructure is of no interest to the private sector unless it
gets a government grant. (Or perhaps you consider a railway system not
necessary infrastructure at all.)
To my mind, reliance on the private sector is a recipe for the Hobbesian
jungle.
Cheers
Geoffrey Marnell
Principal Consultant
Abelard Consulting Pty Ltd
T: +61 3 9596 3456
F: +61 3 9596 3625
W: <http://www.abelard.com.au/> www.abelard.com.au
Skype: geoffrey.marnell
_____
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