Hi Arthur and Ed, With great respect from a small businessman to two economists, I'll say you're quite wrong. Yes, politicians will be tempted (Bush has recently gone partially Keynesian). But, thankfully, you are both outnumbered now by enough economists (and the chattering classes) who know that full-blown Keynesianism will only lead to a repeat of the inflation that we suffered in the 70s and which deprived millions of their savings in a cruel way. (Cor! memories are short, aren't they?) Only a foolish or desperate country will try it in the future.
(I, too, deplore the loss of community in today's technonological culture. But blame Pandora's Box, not Monetarism.) Keith <<<< I thought the programme was very good. The pendulum does swing. When the economy goes sour again, Keynes will come back in favour. Some day we'll recognize the real costs of deregulation and privatization (especially the loss of community) and the pendulum will swing back again. Arthur >>>> -----Original Message----- From: Ed Weick [mailto:[EMAIL PROTECTED]] Sent: Friday, April 05, 2002 5:09 PM To: Cordell, Arthur: ECOM; [EMAIL PROTECTED] Subject: Re: Privatizing the Public: Whose agenda?: At What Cost? Thanks, Arthur. Albrecht makes a great deal of sense. Our public institutions are under attack and there is a feeling abroad that this is justifiable - that the great wheel has come around to where it should be. The program "Commanding Heights" which appeared on PBS recently seemed to pit Hayek against Keynes as the great gurus of the past century, and Hayek, it would seem, prevailed. It suggested that Reagan and Thatcher got it right, ending Keynesian socialist experimentation and letting the market prevail. Bleahhh!! Ed Ed Weick 577 Melbourne Ave. Ottawa, ON, K2A 1W7 Canada Phone (613) 728 4630 Fax (613) 728 9382 ----- Original Message ----- From: <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Friday, April 05, 2002 9:07 AM Subject: Privatizing the Public: Whose agenda?: At What Cost? > > > I am passing along for your interest the following from the net. > > The article was originally written about 1997 but seems relevant to the > thread. > > > Arthur Cordell > > =============================================== > > > DEREGULATION, UNIVERSALITY AND SOCIAL COHESION > > In the past 15 to 20 years, beginning with the airlines, we > have witnessed a profound move to deregulation just about > everywhere. Pundits tell us that we achieve a more efficient > allocation of resources if prices are brought into line with > costs. An added incentive to deregulate is that it will allow > business to be more competitive in the new global business arena. > > And the arguments for deregulation are correct, from an > economic point of view. But there are other values involved, as > well as a view of community to be considered. As we privatize > public functions, as we deregulate to cut costs and be > competitive we are undermining a way of life for many communities > as well as a way of life for many who consider themselves to be > middle class. > > Consider telephones for example. For a cluster of reasons, > pricing in telephones has been based on cross-subsidization. > Prices were set in such a way that, subsidized by long distance, > most residential users could afford to have a telephone. Not the > most efficient use of resources, agreed. But in the old pricing > model, or most pricing models that strive for universality via > cross-subsidization, the outcome was one that leaves participants > feeling as though they are part of the same community. A social > goal was met. Access was ensured. > > With deregulation and competition, cross-subsidization > declines as a factor. Rate structures change. Some think the > change will be slight, others claim the change will be more > extreme, especially over time. As residential rates climb there > will be those who can no longer afford to have telephone > connections. Well, as the deregulators say '...get the basic > residential service rates right and take care of poor people with > direct subsidies, just as we do with food and medical care.' > > The not-so-welcome twin of deregulation seems to the increasing use > of the means test. People who have had access to the phone all their > lives can now either pay more for access or can do without or can do as > the deregulators suggest--apply for a direct subsidy. Consider what this > does to our notion of community. What happens when we create an A Team > (those who can pay) and a B Team (those who must be subsidized)? Is it > that important to encourage market forces to such an extent that we create > a new group of people who must apply for a subsidy thereby admitting they > are part of the B Team, the growing underclass who can't pay their way? > And what is the future for the B Team--a group that is growing in number > but losing in power. A group that surely must be trembling when > governments in almost every jurisdiction threaten cuts here and there in > their fumbling comic/tragic attempts to balance the budget. > > So even if, as the deregulators urge, '...we take care of poor > people with direct subsidies..,' a serious question is: Will those > subsidies continue. We all know that 'what the State giveth, the State can > taketh away.' So deregulation, besides stripping people of their dignity, > may not be a long term solution after all. > > And what about privatization and deregulation in other areas > of society? What happens when we privatize garbage collection? > Will those living furthest away from the land fill sites pay the > higher prices? In a move for prices to reflect cost will a > privatized fire department (and maybe ambulance and police > service) charge more to go to certain areas of the city or > county. Or will we find that as with transportation deregulation > some areas are no longer served? Small towns have lost air and > rail connections. Sure, the bus and the private car can always > fill in--most times and for most people. But what about that > sense of connectedness that binds and underpins nation and > community. > > What about the future of a one price policy for posting a > letter within a jurisdiction? Here too a deregulated postal > service will scream for changed postal rates since in this case > the subsidization is the opposite of the telephone system: the > local postal rates presumably subsidize long distance. In a > Fedex world, where all postal service is privatized, what happens > to those in small communities, in remote areas? Do we just say > sorry but it is no longer efficient to serve you any longer? Or > if we do provide service it is at a rate that is not affordable > by most? Or do we say, sure we can subsidize your postal service > but it must be on a case by case approach and first you have to > show that you can't afford to have postal service. > > Universality is another way of saying economic development. > It means reasonable access to a host of services: potable water, > education K through 12, libraries--access to a social and > physical infrastructure. Where payment for services has been > required, regulations were put in place to ensure that the high > cost areas (the small communities, the out of the way areas, > etc.) could still be served, could still be included--they were > subsidized by the payments from the low cost areas where prices > were substantially above costs. > > Cross-subsidization underpins the transportation system in > North America. Creation of a transportation infrastructure was a > nation-building exercise: canals, railroads, highways and an > airline system. A way of denoting a jurisdiction, a way of > defining community. Cross-subsidization and regulation were > harnessed to create a system where the strongest takes care of > the weakest; the wealthier subsidize the poorer. With > deregulation we are moving away from cross-subsidization. We are > moving away from universality. > > Our society is backing away from universality in a number of > areas. The market agenda driven by the mantra of the need to 'be > competitive in a globalized world' is leading to an outcome that > takes us back in time. To a time of class distinction. To a > time of the rich and the poor. To a time before the broad middle > class was created. The middle class upon which so much of the > mythology of North America and Democracy is based. > > The net effect is more than damage and hardship to > communities and individuals. We are also giving up many of the > hard-won gains of economic development. If we are not careful, > we may find ourselves with many of the features we now ascribe to > the third world: a two-tier society, lack of universality, upward > mobility blocked, etc. > > When all is said and done. When full deregulation has come > to pass. When the market solution is used in all areas. When > universality has been broken beyond repair. What then? We'll > have a host of people added to the underclass no longer able to > participate in everyday affairs; another group living on > subsidies of one sort or another at the whim of government budget > fiascoes; and another group--the top half or top third of the > population who will say: problems? what problems? > > Society today is engaging in a series of small decisions. > Step after step after step. With each move we don't seem to > realize the consequences of our actions. As we undo > universality, as we undo the elaborate cross-subsidization > schemes I fear we will discover that in our striving for > competitiveness and efficiency, we have undone those very > pricing schemes that built communities and nations. The very > pricing schemes that have helped to sustain a comfortable middle > class way of life in North America. > > Regulation and associated pricing schemes all too often seem > to be illogical. But the intent is one where cross-subsidization > is created and endured because it serves a broader social > purpose: that of inclusion. Deregulation and the quest for ever > more efficient market solutions poses, for me, the greater cost > (agreed one that cannot easily be measured): the risk of > exclusion. If economics is about trade-offs, then I think we > should take a closer look at what we are trading off in the name > of economic rationality. > > Many of the ideas and arguments of the deregulators can be > persuasive, but in our quest for efficiency, competitiveness and > preparing for globalization we should be cautious. The gains of > deregulation may be illusory. I suggest that when all costs and > benefits are brought together in society's balance sheet--the > social bottom line, we may find that the great privatization and > deregulation effort has been one that has created more losers > than winners and that the biggest loser of all has been the > public interest. > > > M.D. Albrecht (1997) > > ====================================== __________________________________________________________ “Writers used to write because they had something to say; now they write in order to discover if they have something to say.” John D. Barrow _________________________________________________ Keith Hudson, Bath, England; e-mail: [EMAIL PROTECTED] _________________________________________________
