[PEN-L:1518] Re: In Defence of Humanism

Rob Schaap rws at comserver.canberra.edu.au
Wed Dec 16 04:31:26 PST 1998

Hi again, Enzo,

You argue:

>1. Without privatization, the monopoly wouldn't have gone, and I've never
>seen a monopoly giving up its profit. Usually they start whining about the
>dangers of job cuts in order to blackmail the public opinion (they keep
>doing it even after: see the current stance of Deutsche Telekom). Perhaps
>Lucas is too harsh on regulators saying that he's never seen one giving a
>damn about consumers, but surely their teeth are much less sharp than
>the competititors'. It is true that technology is the real engine behind
>costs reduction, but in all these years the carriers have quietly managed
>to funnel a large share of the savings into their bottom line. Nowadays,
>the wholesale cost of one minute of conversation across the Atlantic is
>about USD 0.02, and across the pacific USD 0.06 . Compare these figures with
>what the end users are told to pay.

A public monopoly ain't quite the same thing as the pre-1982 arrangement you had over there in the U.S. of A. Telecom Australia's money couldn't go into stock options or wage increases before we privatised (partially, so far) it. Either it went back into the infrastructure, was thrown at R&D, or went to the government coffers. Now, I'm not suggesting for a minute that all Telecom's development schemes were particularly inspiring successes (one can't measure a public service as one can a private sector company, so the argument would be difficult anyway), but I am suggesting the citizen may not be losing overall what s/he pays in telephony charges in particular.

After all, Oz boasted better phone access than the US or UK, and up-to-date technology (as at the moment privatisation became a short-term probability, anyway) - we even had friendlier rentals and call prices over distance! Even our local charges, which always got panned in international comparisons, were fine if you make a couple of allowances for reality that privateer consultants don't make (I can go into this, but it's boring).

I reckon the push for privatisation came the day the big boys realised the myriad new 'value-added' and pricing potentials that attended digitisation/convergence.

>2. As in most cases, the real support for the monopolies (and relative
>inefficiencies, consumers rip-offs etc.) has come from government mandate.
>So, why tease poor old Hayek? :-)

Because Hayek's logic is the stuff they use to justify the whole mess in advance and to describe what happens afterwards. If you agree the price mechanism can not generally work in isolation of institutional power relations, aren't you allowing that price differentials might not purely, nor even nearly, reflect where services are most needed or how much it costs to deliver them?

What say you?

Cheers, Rob.

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