Ed,
I'm glad you like my economics. However, you seem
to have been looking at someone else's discipline - perhaps the
neo-Classicals.
Here I am, suggesting through the three basic
assumptions that the world is full of an humanity who approach life through a
veritable torrent of differing and extensive desires, agog with curiosity as
they search for better ways of doing things, yet you say my Political Economy
is mechanical and two dimensional.
Then you make the mistake that is
constantly bruited about by the left. Competition is a war in which some win,
but most lose.
To remind you, competition in the market place brings to
us all better quality at cheaper prices.
Competition brings shoddier products at cheaper
prices.
The object
of market place competition is to provide people with the best possible
service.
No,
the object is to get someone else to pay your costs.
And it
does.
Nonsense!
We are blessed in
the US with an economy in which competition is allowed over a large part of
the economy. Wherever competition exists, products are good and cheap.
Whenever, government interferes with the market, an ever increasing problem,
prices rise and/or quality drops.
You say:
ED: "Beyond those of competition, there are no
principles, and certainly no passions concerning justice and equality for
all. There are no people in it, just self-interested robots. And
certainly no politics. Politics would spoil its perfect
rhythms."
Ed, Political Economy deals with people, not aggregates, in
which I fear lies the interest of the neo-Classicals. Aggregates probably deal
with robots, for surely they have nothing to do with people. There is no such
thing as an "average" person - but there may be an "average" robot. You would
know.
Classical Political Economy is the study of the Nature, the
Production, and the Distribution of Wealth.
Distribution refers to the
distribution of the final product to Land, Labor, and Capital. The Classicals
had analyzed the distribution of Wealth - and had found it wanting long before
the neo-Classicals had begun confusing themselves with mathematics. (Now,
there's a passionate subject.)
I think you are a bit loose with
"justice and equality for all". Of course it depends on how you use he terms,
but they appear to mean about the same thing.
The Classicals are a
little more accurate in their definitions. I want "Liberty and Justice for
All".
Freedom means you can do anything you like. But, in community
that freedom is tempered.
I like Leonard Read's maxim: "Do what you
wish but harm no-one." That's not bad.
Liberty means freedom under the
law. Justice means the law applies equally to everyone. (There are a few other
qualities that make a good law - but crucially, it must apply equally to
all.
Not very passionate, I suppose.
Passion should be
reserved for stirring the blood when one sees injustice. It is useful also
when you are trying to end that injustice. But in between the two, one must
think. If you let passion interfere with your thinking, the result won't be
very good.
As is noticeable with many people who profess to be
reformers.
That's all for the moment.
More
later,
Harry
__________________________________________________
Ed
wrote:
Harry, what I like about your economics
is its simplicity. The economic world is essentially mechanical and
two dimensional. Once set in motion, competition moves it onward
inexorably, the strong emerging as winners and leaders, the weak falling
behind and catching what crumbs they can. Beyond those of competition,
there are no principles, and certainly no passions concerning justice and
equality for all. There are no people in it, just self-interested
robots. And certainly no politics. Politics would spoil its
perfect rythms.
The problem is that the real world is not like that, and nor can real
world economics be like that. In the real world, economics is rather
confusing stuff in which politics, principles and passions get in the way,
keeping things from moving to competitive norms and creating higher cost
structures than would apply under competition.
You mention
the airlines. If I recall my history half-way correctly, the
Government of Canada created a single national publicly owned airline back
in the 1930s because private enterprise simply could not and would not do
it. Basically, that airline, Trans Canada Airlines, served the major
cities of Canada. It was a fragile business at first, in effect a
natural monopoly. Costs were high but traffic volumes were slow in
building up. To extend air service to smaller cities required
substantial cross subsidization. It would not have happened
otherwise. Competition was not a possibility until the late 1950s,
when the Air Transport Board allowed a second carrier, Canadian Pacific,
which until then had been a regional carrier, to fly across Canada once
daily.
We now
have a deregulated airline industry. I'm not so sure of how well its
working. The former TCA, now a privatized Air Canada, swallowed up
Canadian Pacific and is not in sound financial health, partly because of 911
but also because it tried to grow more quickly than the market
warranted. Some carriers have collapsed. Others, such as West
Jet, a low fare, no frills carrier, have emerged. I'm not sure that
fares applying to long distance trasport are really that much lower than
they were back in the fifties and sixties. Back then, ever so many
people, me and my small family included, travelled by rail as a preferred
alternative to flying. It was cheaper, and spending a few days on the
train was not uncomfortable. The kids loved it. Long haul rail
passenger service has now vanished, so the few airlines that now exist have
a monopoly on long distance passenger transport. The fare for a recent
business trip I took within Canada was nearly Cdn$3,000. The fare for
another was about Cdn$1,400. Neither fare was first class or business
class. Both meant spending a lot of time squeezed into economy class
seats between two fat men and travelling on weekends. The fare for
comfortable business class seats on regular working days would have been far
higher.
One of
the trips highlighted another aspect of the messiness of real world
economics - that of divergent interests. The trip involved attending a
symposium which brought mining interests, Aboriginal land claims
beneficiaries, and public government institutions together in an attempt to
clarify legislation and processes around prospecting and mining in Canada's
Nunavut Territory. What soon became apparent was that each of these
groups could not easily accommodate the others. To satisfy their
shareholders and get their work done in a hostile environment, the miners
needed quick answers. Public government could not give them quick
answers because it had a myriad of needs and stakeholders to satisfy.
Aboriginal organizations were watching both of the other groups
closely. They wanted development, which meant incomes and jobs, but
not at a cost to their traditions and lands. The efficient solution
would have been to turn the miners loose and lock the regulators up, but
that is not things really work. The result is a high cost structure
which makes it difficult for miners to operate, but which protects a lot of
things people value.
Is that the way things should be? An economic purist would say,
no, they shouldn't be that way. But that is the way they are, and
being that way, one simply has to live and work with them. And, I
might add, one has to recognize that every solution creates as many as ten
new problems.
Ed
Ed
Weick
577 Melbourne Ave.
Ottawa, ON, K2A 1W7
Canada
Phone (613)
728 4630
Fax (613) 728 9382
----- Original Message -----
From: Harry
Pollard
To: [EMAIL PROTECTED] ; [EMAIL PROTECTED] ; [EMAIL PROTECTED]
Cc: [EMAIL PROTECTED]
Sent: Monday, April 08, 2002 6:01 PM
Subject: RE:
Privatizing the Public: Whose agenda?: At What Cost?
Arthur and
Ed,
Albrecht makes little sense. Neither does much of modern
economics. Imagine physicists discussing the pendulum swinging back to
phlogiston. Incidentally, in his later years Hayek at times appeared
closer to Keynes than Friedman.
The problem with the economic
pendulum is that at both ends of its swing, the economy doesn't work.
That's the reason for the swing.
Albrecht isn't talking economics.
He's talking politics, which I suppose is OK, for economics nowadays is
mostly a description of political entities, with a soupcon of clever
little economic consequences thrown in to make it jolly.
The effect
of airline deregulation was a drop in fares that made air travel a normal
thing for millions of people who had previously been unable to fly. I've
heard complaints from business people about deregulation. Whereas
pre-dereg flying was a pleasant experience, now it's not because hoi
polloi were filling the planes. After deregulation, air travel was no
longer just for the beautiful people.
I would love to know how
airline deregulation led to a loss of community. I suppose people were on
top of the Empire State building rather than back in the village sitting
around the cracker barrel.
Of course, any economist worth his salt
would say that deregulation would not be complete until the Gates were
deregulated. An airline without a Gate is like a painter without hands. As
is usually true, deregulation by government leads merely to a different
kind of regulation with the large contributors getting the best of
it.
But, economists seem to be mostly like Albrecht, taking sides
in the political controversy - unable, or unwilling, to move to real
deregulation.
Privatization is a completely different matter from
deregulation yet Albrecht mixes them together as do most political
pundits.
Privatization is a silly idea. What is needed is
competition. Competition has a way of improving quality, while
reducing costs. It's better to pay a dollar a pound for quality apples,
than $2 a pound for inferior apples. (I would be tempted to say that is
just another way of satisfying one's desires with the least exertion, but
everyone knows that is some kind of religious "truth".)
That's what
competition does. It's good for the consumer who is
everyone.
However, privatization mostly changes a government
monopoly into a private monopoly. Keith says things have improved with the
British privatization of water distribution. I suspect that this is true
because government distribution was so awful (more water leaked from their
pipes than reached the customer).
Yet, without competition, one
doesn't know how efficient any operation is.
Albrecht has no
understanding of this. After mentioning the artificial structure of cross
pollination of telephone service. I suppose we all remember how long
distance calls paid for cheaper local services. Long distance cost more so
that local service would cost less. With deregulation, this silliness has
ended - with dire consequences. Albrecht wrote:
"As residential
rates climb there will be those who can no longer afford to have telephone
connections."
But, why will residential rates climb?
Each
local telephone company is like the British Water Authority - it's a
location monopoly protected and enforced by the State..
One could
imagine another company entering the area with thousands of telephone
poles and a mass of equipment, there to offer discount prices - but it
means your imagination is working overtime.
The local company is a
regulated monopoly which means that residential rates will climb.
Apparently, Albrecht doesn't know it's a monopoly and thinks it's
deregulated.
Not quite a monopoly in some places however. My TV
Cable company got into the local telephone business a couple of years ago
- competing with Verizon, the local monopoly.
They offered a first
line with all the extras like Caller ID ($7.50 a month from Verizon)
included free in the price of $26 a month. Toll calls up to 60 miles were
also free. Further, for another $10 they supplied a second line - but
without the bells and whistles. They also gave me a couple of months free
and paid for the expense of changing.
However, this is not a free
market. It's almost an anomaly.
I've
done a deal with ATT where I can put a business line and two residential
together in a package and can call England for 9 cents a minute and France
for 22 cents with no monthly fee. If I wanted to I could use a competing
discounter and drop those long distance rates to even
less.
Unfortunately, I have lost my sense of community - but on the
other hand I'm not sure I had it in the first place. I don't need it. In
times of trouble, all the neighbors help each other. And we've had floods,
fires, horrendous mud slides, and the rest. But it's Jim, and John, and
Chuck, and Ozzie, and Ace, and Harry - along with their spice and adult
children who help each other. What's with this community bit?
I should mention there is nothing quite so eerie as walking home
up the canyon with the hillsides on each side ablaze. Greasy chaparral
comes into its own with fire and is intensely hot. Incidentally, Keith, I
got home and only first son Alan was there. Harry Junior had taken our
women and the neighbors' down to a friend's house away from the danger.
With fire all around, there was only one thing the English find imperative
and we did it.
We made a pot of tea.
Then Harry Junior
arrived, we fought the fire all night along as did our neighbors. Of
course this shows how sexist I am. It never even occurred to me to keep
Gwen around to climb the roof. And as for that "sense of connectedness"
that Albrecht writes of - perhaps he means the men - now joined by the
women - drinking tea and coffee in the road while discussing the
adventures of the night.
Naahr! I think he was talking about that
sort of warm tree-hugging that's beloved of socialists - except that this
is people hugging. Actual cooperation, including much material exchange,
is a reality that transcends the fuzziness of people like
Albrecht.
He gets into pricing, musing about how private police and
fire departments will handle fees. I suppose he doesn't know that there
are more private police than "official" police in the US. Also, the best
private fire system on the edge of Phoenix does a splendid job. An alarm
will bring volunteers out of their offices to help fight the fire. Their
bosses don't mind, for the efficiency of the system is such that their
insurance premiums are lower.
Libertarians will quote that to you
all the time. They won't mention Grant's Pass in Oregon on the California
border, where privatization was something of a disaster. But then it isn't
privatization we want - it is competition. That's easily
done.
Sorry gentlemen, but I fear that the tone of Albrecht's piece
is one of maintaining and extending privilege. Essentially taking from one
and giving to another. I suppose if you get services that someone else has
been forced to pay for, you feel connected to him.
So long as the
coercion continues.
Harry
******************************
Harry Pollard
Henry George School of LA
Box 655
Tujunga CA 91042
[EMAIL PROTECTED]
Tel: (818) 352-4141
Fax: (818) 353-2242
*******************************
