Thanks, Ray. I was going to write an apology to the list for having used "Bleahhh!!" in my posting. After I sent the posting, I felt like a little boy who had just stuck his tongue out and made a dreadful noise at his mother's tea party. I wrote "Bleahhh!!" simply because I had run out of time, had to catch a plane, and couldn't think of anything sensible to say. No good, solidly smiting sentence would come to mind.
I'm now back from my travels. I took a rather interesting book along with me and read bits and pieces of it on the plane. The book, dare I say it, is Hayek's "Road to Serfdom". What struck me about the parts I read is that Hayek is a very good thinker and a very good writer, but he tends to tar everybody with the same brush, or, more accurately, with two brushes. One brush is for liberals. Anyone who is a liberal has to operate out of an enthusiasm for self-interested individualism. You can't be a liberal if you don't keep government in its place; that is, running the post-office and perhaps the army (and navy), but leaving the market entirely to itself. The other brush is for socialists. Anyone who wants some restrictions on self-interested individualism, whether for the common good or some more nefarious purpose, is a socialist. The guy who believes in publicly funded and operated education available to all is a socialist along with Joseph Stalin and Adolf Hitler. I know I'm being unfair to Hayek, and will probably be pummeled for it. He wrote "Road to Serfdom" during a rather dark period of 20th Century history. So to all Hayekians (as opposed to Keynesians), I promise I will put my steel helmet on and read more. Ed Ed Weick 577 Melbourne Ave. Ottawa, ON, K2A 1W7 Canada Phone (613) 728 4630 Fax (613) 728 9382 ----- Original Message ----- From: "Ray Evans Harrell" <[EMAIL PROTECTED]> To: "Ed Weick" <[EMAIL PROTECTED]>; <[EMAIL PROTECTED]>; <[EMAIL PROTECTED]> Sent: Friday, April 05, 2002 8:44 PM Subject: Re: Privatizing the Public: Whose agenda?: At What Cost? > Ed, > > They just haven't gotten far enough along in the process yet. They still > think tobacco won't give you cancer either. I listened to a representative > from the European market talking about how important tobacco was to their > economies. Not as much as all of those high medical bills will be though. > > REH > > > > ----- Original Message ----- > From: "Ed Weick" <[EMAIL PROTECTED]> > To: <[EMAIL PROTECTED]>; <[EMAIL PROTECTED]> > Sent: Friday, April 05, 2002 5:08 PM > 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) > > > > > > ====================================== > > > > > >
