New Zealand has one of the most open (free) markets on the planet.
Privatisation has been with us here since the New Zealand economic
revolution, the so called "Rogernomics" of post 1984. This was precluded by
then prime minister Sir Robert Muldoon's "think big" project. Think big was
a aollection of Mega Projects, which rendered new zealand self sufficient in
energy production, steel production, meat and dairy processing, on a massive
scale. The theory behind this was that these mega companies, would provide
many jobs as aswell as bolstering the economy, and so a large foreign debt
was used to finance the programme, this conceptually is fine, however
economies of scale allow all of these things (perhaps excluding the
dairy/meat processing) to be more efficient (cheaper) when imported. This
lead to a massive failure. Rogernomics, named after then finance Minister
Roger Douglous, was supposed to alleviate the heavy burdon of foreign debt,
the result was a near textbook example of an open market. Privatisation was
introduced en mass, for 2 reasons. 1. The sale of SOE's (state owned
enterprises) would provide massive injections of foreign capital into the
economy, thus facillitating growth and repayment of debt. 2. Private
organisations are inherrantly more efficient than government owned
organisations as the lack of subsidies, price controls and the greater
competition provided by private players, encourages less waste of resources
than government owned companies. This privatisation cut to the very
infrastructure of the country, Rail, Roads, Telecommunications, transport
and power were all sold to foreign interests. This should have worked for
the reasons that are inherrantly obvious, however the effect of agency
theory meeting social capital produced problems that render a free market
economy unable to adequately perform to the desired intent. Conceptually
fine but flawed in practice, the same thing as can be said of communism.
Social capital is things like sick days being taken unnescesarraly, theft of
office/work equipment, shirking. Agency theory is that which represents
what happens when agents (people like managers who impose rules as a result
of executive decisions) try to communicate the intentions of the executives
in order to achieve the most favourable outcome, this is usually units of
production. When these two theories meet, which is what happens in a larger
context when privatisation occurs, due to the fragmented heiracchy present
in large corporations, from both a divisional sense and also an owners
sense, the results are mass inneficiency. The cogs of this machine get
clogged with people making self interested decisions rather than operating
on the more favourable present aim standard of rationality (the closest
thing to MoQ youll find in economics). The managers realise that if they
can use their heirachially induced power to attain self advantageous
outcomes then they can recieve more benefit from the position. This however
results in inneficiencies, as it means that effort is being expended to
provide the agents benefits which could be used to further the goals of the
organisation. This problem obvioulsy happens in government organisations as
well however the sheer size of governmental enterprise allows a lot of this
effect to be swallowed up with a proportionatly larger revenue. As there
are many enterprises fighting for market share in a competetive market, the
culmination of this agency theory vs social capital on the ontire market
provides for a relatively similar level of inneficiency, however once again
the thin veil of choice/difference clouds our judgements and we are told
only about the virtues, in purely classical reasoning might I add, of the
need for free enterprise. This will obviously not allow for romantic
concepts (such as social capital) which cannot be equated. The combined
effect leaves us in New Zealand with a situation where aulthoough the
foreign debt has essentially been capitalised, by the selling of utilities,
however we as a population now have little interest in these companies as we
cannot demand change as we dont own it (like we do SOE's)
this results in even higer levels of social capital, as individuals feel
they are not now shafting their self but a faceless multinational. If
everything turns to custard then we have nothing to fall back on, weve sold
all our major assets, where do we get money from - by working for someone
else, and thereby returning smaller levels of real capital into the economy
as some is now diverted to foreign interest in the the form of owners
equity. Now we have lots of choice, but no really good options, lack of
community spirit so lack of cooperation = inneficiency, no real assets of
any real liquidity = economic concern in times of recession. The only
reason new zealand hasnt become a statistic is that the products which
provide for the largest amount of foreign trade are very inelastic in nature
(livestock, agriculture) allowing for increadable stability, which is
increadably lucky, if our ecomnomy was based around products of a bubble
nature such as technology or real estate then we would be in serious strife.
Initially privatisation appears to be the anser, a golden slipper that
fits just right, however sociological aspects are often unnaccounted for
sufficiently in econometric formulae, which is the aspect the media
portrays, and which indeed shows privatisation to be a good option,
Privatisation will only work properly when the populace can grasp the
concepts of working together to achieve the higest levels of marginal
utility, however the same is true for communism. BOth sytems, though
appearing diametrically opposed, fail the test of true survival on the same
hurdle. Dont let the free market propoganda go to your heads without
researching all sides of the argument. Remeber America, the shining light
of the so called free market is very regulated, so is effectively spinning
all manner of contradictory propoganda to provide what we hear of being the
leaders of the free world. Yay, more meglamanic induced misperception, just
what we need after thousands of years of fighting exactly that - are we
really this stupid? NOWHERE NEAR QUALITY.
Also remember that monopoly is the goal for all companies as this allow for
the higest levels of profit maximisation, so monopoly is static and
therefore bad, however it is absolutely neccessary as it is the carrot that
encourages trade in our modern economic state. SURELY this in itself is
enough to realise that we are flogging a dead horse in our current socio
economic climate, it simply cannot achieve dynamicism as its end product.
Look at whats happening, evolution is taking hold and so the big companies
buy out little companies and then achieve their market saturation level, so
to keep returning profits which rely heavally on stock markets then more
product must be produced, the current niche is at saturation point so you
must diversify. Diversification for large companies involves purchasing
smaller companies as the h systems of production are allready in place, it
is then merely n exercise in rebranding and injecting a new type of life
into the now corporate owned small company. This keeps happening and
happening untillyou get oligopolies such as the music industry or global
media, where there are a few key players who cant get any more market share
than they currently have without taking something from a competitor. The
only logical conclusion to this is one company, or surprise surprise a
monopoly, survival of the fittest, the strongest company in this case will
defeat all the other competing interest through being able to consume
smaller companies through not pysical conflict which is what happens in the
rest of nature, and which proviedes instant defeat or gratification but
through money, which is produced by our own sytems, and which is
necessarally considered good and therefore far more insidious than the
obvious evils of physical conflict. Think about the sytems we have. ALL of
them have to strive towards some sort of finish line, quality is the
ultimate though unnatainable light, so seing as that is impossible to
achieve, look for smaller sub patterns, patterns of evolution, which give
insight into all manner of advancement. Remeber change is only going to be
wanted by the people in power if ond only if they can recieve a direct
tangible benefit. THink about who is going to recieve the highest amount of
benefit from which policy. Look at it in an evolutionary sense, what needs
to be done to be the strongest. Suddenly the world appears in an entirly
differnt light and yet it is a simple and effective way of predicting the
future, which gives prior knowledge, and therefore is closer to the front of
the train and the railway tracks of quality.
david wilkinson evolve
>From: "Platt Holden" <[EMAIL PROTECTED]>
>Reply-To: [EMAIL PROTECTED]
>To: [EMAIL PROTECTED]
>Subject: Re: MD In Defense Of Socialism?
>Date: Sat, 2 Jun 2001 13:14:37 -0400
>
>Hi Marco:
>
>We agree on many points. For example:
>
>. Monopoly is static, competition is dynamic.
>
>. The ideal is to obtain static and dynamic simultaneously.
>
>. Monopoly is our common enemy.
>
>. It's good that the government of Italy is initiating the biggest program
>of privatizations in Europe.
>
>. The communists deleted the individual in the name of fundamental
>equality.
>
>. We support individual freedom against any social constriction
>(including government). We are libertarians at heart.
>
>We disagree on a few points:
>
>.Government monopolies are far worse than private ones because they
>are able to enforce their monopoly at gunpoint.
>
>. Government monopolies rarely allow the taxes collected to support
>them from being used by competitiors, thus eliminating serious
>competition. (Public schools, universal health systems being
>examples.)
>
>. There is nothing inherently excellent in nonprofit organizations such
>as Greenpeace or Amnesty International. Nor are artists on the left-
>wing automatically superior to ones on the right.
>
>. You propose that everyone "claim care." I know of no way to acheive
>that goal without imposing force on someone. The beauty of the free
>market is that if you are not getting the "care" you want from one place,
>you go to another. Or start up your own business to provide the "care"
>you can't get anywhere else.
>
>On balance I think we agree more than not. In bold captial letters you
>stated, "I am not a socialist." Neither am I. From there on we are merely
>quibbling over details.
>
>But beauty. Ah. Now there's a quality we enthusiastically share without
>any reservations whatsoever.
>
>Platt
>
>
>.
>
>
>
>
>
>
>
>.
>
>
>
>
>
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