April 26, 2014

Horse 1662 - On Privatisation (or: How To Destroy Democracy)

The whole entire of the social science of Economics is ultimately bound up in just four simple questions:
1. What to produce?
2. How to produce it?
3. When to produce it?
4. Who should produce it?
Indeed, the basic measure by which you measure the total output generated by a nation economy is also framed around these questions. If is no coincidence that we call it Gross Domestic Product.

Of course invariably once who begin to ask such questions, a second field of questions opens up.
The whole entire of the social science of Politics is ultimately bound up in just four related but equally as simple questions. These questions do not deal with production but rather, control.
1. What to control in the economy?
2. How to control the economy?
3. When to control the economy?
4. Who should the economy?

When the Prime Minister vows to privatise Medibank Private, Australia Post, University funding, defund the ABC and SBS or when the Premier of a state vows to privatise Electricity assets, these are less about economic questions and more to do with political questions.
Really the questions surrounding privatisation are very little to do with actual economics because both government ownership and corporate ownership of any asset are just different forms of collective purchasing arrangements. Specifically, privatisation asks the questions of what and more importantly who should own and control productive assets in society.

I look at these issues and react the same way as a six year old who has just been smacked in the face by a bully and had their ice cream stolen. I demand to know "why?"
Call me a member of that sub-species of humanity "Snotticus Bratii" if you like but when questions of privatisation come up, I personally am unable to mentally separate the concept from that of theft.
As a member of a society which previously thought it useful to make a collective purchasing decision in building assets like electricity generation, education, public broadcasting etc. I simply fail to understand why it is absolutely necessary to steal those assets from the public and place them into the hand of the moneyed classes.

The excuse is often given that privatisation makes better use of market forces and produces a more efficient outcome. Like heck it is.
Markets are incredibly efficient at finding one efficient outcome and one efficient outcome only - price. Markets are incapable of determining the best social outcome and nor are they particularly concerned with such a question. An efficient market also assumes that everyone has the best available information to them and that everyone is reasonably rational. Everything I've ever read about the real world tends to suggest that there are people who are manipulative, that some people are certainly not aware or even is possession of all information needed to efficiently participate in the market and that most people aren't even remotely rational most of the time.
The question of privatisation then I suppose is more of necessity. Actually it's the same question I asked in the first place. Why it is absolutely necessary to steal assets from the public and place them into the hand of the moneyed classes?

My theory is thus:
In conjuction with concurrent policies which are being suggested such as increases of consumption tax and further reduction in personal income tax, which shift the actual burden of responsibility of taxation further down the social classes, coupled with real reductions in the aged pension, increases in transfer payments like the paid parental leave scheme etc. it seems to me that the real reason behind the current push for privatisation is exactly one of control and nothing to do with balancing budgets at all.

The boards of control of Public Assets are answerable to the government of the day. The government of the day is answerable to the general public. Through the power of the ballot box, governments can be fired; where as a shift from public to private ownership of assets, severs that line of control.
The board of a company is answerable only to the direct shareholders. Thanks to mechanisms such as wealth condensation and the fact that people are now forced to pay into compulsory superannuation, who ever controls the most amount of money, gets control of assets. Simple.
Privatisation is as I see it, is one of the easiest methods of destroying democracy (ie the rule of the many) by deliberately handing actual control and governance of the economy into the hands of the few.
Surely that is the point isn't it? I honestly can't think of any other reason.

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