Tristan,

Having studied public economics, there are two criteria for natural monopolies where state ownership / control has obvious benefits over private ownership

1 - Where the economies of scale continue to grow to the maximum capacity of the state/nation/city.
2 - Where the intangible benefits to the population of the service are so significant that even when the enterprise makes a loss, the value of the benefits vastly outweigh the losses.

Given the size of most economies, the first factor seldom applies. The old monopolies such as power generation generally cannot compete with privately owned enterprises. State enforced monopolies seldom deliver value to its customers, which is why the proposed NBN is such a travesty.

The second factor is generally applied to services such as police, public schooling, public transport, public hospitals etc. But even these can be contracted out to the private sector who can deliver the same public value for a huge cost saving.

The huge state owned enterprises of yesteryear are as relevant today as sail powered cargo ships.

hi Chris

I have to disagree with your assessment that both Tristan and I have 'our hearts in the right place'.

My heart is placed to ensure, in order, my own, my familys, my close friends and my employees welfares comes first. I believe individuals are best placed to determine their own needs and will prioritise as they see fit and so determine their needs, regardless of circumstance.

My fathers father was of a similar opinion. It's called being true to oneself and because I don't suffer the deprivation, of he in his time nor of many others today, I cannot decide nor direct them towards their priorities. I'd be arrogrant if I thought I could.

Now get Tristan to enunciate that he shares the deprivation of my fathers father or of some people today.

He cannot, therefore he isn't being true to himself and will not eventually, because it is his displayed behaviour, be true to the people he proports his idealogies will do good for. He cannot understand their priorities but because he has greater education he can dominate them and relegate their unspoken needs and aspirations.

That's labors mode of operating today and it is their undoing and causes them to prioritise things that are not the deprived priorities. Really how many in deprived backgrounds today prioritise gay marriage, electricity privatisation, give a hoot about the defiate antic's of the military or want a carbon tax?Those things don't put food on their plates nor provide a better future for their kids.

For a long time now labor's millionaire and uni educated classes haven't been true to themselves and they've betrayed those they proport to represent. The gooses.

Before you think about joining or supporting the Liberals it is important to understand they generally adopt my attitudes towards personal responsibility. And that's a huge divide from Tristan's attitudes and indeed of many who may see the liberals as at all 'benevolent'.

Regards keith

Keith,

I do not believe that any thing is achieved by political commentary tied to the bias of one party. We have enough sectional interest groups for that given their historical preferences towards certain parties.

In terms of affinity with liberal politics, i no longer see Labor as 'the' only option.

What matters to me, as you suggest, is policies that encourage greater individual responsibility (mutual obligation) for a variety of reasons, efficiency of resources, and positive outcomes in terms of balancing wealth creation and helping those in need of assistance. In the case of the latter, some people need to be assisted through decent education opportunities, while people need resources to meet their living costs. I never want to see many pensioners turning off heating given they cannot pay bills.

I feel my own life experience, a beneficiary of state (Liberal) help as a ward of state (4 to 17), it would have been unlikely (although not impossible) that I ever moved from labouring to academia without state help. Further, my perspective, shaped by experience and learning, still leads me to believe in the important role of govt.

And the more i think about it, even when voting Labor, the more i feel John Howard was the best PM in my adult lifetime. (I can only go back to Fraser to make my judgment).

A lot of the differences between the major parties is rhetorical, with Labor the biggest fibber trying to woo everyone with greater populism. They are still at it in 2011, yet a carbon tax will probably lead to resources being shifted from other important policy areas (although we must wait to see what happens).

I think tough reform is ahead; I just hope the reform is done in a smart way that balances wealth creation and compassion in the best possible way. Sounds like rhetoric, but such a simple statement should always determine what good policy is, especially looking back as an academic.

Shadow Minister;

re: Natural monpolies - I think to that you could add to scenarios where avoidance of cost structure duplication provides a greater benefit than product differentiation in the market; and I think that applies to water and communications infrastructure. (but not retail service) I also think product differentiation in energy is so minimal that it doesn't justify the added costs to consumers with payment of dividends to private stakeholders.

More broadly I think the public sector is NOT 'essentially' inefficient or inferior. And if you take public transport, for instance, it's possible to capture private sector innovation by investing in rolling stock from a variety of sources, while still having public infrastructure. Private management is possible in the context of public ownership, but full privatisation would see deterioation of services on unprofitable routes. There are similar complexities in other instances.

And again - if you add up the cumulative effects of privatisations, internalisation of the costs of providing dividends to investors really adds up - In the end it costs consumers an awful lot. So where the public sector *can* do just as good a job then we need the abandon ideology and work in the public interest.

Other instances - such as the Commonwealth Bank privatisation - now see the public losing out on over $6 billion in dividends - and reinforcement of collusive oligopoly - where a public bank could have actually enhanced competition.

Though of course there are huge swathes of the market where competition between private enterprises (or conceiveably non-public democratic enterprises) drives innovation. I don't dispute this.

Keith: You do not know my personal financial circumstances, so don't make any assumptions. It's really no-one's business, but I've never been so well off that anyone could reasonably say I've been part of the 'middle class'. I sympathise with the disadvantaged because I've been there myself.

What I can't get over is this idea that quality public health and aged care, and investment in transport in new suburbs where working class families are settlig is 'irrelevant' to workers.

I understand arguments that some people want to consume in a private context; thinking this provides 'choice'. The Budapest school made similar arguments in their criticism of the command economies before the collapse of the (Communist) Eastern Bloc. Where 'command' structures go too far this makes perfect sense. But again I point to the added market power of consumers with collective consumption. And the likelihood of market failure where markets go *too* far. (ie: infringing upon the terrain of the legitimate mixed economy)

Tristan,

The reason the ACCC and its equivalents around the world are set up are because monopolies are almost without exception less efficient than multiple entities competing in delivering value to the public. This is because competition forces companies to be cost effective and to deliver the service the company wants, or the customers simply move elsewhere (This has little or nothing to do with product differentiation.) Public companies on top of this have the added handicap that the objective of efficiency is often surpassed by political considerations.

So ideology aside, there are very few examples where public institutions can compete. The sale of the CBA did not deprive the public of $6bn of dividends, simply because a public company would not have made the dividends in the first place.

If you have any evidence that the banks are colluding perhaps you should provide it to the ACCC, because as of yet there has been no evidence of this whatsoever. Because banks offer similar products at similar prices might simply be because any higher would lose customers, and any lower would lose money.

To be perfectly honest, you reply above would indicate that you have no background in economics whatsoever. I would conclude that this deficiency is the reason you can continue to believe in your socialist agenda.