It’s time again for weekend reflections, which makes space for longer than usual comments on any topic. As always, civilised discussion and no coarse language please.
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John Quiggin 
Terje 1, Donald 0.
Terje, you are making it up as you go along for the first government telephone exchange was the Sydney GPO which opened in 1882.
Fair enough then a correction.
State governments had entered the market by 1882 so not all growth from 1882 to 1901 was by the private sector. However the private exchange in Melbourne still grew subscriber numbers from 23 to 887 in 7 years. A growth rate of 58% per annum.
The threshold effect that Donald Oats cited as a barrier to private sector initiative still doesn’t exist.
Terje, I’m not going to bag you but you must understand that ‘The Australian networks were government assets operating under colonial legislation modelled on that of Britain. The UK Telegraph Act 1868 for example empowered the Postmaster General to “acquire, maintain and work electric telegraphs” and foreshadowed the 1870 nationalisation of competing British telegraph companies’.
I didn’t know that. However I did know that silly laws were being written even back then so it shouldn’t be a surprise.
Terje, you could have argued a better case if you had done some research on the Melbourne Chamber of Commerce whose members were not ideological champions of private enterprise during the 1880s.
Were they ever?
MoSH,
Chambers of Commerce are generally not “…ideological champions of private enterprise…” anywhere or at any time. They normally call for less restrictions on existing businesses (i.e. their members) but more restrictions to stop others coming in (i.e. competitors to their members).
They are, like unions and other such associations, generally rent-seeking by nature – with some being less aggressive than others.
Andrew Reynolds, my argument is that the Melbourne Chamber of Commerce which was Victoria’s first employer organisation formed on the 12 March 1851 whose members included accountants, bankers, financiers, merchants, importers, lawyers, ship owners and agents, manufacturers etc actively supported the creation of a federation and unified commercial relations. They were the ones who pushed for government intervention and later the nationalisation of telephony services.
Federation was a bad idea. However I say that with the benefit of hindsight.
I don’t know if this is true but it seems likely enough. This is quite often the way it happens. Bad policies often get implemented with interest groups cheering the government on. This is why we should have a cost benefit analysis independently undertaken for every significant reform.
TerjeP, rather than be cynical all the time look on the bright side of how Australians have benefited through our own home grown technologies. And in respect to NBN, the free market had their opportunity but failed to deliver the goods and Labor stepped in. End of story.
How did the free market fail?
TerjeP, I have answered your question and ask you do some reading rather than fantasise.
Shorter MoSH – “I have no argument.”
MoSH,
I am not surprised they pushed for nationalisation, given the nationalised service lost money. This represented a clear subsidy of the rich (those who had a telephone at the time) by the taxpayers.
I thought you objected to that sort of thing? I must have been mistaken.
Andrew Reynolds, to cut a long story short as the telegraph line extended from cities into country areas so to did the telephone system and telephone exchanges. Following Federation in 1901, the Commonwealth Government took over responsibility from the States for post, telegraph and telephone offices and in providing a ‘public service’ to the community. I fail to see how it benefited only the rich.
MoSH,
Did the poor have phone lines?
Andrew Reynolds, to answer your question the not so well-off were limited to using public facilities, as in 1901 there were 116 exchanges, 24,708 telephone lines and 32,767 telephone instruments connected throughout Australia. However, a decade later Australia had more telephones relative to population than most other comparable countries despite the telephone being a luxury.
So MoSH, the role of government is to provide its citizens with luxuries?
No Jarrah, this is what you call progress.
The point being that we don’t need government for progress.
Jarrah, very interesting comment but just like TerjeP I have to ask you do some reading rather than fantasise.
MoSH, be careful what you wish for. Reading is what turned me from lefty to moderate libertarian.
You should try it sometime.
Jarrah, you are one confused individual.
I’m sure that’s how it appears, given your limitations.
No Jarrah, I will not waste my time with bullship artists. Don’t bother answering as you will not get a reply.
I don’t see how destroying an entire private sector industry is worthy of the term “progress”. Only in socialist fantasy land does such stuff make any sense. If the government was so dandy at rolling out phone services why did we have the Cook enquiry. The reality is that the government only succeeded in this endeavour by licensing the competition out of business and funding the capital outlay by diverting resources from other sections of the economy. Enslave enough people and you can build beautiful pyramids but that doesn’t make it progress.
Sorry Terje, but none of the above makes sense and until you do some reading it is just double dutch.
I don’t see how denying an entire sector of public sector industry is worthy of the term progress or justice or equity or morality or efficiency. Only in a capitalist fantasy does such dogma make sense. If the private sector was so dandy at rolling out financial services why did we have multi-trillion dollar featherbedding? The reality is that capitalists only succeed by cutting competition out of business and getting their super profits by diverting resources from other sections of society. By enslaving enough people capitalists build vast castles in the sky which always collapse in the name of progress.
@TerjeP
I don’t see how denying an entire sector of public sector industry is worthy of the term progress or justice or equity or morality or efficiency. Only in a capitalist fantasy does such dogma make sense. If the private sector was so dandy at rolling out financial services why did we have multi-trillion dollar featherbedding? The reality is that capitalists only succeed by cutting competition out of business and getting their super profits by diverting resources from other sections of society. By enslaving enough people capitalists build vast castles in the sky which always collapse in the name of progress.
@TerjeP
I don’t see how denying an entire sector of public sector industry is worthy of the term progress or justice or equity or morality or efficiency. Only in a capitalist fantasy does such dogma make sense. If the private sector was so dandy at rolling out financial services why did we have multi-trillion dollar featherbedding? The reality is that capitalists only succeed by cutting competition out of business and getting their super profits by diverting resources from other sections of society. By enslaving enough people capitalists build vast castles in the sky which always collapse in the name of progress.
Chris – we are living in that fantasy here at the moment in state and federal policies across the nation. Governments State and Federal think they “should” have “free market” aspirations in everything from ports to rail to roads to imports and now to water rights which are merrily being sold off to foreign firms. Very sensible until you are dying of thirst and some private firm owns the market.
Local Councils are now ticked off that the other two tiers are not pulling their weight on infrastructure. Plantation pine farms are collapsing left right and centre as they were “freely allowed” to be planted over good pasture land – too many of them but its too late now. Unit blocks are being merrily built over once public open spaces, public buildings are being torn down and sold for high density abominations, city basin agricultural production lands are being developed over without any thoughts of food production lost, schools and unis in cities that are sold off to developer “freedoms” despite rising populations that need education,…with local councils being run over in the indecent haste for state governments and corrupt officials to share in their new found freedom facilitating roles courtesy of the land and enironment court (whos name must surely be a joke).
All this market freedom and liberty is just making a huge mess that will either a) corrupt government officials involved in the sale processes b) produce loss of amenities for people and production potential b) produce an increasing political backlash in an angry electorate c) require rectification at greater expense d) create planning chaos or e) impoverish us as a nation by degrading or overloading existing infrastructure capability.
But some still think that they have an almost god given right to to pay less tax at any cost and want to see less regulation and more “free markets” for this primary reason alone and will construct any reason to justify it, no matter how ill evidenced.
Stupid software.
Disappearing posts then they pop-up in triplicate.
@Michael of Summer Hill
Mosh – very wise. There is just no point to replying to those sort of snarks. Ive learned that bitter lesson myself recently. You cant fight snark with snark – it would be nice if some observed the same comments policy here, they insist on in their own blogs.
Chris – nobody is denying that the public sector exists.
I take the opposite view – most right-wing capitalists deny the right for the public sector to exist.
Didn’t they deny the right for public owned banks to exist? One whole sector wiped out of existence.
The same for domestic airlines.
Capitalism makes bigger profits if its lobbyists deny the right of a public sector to even exist.
Privatisation is (in essence) the deliberate, intentional denial of the public sector.
The problem with privatisation is that a sector ends up being driven by capitalists without all the economic competition society should be producing.
The public sector does not have a right to exist. It must continuously justify it’s existence.
“The reality is that capitalists only succeed by cutting competition out of business and getting their super profits by diverting resources from other sections of society.”
This doesn’t make any sense. Care to elaborate?
TerjeP, are you saying the State has or does not have responsibility for the care and protection of vulnerable and disadvantaged people?
MOSH – I’m saying that the public sector does not have a right to exist. It must continuously justify it’s existance.
Clearly vulnerable and disadvantaged people do have rights. In terms of caring for and protecting vulnerable people and the disadvantaged there are many means and methods by which this might be done, some of which may involve the public sector. However the public sector does not have a right to exist. It must continuously justify it’s existance.
TerjeP, you are rambling on. I suggest you read up on ie the Charter of Human Rights and Responsibilities Act 2006 (Vic) binding the Parliament, courts, tribunals, ‘public authorities’ and the Crown in its capacities in Victoria. Public servants must act in accordance with the rights protected by the Charter. In other words their actions and decisions will be unlawful when incompatible with human rights.
This directly contradicts the claim that no-one denies the public sector exists.
Public sector provision is always more efficient and accountable than any degree of monopoly. This is the necessary justification.
So it is up to our corrupted bankers and etc to justify themselves given their (politically organised) feather-bedding.
The only options to debt-succored capitalist banks are public sector operations or non-profits of some other type.
This is further justification.
This sort of comment only exposes the level of your understanding.
Once competition is excluded, and to the extent competition is excluded, a degree of monopoly profits develop.
QED
“only succeed”
This is the bit that doesn’t make any sense, but I didn’t want to strip it of context.
Chris, this is your chance to convince me. Insults won’t help.
“Public sector provision is always more efficient and accountable than any degree of monopoly.”
It often IS a monopoly.
Publicly controlled monopolies can still price at socially desirable levels.
Private monopolists hike prices to extract super-profits, thereby creating less supply and less social equity.
The problem is not monopoly as such but the political economic consequences.
Capitalist monopoly – bad, pubic monopoly – good.
“Capitalist monopoly – bad, pubic monopoly – good.”
Capitalist monopolies are bad, sure. Please point to one in Australia. Please demonstrate how one is maintained in the medium and long term.
Public monopolies have their own problems. Artificially low prices aren’t a universal good, because they screw with the function of prices, and the public welfare justification leads to business decisions made for political reasons, harming the service delivery.
@Jarrah
This reads like denialism. Anyway if you read Paul Barry’s biography of Packer you will see in intimate detail how he extracted wealth by deliberately and crudely demanding monopoly rights – by trading off favourable consideration for politicians in his media outlets.
If you go to any shopping mall you will see supermarkets who often have agreements to exclude alternative operators.
If you go to community events you will often see food outlets who have agreements to exclude other alternative suppliers.
If you look at the screen in front of you you will see the worlds biggest market manipulated with the most screwed prices – Microsoft.
You cannot see monopoly because you are surrounded by it.
Actually I’m looking at an Apple iPhone screen.
Chris, for the sake of clarity in discussion can you define what you mean when you refer to “super profits”. Our government recently defined it as a return on capital higher than the bond rate. Is this what you mean?
“he extracted wealth by deliberately and crudely demanding monopoly rights”
Uh oh. You’re going to start undermining your argument if you point to capitalists getting monopoly privileges from government.
Also, it’s about time you actually acquainted yourself with the definition of monopoly if you’re going to talk about it. So far, you have not given any examples of monopolies. Nor have you shown how they would survive.
“If you go to any shopping mall you will see supermarkets who often have agreements to exclude alternative operators.”
If you restrict your examination to a tiny area, you’ll find nothing but ‘monopolies’. My corner shop has a ‘monopoly’ on my street. My landlord has a ‘monopoly’ on my flat. I don’t think this observation advances our understanding of economics or helps your cause.