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The Forum > Article Comments > Competition has a lot to answer for > Comments

Competition has a lot to answer for : Comments

By Harry Throssell, published 20/3/2008

The 2020 Summit: in a democracy rich in resources we have a two-tier system, one for the haves and one for the have-nots. Why?

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there is certainly a lot of fuzzy thinking going on here.

a capitalistic economic system is the only one that will survive. how many other economic systems have survived and grown for 2 centuries (as the US) and provided (for the most part) an equal opportunity for everyone to succeed to their level of capabilities. This does not imply there will be an equal outcome for all as all people are motivated by different things.
Those that are risk averse do not deserve to participate in the spoils of those that are willing to risk everything for a better idea. Those that are unwilling to work the long hard hours to improve themselves and their earning potential should not participate in the winnings and accolades of those that are.
The worker or entrepreneur that is willing and able to produce a better product for less cost should be rewarded. But, this will never happen without a strong and open competitive environment unencumbered by red tape and unnecessary government regulation.
Posted by Bruce, Saturday, 22 March 2008 4:48:54 PM
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Wow! What an untrammelled crock of neo-conservatism ed online. I hardly know where to begin.

The argument was not whether or not there should be free markets but just how free the individual players should be to follow their own self-centred interests. Would we really describe a society in which people were free to commit theft, rape and murder a truly free society? The same applies to markets. They require regulations to curb some of their natural tendancies.

Private monopolies generally ARE non-contestable by the public at large. This is why it is appropriate for vital services and utilties to be oligopolised/monopolised by government. Democratically elected governments can be dismissed if we are unhappy enough but privately owned monopolies cannot. I have posted numerous times of the situation that once occurred in my area with the part-privatised water board demanding a 1200% increase in water rates, a situation only rectified by the majority shareholder (state government) stepping in. Here is a non-contestable monopoly such as you speak of - what were we going to do, get together and form a company to truck water in for the entire town?


Government monopolies run for the benefit of all rather than private profit are therefore contestable if the majority believe it is being badly mismanaged unless the government is a dictatorship. The same does not apply to privately held monopolies.

cont later
Posted by Fozz, Saturday, 22 March 2008 8:43:19 PM
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Fozz,

As I already said:
"I don't dispute the need for some rules and minimal regulations, principally to prevent violation of personal and private property rights. But otherwise, markets (like society in general) should be free."

You:
Private monopolies generally ARE non-contestable by the public at large. This is why it is appropriate for vital services and utilties to be oligopolised/monopolised by government. Democratically elected governments can be dismissed if we are unhappy enough but privately owned monopolies cannot.

I have posted numerous times of the situation that once occurred in my area with the part-privatised water board demanding a 1200% increase in water rates, a situation only rectified by the majority shareholder (state government) stepping in. Here is a non-contestable monopoly such as you speak of - what were we going to do, get together and form a company to truck water in for the entire town?

Me:
So the Govt stepped in and implemented a price control. This demonstrates that the real reason why the water market is non-contestable is because it is Govt controlled. It is a well-established economic fact that Govt price controls inevitably lead to shortages. Consequently, Australia’s current water shortage is NOT caused by the drought, it is caused by government price controls and mismanagement.

If the Govt deregulated the water market (i.e. made it contestable) new companies would enter it. Obviously this would result in price increases (to reflect the true value of water), but this would be partially offset by tax cuts. In a contestable water market, water rationing would come to an end.

You:
Government monopolies run for the benefit of all rather than private profit are therefore contestable if the majority believe it is being badly mismanaged unless the government is a dictatorship. The same does not apply to privately held monopolies.

Me:
In a contestable market, inefficient private monopolies are replaced by efficient ones. See here:
http://www.economist.com/research/Economics/alphabetic.cfm?letter=C#contestablemarket

In a non-contestable market, your only hope is to vote out the existing govt. That is, replace the current incompetent Govt with another incompetent Govt. Great plan!
Posted by ed_online, Saturday, 22 March 2008 10:48:33 PM
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Regarding the attempted exploitation of the public through a privately owned natural monopoly on something vital for life itself: There was no shortage of water ed. There was an abundance. A great drought had seen supply fall to around 12%. The big industries that use 80% of the water here implemented expensive technologies eg:recycling sewage, desalination, seawater cooling etc. Then a cyclone filled up the resevoir. There was now more water than ever because the dam wall had been raised in the meantime. But the the big buyers, having spent many millions of dollars on alternatives were not inclined to simply abandon them. The private water board attempted to make residents pay for the shortfall in returns. They even issued a media statement, saying that people needed to understand that water was business and business must turn a profit.

So a commodity (I hesitate to describe water to drink and bathe in as such.....) was now in surplus but circumstance and de-regulation conspired to produce a private monopoly that would have inflicted great harm on our town in order to maintain it's bottom line. Sometimes, price controls are necessary to prevent private interests from exploiting society and wreaking economic damage. Since everything and everyone uses water, there would have been severe cost blow-outs in businesses that need to use more because of what they produce. There would have been local closures and people thrown out of work all because someone in control of something everyone needs and cannot source elsewhere wanted to line their pocket.

Your assertion that government enforced price controls, not drought, are responsable for water shortages is bizzare. No amount of de-regulation and private ownership is going to make it rain. You honestly believe that the holders of a natural monopoly such as water are going to pass on tax cuts? Just how do you propose to make a natural monopoly contestable through de-regulation?

I haven't even touched on immunisation, Pinochet's Chile, Iraq and taxes.

Jeez.
Posted by Fozz, Sunday, 23 March 2008 7:42:40 AM
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uh-huh.

Here we go with the capitalist pigs versus the communist pigs schtick.

Sheesh, didnt you get the irony of Animal Farm. Try reading it again.

Silly naive theortical communist. Duffer.

Anyway, be it capitalism or communism they both ultimately lead to monopolies. The only difference is the pretence of the name in which they weild their ambitions of power and control.
Posted by trade215, Sunday, 23 March 2008 10:25:23 AM
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Well said Trade215.Competition in private enterprise creates the wealth for the do gooders to have time to whinge about the injustices in life."Too many do goods and not enough good hard working men."Johnny Cash got most of right.We are caught between global capitalists and socialists Govts,both want a free ride off our backs.
Posted by Arjay, Sunday, 23 March 2008 8:51:03 PM
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