Wow, what a rant ! You wouldn't be inclined to be left wing by any chance would you ?

While I agree with some of the things you say, particularly about sport. I think you tried to cover far too much ground as it is impossible to debate such a spread of subjects. Perhaps you should confine your arguments to specifics rather than try and paint a broad picture. You will then get more feed back. There is no perfect country and for all our faults it is still considered by the people that live here, the best country in the world. Why do so many people want to come and settle ? It's mainly because of opportunity which doesn't exist in many other parts of the world. There is always room for improvement but don't knock it, consider some of the benefits. If you want to debate the health system compared to other countries for instance I think you might be on shaky ground although, God knows, there is plenty of room to improve the system here, but try living in the USA or the UK and find out what a health system is like.

A far left tirade which can be summed up as “competition (& the capitalist system ) dun it”. There are so many factual errors of reasoning here. But one is sufficient to debunk the entire article.

Harry: “Australia is the third richest country in the world in average wealth per person”

For the author’s benefit, take note:

Australia is the 16th richest country per person.

Australia is the 16th richest country, behind even Indonesia & Mexico.

Australia is the 3rd most developed country.

This last figure is according to the UN’s Human Development Index, which is a measure of life quality taking everyone into account, including the 59 yr life expectancy of Aborigines. So according to the UN there are only 2 better places in the world to live than Aus. Go figure.

Don’t let facts get in the way of a good yarn, Harry.

Harry needs to write less & read more.

Funny thing is this type of nonsense in Harry’s article is so often repeated by elements of the left that to see their arguments written down in full is both very damning for them & laughter-inducing for the rest of us. No wonder Labour moved to the right & turned into New Labour. That’s because no-one apart from a few staunch stone-agers would ever vote for them.

As Kerry Packer said, “I don’t believe in competition, I believe in monopoly”.
Well all the ruling elite espouse that otherwise they would not be a ruling elite. Having a monopoly on the media is crucial for a handful of people to dominate society and oppress the larger working class, including having any say in any of the meaningful decisions carried out daily. As well as, promoting their "creatures" like Rudd and the rest of the Laborites after they have squeezed the Liberals of further useful treachery.

But as many realize modern monopoly is engendered by competition itself, as witnessed by an ever greater merger of companies over the last two decades to form global conglomerates that scour the world for ever cheaper resources and wages. The escalating competition, in which the market value of a company has become the sole criterion for survival, leaves no more room for social concessions in the workplace. At one time companies vied with each other by increasing their services - today it is ever further cutbacks including quality control.

Many of the banks got their fingers burnt in predatory dealings in the sub-prime home loans and are now cutting back on cheap credit which will have huge ramifications for production and jobs. Including those who have partially been living off their credit cards because living standards are in reverse and there has been no significant wage rises since 1982, whilst the Ceos have had some 400. Cheap credit too is the lifeblood of manufacturing. Workers will be confronted with an unprecedented proliferation of closures and mass layoffs, a sharp increase in temporary and low-wage employment, and a further but intensified assault on old-age pensions and the social welfare system. Which will add fuel to the fire because spending will sharply decrease, people will not be able to buy goods. It is evident too that the small manufacturer cannot survive in a struggle in which the first condition of success is production upon an ever greater scale and the governments looking after "big business."

It is hard to think of a way in which this article can be made a stimulus for constructive dialogue on how society and economics can be better organised for the commonwealth. A lot of things are certainly very bad. But before we make radical changes in the way we do things we have to be sure that we can do better. When I was young I was really enthused by the slogans that came out of early and mid 19th century socialism, such as: "From each according to his ability, and to each according to his need" How wonderful it would be if all the producers worked their butts off for the joy of contributing to the commonwealth, and all the needy restrained their demands and sought to become producers themselves. Sadly it doesn't seem to work like that except in some close family groups. It seems that we need the incentives of competition and differential reward even though that leads to great excess and considerable inequality. But that doesn't mean that we can allow open slather and dog eat dog. That is why we have evolved a social democracy and why we want our governments to keep on chipping away at the problems. Evolution is what we want, not revolution. Don't throw out the baby with the bathwater Harry!

Fencepost says "It seems that we need the incentives of competition and differential reward even though that leads to great excess and considerable inequality."
What is this "we need the incentive"? This line usually comes from someone 'who is doing alright', that is, at the expense of the majority. What incentive is there when 2 million are going to lose their homes and finish up with an enormous interest debt owed to predatory lenders?
Fencepost in his haste for "meaningful dialogue" doesn't explain that the USA manufacturers, yes the very same maufacturers who at one time produced 60% of world production, many have now turned towards speculating on the stock market rather than produce goods. Producing instead the various stock market bubbles including the predatory sub-prime home mortgage lending. And the reason for this is that profits have been shrinking due to the inherant tendency for the rate of profits to shrink and the over-abundance and over-production of goods. Moreover, the advent of the microchip and the latest technology has expanded the capabilities to overproduce and flood the markets. At its highest point competition for markets sharpens up "each against all" leading to trade war, trade sanctions and then shooting war. Every company around the globe endlessly repeats the same tired mantra "we have to be more and more internationally competitive." However their standpoint is always - they are the only one in the market - hence their constant cry for "free trade."
Todays oil/petrol cartels are precisely the normal outcome of the monopoly gained through competition. In the US the Texas oil/petrol cartels actually get the taxpayer to fund the war in Iraq so they can steal the oil and sell it back to the public at high prices at the bowser: They refer to this swindle as "double whammy." The local and mid size harware companies here, have to a reasonable extent, over the last two decades been gobbled up by the competition such as Bunnings. So that they have LESS competition.

KGB - you may be right that Harry made a factual error - I can't be bothered checking though - it's completely irrelevant to the thrust of his argument...A society in which it believed that the greatest good is the outcome of unrestrained competition (well, 'unrestrained'isn't correct - it doesn't do justice to our system of favouring the wealthy in a massive variety of direct and indirect ways)is a sick society. When the only indicator of a society's health is its economic activity (and even that is measured in ways that beggar logic) then a society has proved itself incapable of being a society. I don't know that we can eliminate competition in a society - I suspect there is a fair dose of that in human nature, but we can control competition and put it in service of building communities and fairness not destroying it. We could start by dismantling the corporate/political system - and replacing it with a human one.

MP Jason O'Brien, our local Member for Cook has done the right thing to reveal (yesterday) that he has written a letter to the Minister detailing security problems in the region in 2005, with no response.

I appreciate the difficult situation and therefore write the following.

The "NO REPONSE" issue is telling in the over all debate concerning issues of Health and Well-being in Cook Shire and throughout Cape York.

While the issue our Member is outlining is about Nurses and Nurse Accommodation and Safety, and the way the Nurse herself is alleged to have been treated by her own Health Department, I stress the issue ought to be seen in its broader context, if the idea is to Problem Solve.

I add that it is often not until something happens to a "professional" themselves that the "voice" to address "what might be wrong" within and between administrative departments becomes recognisable as a point of true focus. I know as a community development officer, this is the truth, in my own case.

For this reason I have put an OPEN LETTER on my web-site for Ms Anna Bligh, Mr Jason O’Brien, Mr Kevin Rudd’s office and associated staff.

As a Community Development Officer, with a background in community and especially in socio-economic issues of civic and primary development through HEALTH, I urge you to consider this letter.

I am available for consultation and have evidence that can personally support my efforts to find a solution to ground based community matters.

I am optimistic and hold-out for the implementation of policies that combine “Social and Economic Inclusion” (especially through the extended civic health frameworks), and pro-action said to be coming down from our Deputy PM’s Office.

I hope to meet with Ms Anna Bligh, Ms Julia Gillard, Mr Jason O’Brien and our newly elected Mayor, Mr Peter Scott on these issues.

I feel until this occurs, it is ring-around rosy, as it is the “ground” not understood.

Maria Altmann MPhil
Cooktown – Cape York.

http://www.miacat
.

Open almost any economics text book and within the first few pages you will read that we live in a world of finite resources but humans have unlimited wants. Consequently, competition is a natural part of existence and attempts to remove it from society are doomed to fail.

Instead of focussing on removing competition (a fruitless exercise) the real question is which type of society is best at distributing scarce resources to satisfy the most individual needs. The answer, of course, is capitalism.

Why? Because in a market economy, competition is a positive-sum game, everyone is a potential winner. But in govt controlled economies, competition is a zero-sum game where govts steal from productive individuals and distribute their ill-gotten gains to the non-productive and inefficient. Govt interference, therefore, creates a society of winners and losers which ultimately leads to a lower standard of living for all.

Let's take just one example: health care.

There is a delicious irony in the suggestion that since six different govts have failed to properly manage health care, the wise thing to do is give a seventh govt a go. Most of the problems with health care in this country can be attributed to govt mismanagement. As the former director-general of the NSW Premier's department recently noted, the NSW health system employs more clerks than nurses, and continues to obstruct desperately needed reform.

http://www.theaustralian.news.com.au/story/0,25197,23399851-2702,00.html

Next – you’re making the same mistake Harry made.

“that Harry made a factual error - I can't be bothered checking though - it's completely irrelevant to the thrust of his argument”

No, it’s completely relavant. He (& you) are both implying Australia is a sick society. The UN absolutely disagrees with you. It thinks Australia is the 3rd best country in the world for humans to live in.

“When the only indicator of a society's health is its economic activity…then a society has proved itself incapable of being a society.”

Again, the UNs HDI is made up of literally hundreds of indicators, social & economic.

That you “can't be bothered checking though” explains your & Harry’s ignorance.

Societies have tried a few ways to organise themselves over the millenia.

The present cornucopian system seems to have emerged the global winner, just in time to witness it's own downfall due to the utter exhaustion of the very stuff that gives it life.

There's no point in arguing about the different 'isms of old. This wonderful corporate, competitive, chrome-plated, capitalist system has been very good to me. But there comes a time when it has to be seen for the antideluvian, decrepit, dead parrot that it is. The plumage seems to be vibrant, but it is so VERY dead that we need war and economic con-tricks to give it the semblance of life. Look again. It's a stuffed parrot twitched by old, old men, with old, old desires. Why defend, revere or fawn over that?

Now that there are over 6 billion of us, wouldn't you think it might have entered the mind of social man to move on towards something a little more brainy? A little less Jurassic?

Ego is something we imagine into being, just like our precious fiat currency.

We have ridden this planet for a zillion miles. Time to get the old girl up on the blocks and do a much-overdue service, otherwise the last wealthy ego standing will be master of a dry, red lump of dead rock.

- dunno about you, but I am tired of feeling like just another hopeless
cancer cell in the tumour of economics and consumerism.

Competition and co-operation are really two sides of the same coin, inseparable from one another as both are inherint in human nature. It is necessary to strike a balance between the two otherwise a callously exploitative or brutally repressive society (or both) are the result. Where that balance lies will be the subject of never ending argument and debate.

ed online, I agree that capitalism is a very successfull system but I strongly disagree that untrammelled free markets are the best way to distribute scarce resources (apologies if you are not in fact, implying this). A measure of rules and regulations MUST be applied or competition ceases to function effectively and is replaced with monopolies and oligopolies.

Do you regard government taxation and redistribution as "ill - gotten gains?" Are you saying that health, education, law enforcement and the like - the things that hold the fabric of a society together - should be privately owned and run for profit? Just imagine the immunization program run for profit. The "real cost" of each of those shots would come to thousands of dollars. Millions of people would end up harbouring dangerous infectious diseases.

From Pinochet's Chili to todays Iraq, replacing all state owned structures and systems with unfettered markets has proved disasterous for a good portion of the population. Capitalism can only successfully serve society as long as it's natural excesses are tempered by a measure of socialism (and probably vice-versa as well).

Actually, I strongly agree that "untrammelled free markets are the best way to distribute scarce resources." 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.

Monopolies and oligopolies are nothing to fear except when they are non-contestable. Non-contestable markets only exist when enforced by governments.

Yes, I do regard taxation as theft. And yes, health and education should be privatised and the taxes collected returned to their rightful owners. We currently have a crazy system where parents who send their kids to public schools are paying taxes to subsidise private schools. And parents who send their kids to private schools are taxed to subsidise public schools.

'Free' immunisation does not exist, it may seem free but it is not.

Empirical evidence shows that countries with greater economic freedom tend to have higher standards of living. The reverse is also true. Check out the Heritage Foundation's Index of Economic Freedom.

Chile’s economy, though not perfect (and which one is?) is doing OK. Over the past five years, it has experienced a 4.5%p.a. compound growth rate in GDP. The unemployment rate is 7.7% and inflation is 3.1%pa.

As for Iraq:

"The Iraqi economy should benefit from many excellent reforms and institutions that have been put in place since 2003, including tax policies, simple and low tariffs, new investment laws, and a significantly liberalized and modernized banking system; but these reforms and institutions cannot be fully effective as long as they have to depend on a foundation of weak physical security and persistent corruption."

The latest figures show an unemployment rate of 25-30% and inflation at 32%.

You say: "Capitalism can only successfully serve society as long as it's natural excesses are tempered by a measure of socialism (and probably vice-versa as well)."

I say: Capitalism = freedom; and socialism = slavery. Therefore, while partial slavery is better than total slavery, its still slavery. I would like to see slavery completely abolished, is that such a bad thing?

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.

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

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!

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.

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.

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.

Caught in the Act 'trade215'. When a narrow mind speaks it tends to re-spray the stigma that can take centuries to overcome. Try to be original and at least pick out one visable argument in the discussion?

On reply to your comment... I wonder, perhaps it is you who needs the free ticket to China, as it appears the true 'liberal' wants more than armed paratroops, guns and tanks, the spoke wheel of a communal capital based dictatorship.

Applied Thinking is not a 'Communism' as you express but a "communication" progress between many minds without violence about the issues that can help process the action we need urgently, to take us ALL forward.

Capital can help if we demand the creditable over the present gullible or incredulous mastery dictating the unsoundness of unthoughful and neglectful terms.

Going wide as the author has is encouraging because it attracts seeds for a wider form of debate and, who wants the cart before the horse. Where else do we get the opportunity to 'story-board' if not this On Line Forum. Our thoughts are better out then in - given the need to share these thoughts is the very 'food' we need in this day and age as a way to contribute as a public.

Ed-Online, thank you for the timely link and Chris Shaw I take your comment to bed. It is the best I've seen next to one other being from Jug Suraiya, in the 'The Times of India' news (yesterday), whose same wit with words gives much faith to reasons why we might bother to air our valuable breath toward the otherwise 'chicken-hearted'. In fact it is people like yourself whose words help to take the sting out of the obvious.

http://timesofindia.indiatimes.com/Jug_Suraiya_From_Taslima_to_Tibet_India_proves_chicken/articleshow/2885952.cms

Chris Shaw you are a wonderful writer and I do hope you keep it up.

http://www.miacat.com/
.

Uh huh.

Exactly where did I profess to be communist Trade 215? Didn't you read my earlier posts? Try reading them first. I proposed a balance between individualism and collectivism. You know, that thing that democratically elected governments do, with varying degrees of success.

Since you seem to have somehow entirely missed the point of my previous post, I will explain it down to your level: The silly government people wanted to try a silly idea - privatising water, in the silly and mistaken belief that it would run better and they would save money. But the people they sold it to were not very nice. They thought that they owned the water that belonged to the whole community and that they could do what they liked with it so that they could make lots and lots of money. If some people suddenly struggled to pay the huge price hike or some local businesses closed and people were put out of work that was just too bad. The not very nice people were very cheeky because they knew that water was something that no-one could get from anyone but them. But lots of people got very angry and jumped up and down and made lots of noise. Then the silly government people knew they had made a mistake and stepped in to fix things up.

If you're not sure that you understand that after the first reading, try reading it a few more times.

"Competition in private enterprise creates the wealth for the do gooders to have time to winge about the injustices of life".
Indeed Arjay. But as the above example should demonstrate, private enterprise needs to be regulated in order for competition rather than collusion and monopolization to reign (or in critical areas where competition is unlikely to exist, price controls must be implemeted). Surely you realise that the whole point of competition is to win, to dominate as much as possible. So regulations pertaining to fair trading practices are necessary. A pure, self-regulating, self balancing free market is a utopian fantasy, just like communism.

So a company that has a surplus of water, decides to put up the price in order to reduce its inventory. In a free (contestable) market, this would never happen. The fact that it has happened in your community proves your earlier point that the water market is non-contestable and it is clearly not 'de-regulated'.

The solution is to remove price controls and have a properly de-regulated market. Once de-regulated, the incentives will exist for other companies to enter the market and invest in collecting, recycling and distributing water. Indeed, according to your post, this has already happened, to a degree.

Fozz: "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'm sceptical of the existence of natural monopolies. If there really was a natural monopoly, then how did 'big industries' manage to source water elsewhere?

Obviously, deregulation won't make it rain, but there is more than enough water throughout Australia to satisfy everyone. As I understand it, last year Northern Australia experienced unseasonally high rainfall while Southern Australia experienced unseasonally low rainfall. So the problem is not inadequate rainfall, the problem is a lack of incentives to have it distributed to where it is needed the most. To create those incentives, you must get rid of Govt meddling.

“Dad had the money and power, the others had poverty. This is the essence of economic competition.”

That is the essence of paternalism. It has nothing to do with “competition”

“Competition can create disadvantage.”

Just as it creates opportunity

“did not predict the need for affordable public housing”

“Competition” does not work as well when government exercise their monopoly power and fail to represent the interests of the electorate. Housing is a state government responsibility and all the states are run by incompetent socialists.

I cannot be bothered to read any more of this third rate, left wing, emotionalistic drivel which looks like it was spewed forth by Marx on one of his purging and vomiting days (and there were quite a few of those).

The success of the libertarian-capitalist system, which encourages competition and the right of people to be free of undue government interference is evodenced by the quality of life which we enjoy, compared to the charnel house of attrocities lorded over by communism and the fact that every "competetively based libertarian-capitalist democracy has thousands of people queueing up to get in and no wall to stop them getting out.

Unlike the socialists which I am at pains to observe what Lenin said

“the goal of socialism is communism”

That was before he said “a lie told often enough becomes the truth” and before he starved 6 million Russians to death and was followed by his mate, Stalin who murdered another 50 million folk.

And why "socialism had a lot to answer for".

Fozz “Government monopolies run for the benefit of all”

Like Telstra did before privatization.

Government monopolies are “monopolies” and are run to first protect their own vested interests and the consumer be damned.

Government is there to regulate, not to own commercial operations. Such duality immediately throw them into a conflict of interest between those of the business operator and those of the regulatory officer

No ed, the situation occurred BECAUSE price controls did not exist and because water is a natural monopoly. A monopoly in something no-one can do without where regulations have been removed is dream come true for those looking for a juicy profit at others expense.

True competition cannot exist in water suppy because it cannot be produced (except at great expense, and then only on the coast) and cannot be sourced elsewhere in anything remotely like the quantities necessary. We cannot refuse to buy it unless we get a fair price because it is vital for life itself and for virtually everything we do. This is one of the natural monopolies whose existence you are sceptical of. It must either (a)remain in the hands of government or (b)be regulated to the strictest extent to prevent exploitation. This naturally makes it less attractive to private enterprise which unlike government, must operate on a for-profit basis.

I'm not sure that you're being serious when you ask how big industries managed to source the water elsewhere. Like 99.9999% of other Australians, my bank account does not look nearly as healthy as that of Rio Tinto whose plants sit on the edge of an ocean and are capable of using seawater in most of their processes anyway (they only bought fresh water because seawater increases maintainence costs, being corrosive).Anyway, are you seriously suggesting that the average household posesses the same kind of bargaining clout when buying anything as one of the most profitable resource corporations in the world?

In many cases ed, government "meddling" is no more meddling than policing the streets is meddling in the rights of people to do whatever the hell they like. The purpose of government is after all, to govern.

"Like Telstra did before privatization". People I have asked have told me that their line rental has increased in line with Trujillo granting himself a paycheck in excess of 100 times that of the highest payed executive when it was publicly owned.

I will challenge other parts of your post later, I am about at the word limit.

Fozz,

In part, our disagreement is due to a different understanding of the term 'monopoly.' To me, a monopoly exists when a producer is protected from competition by Govt regulation. Water is not a natural monopoly, it is a scarce resource and like all scarce resources, the most efficient way to allocate it is through a competitive free market.

However, I understand your concern. Your fear is that without govt regulation and price controls, the water company would exploit the community by increasing prices by 1200% and this would have devastating consequences. But would it?

In a free market, such an increase would create a huge incentive for new competitors to service your community. It would encourage greater innovation and exploration of alternatives. For example, it could then be cheaper to have the water trucked in (which would be a boon for local transport companies), people would install more water tanks (a boon for local installers and suppliers), and investment in recycling systems (a boon for the construction industry). At higher prices, your local hardware store or other companies with large rooves could install tanks and sell rain water to their customers at discounted prices (a boon for retail trade). Rio Tinto could even establish a separate business on-selling its excess water to the local community. Over time, as the supply of water increased, and the number of customers dropped, the water company would be forced to lower its prices, or go broke and be bought out by a more efficient operator.

Both the water industry and the food industry supply essential services as they provide commodities which are "vital for life itself and for virtually everything we do." And both industries depend on rainfall. However, while Govt price controls exist for water, there are no price controls for food (at least not yet!) Note, there is a shortage of water in Australia yet not a shortage of food. This is no coincidence.

Ed_online,

A big thank you for bringing some rationality into this discussion. Your very first statement sums things up nicely:

"Open almost any economics text book and within the first few pages you will read that we live in a world of finite resources but humans have unlimited wants. Consequently, competition is a natural part of existence and attempts to remove it from society are doomed to fail."

Exactly.

This forum tends to get caught up in the rants of those who don't like free markets and who want protection from the real world. It's nice to see someone coming at the topic from a rational perspective.

Ed, yes water is a scarce resource and a natural monopoly also for blindingly obvious reasons previously stated and personally experienced. Am I to take it that you are arguing that monopolies and oligopolies exist only becuase of government regulation aimed at preventing them?

I think you are blindly following the Freidman doctrine - that there exists a "pure" free market that operates in glorious self-balance and perfection and is constrained only by attempts to regulate it and if such constraints were lifted, we would all enter an economic garden of Eden. You know Ed, I was once enthralled in much the same manner by the hammer and sycle but eventually came to realise that a lot of it was crap. The two theories share a striking similarity - unquestioning belief that following certain steps will lead to a perfect, utopian world. There is no room for compromise and when things go pear shaped and people get hurt along the way, it is always the fault of anything but the ideaology. Much purist free market theory is dangerous crap Ed.

I don't share your confident willingness to experiment on my community. Trucking water in is a silly idea. Getting it here would consume millions of barrels of oil - seen the price of oil lately? As people have already found out, you can install all the tanks you like but if it doesn't rain.......And I grew up living on tanks, even with carefull rationing the water often doesn't last. In a no-holds-barred environment, I doubt a behemoth like Rio Tinto would compete - they would simply dominate, buy up all water infrastructure in the area and give themselves the cheap water and sell expensive water to everyone else.They already part own the power station.

"Note that there is a shortage of water in Australia yet not a shortage of food. This is no coincindence"

Of course it's no coincidence!! Food can be readily transported all over the country and the world. Water supply for whole cities cannot. Only a moron would insist it can.

Ideaological zealotry Ed.

fozz and miacat,

l still dont understand.

This closed mind is well below such lofty and expansive conceptualisations. Or more appropriately... rationalisations.

ps. it takes a helleva lot of of critical thinking and effort to empty one's mind of nonensical applications of logic in pursuit of rationalising a priori postions. And much more effort to keep it out.

"Am I to take it that you are arguing that monopolies and oligopolies exist only becuase of government regulation aimed at preventing them?"

Not exactly. I'm distinguishing between two types of monopolies/oligopolies, (1) those that arise in a contestable (free) market and (2) those that are protected from competition by Govt regulation (i.e. non-contestable).

In a constestable market, inefficient firms are replaced by efficient ones. In a non-constestable market, firms tend to remain inefficient and indeed are likely to become even less efficient over time.

I have read Friedman and I don't recall him ever suggesting that a free market is utopian. Humans are imperfect and consequently their institutions are also imperfect. I would rather live in a free imperfect society than to live in a totalitarian imperfect society.

I don't deny there are practical difficulties in obtaining reliable and cheap water, but a free market will supply the incentives for people to solve these problems. If Govts are allowed to block competitors and fix prices, this will discourage research, innovation, and investment into better methods of storage, distribution, recycling, conservation, etc.

Ed, the very reason that some monopolies are controlled by governments is that competition is unlikely to occur due to their particular nature. Many areas have only a single source of water. It is not yet possible to make huge quantities of water cheaply and reliably. You do understand the concept don't you Ed? - there can be no competition when there is but a single source of supply. Someone will invariably control the whole thing, de-regulation will not make a whit of difference. I would rather have it controlled by the (to qoute Col Rogue here) "vested interests" of government than the vested interests of the private sector. For the vested interests of democratically elected government are to be re-elected by trying to make sure that the majority believe that they are doing a good job. The vested interests of the private sector by contrast, are to ensure maximum returns to shareholders. These shareholders may not even reside in the country and may have little or no interest in any negative effects on local communities as long as the returns keep rolling in.

Why should they? Their jobs are not up for reveiw by the public.

Shoving utilities into the marketplace has brought no consistent pattern of success becuase in many cases there is no market in what they deliver. They are chunks of the public good, the foundation stones of a modern, first world country. Water in my area, Telstra (line rental up, regional services scaled back, CEO's paypacket 100 times that of the highest payed executive when it was in public hands) the crumbling S.E QLD powerline network (not cost effective to do proper maintainence).

Just as we need a healthy private sector, we also need a strong, healthy public sector to keep control of the essential things that corporations - to put it bluntly - just can't be trusted with. Or at the very least, iron clad regulations in these vital areas.

If you want to see the effect of heavy de-regulation, visit the U.S. I did last year and there were some appalling sights.

You say that there is "only a single source of water". This is clearly untrue because you have stated that Rio Tinto found an alternative. There may be lots of alternatives, but these will never be explored if the Govt locks them out. If the water company (who is it btw) was allowed to increase prices by 1200% (to what exactly?) this would have created lots of incentive for innovation. Assuming the Govt allowed it.

But even if I were to concede a lack of alternatives, it is still better to have a contestable monopoly. As already stated, in a contestable market inefficient monopolists are replaced by efficient ones. The same is not true for non-contestable monopolists (your preferred model).

You believe that Govts are better at serving the interests of consumers than privately-run corporations. It is well known that Govt enterprises are less efficient than private enterprises, for a range of reasons, including that they are less responsive to consumer demand. Govts frequently have conflicting priorities and are captive to special interest groups. There is an entire field of economics that has catalogued govt failures, including: regulatory capture, pork barrelling, feather-nesting, corruption, inertia and rent-seeking.

Perhaps I wan't clear enough. The big plants in the central Queensland industrial city of Gladstone sit directly on the harbour. The bulk of the water they use is for cooling. Cheap, fresh water was always preferred as using seawater increases maintainence costs. They simply began using seawater for their processes while desalinating and recycling for the few processes they could not use it for. To produce a reliable supply of potable (drinking quality) water for a whole city would have been an enormous undertaking (and impossible inland). Furthermore, it would be volitile. Any percieved attempt to exploit the price of water leads to community outrage, as the commercialised Gladstone water board discovered. This would be a disincentive to any "water investors" looking to quickly recover some of the astronomical costs of such a venture.

Face facts Ed. At this point in time, water supply is usually going to be a non-contestable monopoly regardless of the owner. The main problem with private monopoly holders is that they are not answerable to the public and are driven by the profit motive. Thus, my preferred model is public ownership of critical services and utilities and an appropriately regulated private market in most other things. I see the role of government as serving the need of citizens and the nation rather than consumers. Do you consume hospital beds when you are sick? Do you consume the basic education that gives you the opportunity to become a productive member of society? These things must be run on a not for profit basis to ensure everyone has access - something the private sector is incapable of doing.

Total privatization of basic public services has usually been disasterous from Mexico to New Zealand to Iraq ( I doubt Iraqis will ever accept total foreign ownership of their economy, even though the U.S has re-written the country's constitution to virtually gaurantee it)

Fozz,

Thanks for the background information, no doubt there is more to this story.

"The main problem with private monopoly holders is that they are not answerable to the public and are driven by the profit motive."

I see nothing wrong with the profit motive, in fact, it is a good thing. As I keep drumming on, you need incentives to encourage investment in innovation, efficiency and productivity. These are important in keeping future costs down and maintaining a reliable and efficient water supply.

If the Govt won't allow the board to make a profit, in the long run there will be insufficient funds to invest in new equipment and technology. This will result in a deterioration in existing equipment, falling service standards, an increase in prices (and/or taxes), and water shortages (and rationing).

In a previous post you indicated this could be resolved by simply changing the Govt. Given that it won't allow the board to make a profit, how would a new Govt fix the problem?

BTW, is the water board making a profit? Even if it is profitable now, I predict that over time it will begin to accumulate losses, thanks to Govt over-regulation.

I haven't been able to find out what the current arrangement is Ed. Perhaps the government just bought it back. If so, it's clear they should never have sold our water supply off. Now that it is back to where it was, we once again have reasonably priced, reliable water. This was threatened to be taken from us under the commercialised arrangement.

Just come to terms with it Ed. There are some things only government can do or does better than anyone else. You sound just like me years ago - I was convinced that absolutely everything must be owned by the state and the evil capitalists would invariably disappear. These days, I accept their existence and that of an (appropriately regulated) market. This doesn't mean I agree with everything they do.

Why are you so insistent that government is unable to effectively invest in basic services and infrastructure? They can and do and the benefits can be profound. They increased our potential (and now, actual) water supply by increasing the resevoir size. They selected the most cost effective tender from the private sector to build it. Built by the private sector and then run on a fair price basis by elected government. Reliable, fairly-priced water much more likely to encourage business to invest in the area than the private monopoly that did little more than try to rip us off.

I would note that all the deteriorations you speak of are occurring in privatised public services. De-regulation is often responsable for more problems than over regulation. (This does not mean that regulations should not regularly come up for reveiw).

Fozz,

By pure chance, the Productivity Commission has just released a report titled "Towards Urban Water Reform: A Discussion Paper". Media release here: http://www.pc.gov.au/research/commissionresearch/urbanwaterreform/mediarelease

Take note of the following:

"Most urban households face severe restrictions on their use of water. These impose hidden costs that could amount to billions of dollars each year. Australia’s urban water shortages are only partly due to low rainfall. An important contributor has been inadequate institutional arrangements for the management of our urban water resources.

In a discussion paper released today, the Productivity Commission identifies a number of deficiencies in how urban water is currently managed, the most fundamental being the lack of any effective market.

Commission Chairman, Gary Banks said, ‘From storage and distribution through to delivery and waste water removal, urban water supply is the domain of government monopolies. Water charges cover storage and distribution costs, but ignore whether dams are overflowing or running dry. With no real urban water market, the difficulties of making efficient investment decisions are compounded.’

The paper reveals that some of the issues are complex to resolve and it does not lay out a particular blueprint for reform. Nevertheless, the Commission finds that the direction for reform seems clear. Key areas for more detailed assessment that it identifies include:

- allowing a greater role for prices to signal water scarcity and to allocate resources;
- removing artificial impediments to rural urban water trading; and
- removing barriers to competition in the supply and retailing of urban water.

The Commission argues that appropriate reforms would be best advanced through a comprehensive public review, to determine the merits of different options and build a greater understanding within the community of the costs of the status quo and the tradeoffs in pursuing change."

In essence, the Productivity Commission is saying that Australia's water shortage is mostly due to Govt mismanagement rather than low rainfall. Solving the problem requires more competition in the market and an end to price fixing. The lack of a proper market is a disincentive for investment. Which is pretty much what I have been saying.

Ed, the productivity commisission is a collection of high level bureaucrats selected by the government. The current crop were selected by the previous government so it should come as no surprise that they would advance recomendations for commercialisation because that is exactly what they were selected to do by the last neo-liberal regime. Anyone without open neo-liberal sympathies would be most unlikely to be selected.

Brisbane's combined dam capacity is currently under 40%. No amount of privatization is going to fill them. We are short of water for the combined reasons of extremely long drought and rapid population growth. We are reaching the limits of growth without access to a much expanded capacity. Commercial pricing arrangements are not going to free up more water to go around because the water is not there to be freed up.

Have you missed the fact that I have kept banging on about? - commercialising our water supply allowed the owners to act as though an abundance was a shortage and charge accordingly.

Competition is a wonderful thing.

You really get excellent service from the subservient shop assistant who knows that a third of the staff are going to be laid off and is determined to stay.
You get really vague and dozy advice from the call centre operator reading from the service script in the call centre in Mumbai.
The nurse caring for you in a private hospital was probably hired at the start of the shift and doesn't know the ward routine and is probably more worried about getting enough shifts to cover their rent and car loan payments.

Did any one else hear the analysis of Australian foreign aid spending? Australia spent about $200 million in the Solomon Islands, giving $128 million to the Packer family companies.

Fozz,

While its true that the Productivity Commission in its current form was established under the previous Govt, it has a history dating back 30 years. Instead of being criticised, the Productivity Commission should be applauded for injecting some sense into this issue.

I am not disputing that low rainfall has contributed to water shortages. But it is one of several reasons, and probably the least important one. The main standout reason for water shortages is Govt monopoly, specifically artificially low water prices. We don't have shortages of orange juice, beer or milk in Australia, and that is because these commodities operate in a free market where companies respond to consumer demand. Govts, on the other hand, have artificially kept prices low and this has encouraged inefficient practices both by consumers and the Govt. Including a failure to invest in new dams or infrastructure over the past two decades.

Now even if I was to accept that your Gladstone story is true (and I doubt you have supplied all the pertinent facts) I still don't see a problem in prices rising 1200%. An increase of that magnitude, assuming that it is above the market rate, would simply be unsustainable. This is because it would create an enormous incentive for innovation, conservation, recycling, etc. But most importantly, it would encourage the development of new sources of water. And that is how it should be.

Notice how people have responded to rising petrol prices. They have changed their driving habits, bought smaller cars, use public transport, switched to alternative fuels, cycle/walk to work, etc. It has also sparked interest in alternative fuels.

But instead, you would prefer to trust politicians, like this guy:

"In December 1989 the first act of Kevin Rudd, the new chief of staff to Queensland's incoming Labor premier, was to cancel plans for the Wolfdene dam. This was despite expert advice that such a dam would be needed for southeast Queensland in the early 21st century."

http://www.theaustralian.news.com.au/story/0,20867,21002760-7583,00.html

Billie “Competition is a wonderful thing.

You really get excellent service from the subservient shop assistant who knows that a third of the staff are going to be laid off and is determined to stay.”

And you get worse service from some unionized authority where the indolent service staff could not give a rats because they know the government boss cannot sack them.

“The nurse caring for you in a private hospital was probably hired at the start of the shift and doesn't know the ward routine and is probably more worried about getting enough shifts to cover their rent and car loan payments.”

No one is immune from housing (rent or mortgage) and possibly car or credit card payments billie.

Why don’t you engage your brain once in a while and produce a suggestion, instead of the tired and gaseous whine of the bloated.

As for “Australia spent about $200 million in the Solomon Islands, giving $128 million to the Packer family companies.”
Why not make a proper case billie, instead of taking cheap punches by crying “news headlines” which lack any detail.

Ed-online I note you have introduced organization of the water authorities. I can speak with some knowledge of Victoria

Victoria has a two tier system about 20 distribution authorities cover the state and overlayed are 7 water catchment authorities all operated as state government private companies.

Doubling handling of water is a total administrative waste.

The really galling bit is, over the past 10 years, the socialist state government has levied $1 billion of “special dividends” onto the metropolitan authorities.

That means $1 billion of rate payers money has been expropriated away from being spent of preventive maintenance and infrastructure development into things like Mary Delahunty’s “blue trees” debacle.

Because water is critical to life, I believe it should be the one and only resource / utility which must be handled by government and not in private hands. However, that does not excuse the government abuse of the corporate process which defrauds water users through immoral dividends and sub-economic operating structures.

Nothing wrong with a productivity commission as such Ed, just pointing out that all commissions and departments are political by nature and when one side has been in power for over 10 years, most high level, government appointed roles are filled by those with political sympathies and ideals of the same stripe as those in power.

I would suggest you look at how much orange juice, milk and beer is consumed in a single city before pointing out that we don't face a shortage of those things. The consumption of those things (for a single purpose) versus the consumption volume of water for countless differnt purposes is infinitly tiny by comparison (though in a place like Australia, beer might run a close second). You will note that in most places, the three commodities you mention would not have been produced there but bought in from elsewhere which, as previously mentioned cannot be done with an entire water supply. And water somewhere in the world was needed to produce then in the first place.

How long do you think it would take to develop and construct a new source of water (and how much money)? And what of the hardship and problems caused by gouging in the meantime? And if privately owned, it must profit to recoup perhaps a half-billion or so spent on investing in it. Without price controls and other regulations, how would you prevent collusion between big players? And, very importantly, how is a new kid on the block actually going to supply something that must be delivered through a single pipeline infrastructure already owned by the existing company?

You can't just pop accross town and buy it from the other shop because he's cheaper. You seem willing to risk entire communities in the conviction that a one-size-fits-all approach to economies is the way to go. Reminds me of communism in that respect Ed.

Strangely, you are not against public transport.

Col_Rouge in 1976 Victoria had the most integrated water management systems in the world and the autonomous independent English water authorities envied Victoria's integrated system. Sadly since then - no money has been spent on infrastructure and the Kennett government broke the Melbourne Metropolitan Board of Works into 6 seperate companies, each with the own CEOs, billing systems etc. I guess you are arguing for centralising water collection and distribution presumably operating the monopoly in the for-profit sector rather than using a government authority.

I am offended by your assumption that everyone on the government tit is lazy and incompetent. After all the biggest crooks appear to be in private industry as we are finding out about the Scott brothers being exposed by the Coles meat scandal and Allco. The government authorities used to provide most of the apprentice training and private industry hasn't stepped up to the plate and government bureaucracies used to appoint staff on merit - staff had to be qualified rather than just friends of . . . .

Its becoming clear that provision of utlities is a natural monopoly because we can't replicate electricity transmission lines, communications cable, gas lines, water pipes for each seperate provider. Its an abstraction to have companies competing to provide the service - they are just competing for the right to collect our money. The seperate companies focus on increasing market share at the expense of planning for future markets and maintenance of existing plant and equipment.

Fozz,

True, beer, juice and milk can be sourced from different places, but so can water. True, each commodity has a narrower use than water. But each requires water, and the manufacturers managed to find some. They did it, but our wise Govt monopolists apparently can't.

I don't know how long it would take to develop alternative sources, but it would be faster than two decades. The only 'gouging' going on in the meantime is that of the water police issuing fines for the heinous crime of watering the garden.

You seem to dislike profits. But profits are the incentives that drive innovation and economic progress, without them, we would be a third world country. Without them, there would be water shortages. Oh yeah, we already have water shortages, funny about that. You are attacking the very thing that will help to increase the supply of water in Australia.

"how is a new kid on the block actually going to supply something that must be delivered through a single pipeline infrastructure already owned by the existing company?"

For starters, remove govt bans on water useage and allow the existing company to charge whatever it likes. The higher prices will encourage exploration of new sources of supply and consumer conservation.

"You can't just pop accross town and buy it from the other shop because he's cheaper."

People buy water from the supermarket every day.

"You seem willing to risk entire communities in the conviction that a one-size-fits-all approach to economies is the way to go."

I assume by "risk" you mean higher prices. Many people are prepared to pay more for water. Water is, after all, a scarce resource, and its price should reflect that fact. As for those who don't want to pay more, they can just use less. People ought to be free to choose, unlike the current arrangement.

"Reminds me of communism in that respect Ed."

The current arrangement is very much like communism. Under communism the price of everything was controlled by the State and citizens were encouraged to dob in their neighbours (i.e. a "one-size-fits-all approach").

The final paragraph of Billie's last post is profoundly correct. Hear, hear Billie!

I am starting to get annoyed Ed. Your arguments are becoming silly. I don't dislike profits. They are a necessity. But some things are much more effectively and fairly run/distributed on a not-for-profit basis.

The whole idea of private monopolies is to maximise profit by keeping other players out. You are fantasizing if you think that anything other than near-draconian regulation will force private owners to share access to the only possible means of delivery.

"People buy water from the supermarket every day". This is the silliest thing you've said yet. Come back with a cost/benefits analysis of bathing, cooking, watering the garden, washing the car and running the washing machine with evian or perrier. Don't forget delivery costs and the storage and pumping facilities needed. I wonder if Rio's aluminium would be healthier if it was electrolised in "roaring forties natural rainwater"?

So those who don't want to pay more (or CAN'T) will just have to use less - but this makes them "free to choose"?

Get yer hand off it Ed.

Billie's remarks are correct in the sense that Govt monopolies preclude duplication of services. Dams, pipes, roads, pavements and sewage are owned by Govts. If they were privately owned, then duplication would be possible.

You don't dislike profits, but you don't want water companies making profits. Well, once again, I must point out that without profits, there will be no incentive for better services. Without profits, you are stuck with ongoing water shortages.

I have no problem with private not-for-profit companies. However, govt-owned and operated 'companies' tend to be less efficient, similarly companies protected by competiton by Govt mandate.

You believe that private monopolies will keep players out and thus maximise profits. I agree, but only if the monopolist can enlist the support of the Govt to keep players out. If, for example, the monopolist leases rather than owns the water infrastructure, and there are no price controls and minimal regulations, then a private 'monopoly' will not charge excessive prices. It can't, because of the risk of losing its lease to a cheaper competitor.

People who buy supermarket water obviously think its a good idea, otherwise wouldn't do it.

There are no doubt lots of innovative ideas out there on how to collect new water and save existing water. But for these ideas to come forward requires incentives, and that requires an end to price-fixing and Govt controls. Yes, that means higher prices in the short-term.

The current socialist system doesn't work, so its time for change.

Sigh. Your arguments get sillier and sillier Ed. You appear determined to ignore all arguments and facts to the contrary and blunder forward with the same lines in face of all evidence to the contrary.

A brief glance at todays "The Australian" provides an example of the perils of commercialising vital utilities. The First Mildura Water Trust are in deep poo. They took money that the government collected from taxpayers for ensuring water for certain farming communities and invested it in the U.S sub-prime mortgage market. Naturally, they have suffered a huge loss and will have to beg the government for more taxpayers money just to run existing infrastructure, let alone invest in new ones.

Commercialising anything changes the decision makers attitude from "We are the custodians of a vital service belonging to the community" to "We are here to maximise returns to our shareholders". The commercialised water trust operators believed that they owned the water and that it was just another commodity like any other. Both are grossly untrue. The saw no problem in risking the water supply of entire communities.

The socialist system is the best placed system to deliver vital utilities and services. This works very well (albeit not perfectly) and has done so for a long time. PPP's and private ownership of these things is, with increasing frequency proving to be a disaster in the pipeline.

The rest of your post is irreverent nonsense, deliberately ignoring facts and arguments.

Billie “Its becoming clear that provision of utlities is a natural monopoly because we can't replicate electricity transmission lines, communications cable, gas lines, water pipes for each seperate provider.”

The common model used for the provision of utilities is to separate the infrastructure/wholesale function from the retail activity. Thus retail suppliers to households are separate to the delivery system (cables and pipes) which can be separate to the resource processor/generator. Each step with potentially different owners/commercial or government participants

This has been applied into Telstra, the old power utilities companies. The transport network has been structured differently, the asset base retained by the government and operated by the operating companies on an outsource basis.

I would note, the separation of wholesale from retail activity has been pursued to prevent monopolistic domination of any market, most particularly observable in telecommunications. I recall Telstra being investigated and its actions challenged by the ACCC in regard to monopolistic abuse from pricing for broadband.

I would further note, the FTC in USA has been engaged in the process of trying to get Microsoft to separate its application software from the operating system because of monopolistic practices used by Microsoft (basically Microsoft’s secrecy surrounding the source code of the MS operating systems, which present a natural barrier to fair competition). This is a legal tussle which has been going on for some time now and which the FTC has been tenacious in pursuing to protect the millions of consumers of software and break what has become a “natural monopoly” for Microsoft.

Whilst we can all point fingers at examples of the apparent shortcomings of private enterprise, because of the obtuse way governments tend to account, the opportunity to inspect the financial arrangements and exploitive use of natural and unnatural monopolies by government is far more difficult to see and thus potentially far more abusive.

I recall when Margaret Thatcher broke the monopoly the rail network operators had on commuters into London, my weekly fare dropped substantially to one third of what it had been under the rail monopoly.

I understand that this is generally the case Col, but is this really the best long-term delivery strategy for the utilities and services that communities would simply cease to function without?

Water for arguments sake, may be broken into seperate entities handling different parts of the delivery system but to keep people alive and cities functioning they must work in harmony as a single intigrated system. Any failure by any one of the different providers would become a glaring example of the fact that a chain is only as strong as it's weakest link. The moment any one of them goes belly up, it must immediately be bailed out by government to prevent a real disaster.

I believe that ( in the case of water at least and most likely other things as well) the practice of pretending that a single government monopoly can be broken into numerous commercial enterprises who regard the enormous responsability of providing safe, reliable water for many thousands of people as just a business like any other, to be dangerous in the long run and sowing the seeds of future problems.

Whatever the shortcomings of democratically elected government (and there are plenty) some things are simply much more secure in their hands. Governments often bail out private enterprise but if government ever needs to be bailed out then we really are in trouble.

I don't doubt what you say about train fares when you were in Britain Col, but the privatised British rail system has become a train wreck.

Just how compatible is the profit motive with the provision of critical services and utilites? Not very, I think.

Col you might feel a frisson of virtue when you pay your electricity bill to the electricity company that is actually now owned by Temansek, or one of a number of Chinese conglomorates. "AGL grafted electricity onto existing assets; others like Alinta and Origin have been created from standing starts; other overseas-owned businesses like Powercor, International Power, Truenergy and Singapore Power have added strong Australian arms." http://www.onlineopinion.com.au/view.asp?article=123 I would actually still prefer to pay the old state owned and operated State Electricity Commission.

Since privatisation our electricity bills haven't fallen, the electricity tariffs have been maintained but when the agreement expires later this year Victorian consumers have been told to brace themselves for big increases in electricity prices or so The Age says.

The Restructuring and Privatisation of the UK Electricity Supply — Was it Worth It? Its authors, David Newbery and Michael Pollitt, summarised the winners and losers from 1990 to 1995.

What happened? Privatisation helped accelerate job loss, but the gains in industry productivity that resulted didn’t lead to lower prices. Instead, the shareholders (banks, pension funds, etc) made a fortune as share prices rose by as much as 300% and the government picked up a bit in increased company tax receipts. “Power purchasers”, they observed, “seem to be paying higher prices than they would have under continued public ownership.”

Between 1989-91, domestic electricity tariffs in Britain rose 28% (4% above the inflation rate), despite a 27% fall in coal prices to the electricity companies. If that had been translated directly into consumer prices, they too would have fallen by 8%.

At the same time, price increases have gone along with decreased supply reliability — the predictable result of job-shedding. This has not just resulted in some spectacular system collapses (for example, the week-long blackout of Auckland in February 1998) but also to a rise in short-term blackouts. In Victoria, the frequency of blackouts increased by 32% in the four years after privatisation in 1995 see www.greenleft.org.au/2008/740/38305

Fozz

I assume you believe the Mildura and Gladstone examples demonstrate that a privatised water market would be disastrous. Since both authorities operate in a Govt-controlled (and subsidised) market, it actually reinforces something I said in a previous post "govt-owned and operated 'companies' tend to be less efficient, similarly companies protected by competiton by Govt mandate".

From the same article, further examples of Govt mismanagement:
"The FMIT...is in the same position as dozens of local councils, which stand to lose hundreds of thousands of dollars through investing in collateralised debt obligations through Grange Securities."

You: "Commercialising anything changes the decision makers attitude from "We are the custodians of a vital service belonging to the community" to "We are here to maximise returns to our shareholders"."

In the first place, what does "belong to the community" mean? And in the second place, what is wrong with maximising returns?

"The socialist system is the best placed system to deliver vital utilities and services. This works very well (albeit not perfectly) and has done so for a long time. PPP's and private ownership of these things is, with increasing frequency proving to be a disaster in the pipeline."

The current socialist system has delivered water shortages with 80% of Australians on water restrictions. In a prosperous country like Australia, that is hardly evidence of a system working well.

Now suppose for argument's sake I was to concede that a completely privatised system is impractical. (At least in the current political climate). Would you be prepared to consider the view that water prices in Australia are too low? And that raising the price would create incentives both to reduce waste and increase investment in new infrastructure?

Go spark up another one Ed, before you come to your senses and realise you're talking crap.