3 ms·

> Do we nationalise everything? The natural monopolies of power generation, water, sewage, public transport, justice, prisons, defence, medical care, etc - why

> Do we nationalise everything? The natural monopolies of power generation, water, sewage, public transport, justice, prisons, defence, medical care, etc - why not? Certainly it seems that they were doing a better job when public anywhere they've been privatised.

robertlagrant 3y ago
They aren't all natural monopolies. The main reasons to nationalise are: - there's no/not much innovation to do; it's just about running at low cost with a standard service (e.g. sewage) - the incentives are too misaligned to privatise (e.g. prisons; defense) - politicians can win votes by spending money on it, so it will be worse as a meddled-with private system than a nationalised system (e.g. healthcare) - there is an actual natural/positive monopoly (e.g. power transmission) None of that means that in this case a middleman power retailer should nationalise. If there's an actual reason, that's fine. But saying "some things are better national (or at least better than private with a lot of government interference)" doesn't mean that it applies here.
- jampekka 3y ago
  Why is nationalization the exeption and private ownership the rule? What are the conditions for private to be better?
  - robertlagrant 3y ago
    Private is the default as we all have to pay for it with taxes now or inflation later. I guess you could ask why doesn't the state start a plumbing business?
    - jampekka 3y ago
      Yes, why not? They run the water and sewage "business" too. They are totally self funded as far as I understand. Private we have to pay through profits and rent seeking even more. Also public ownership doesn't mean the enterprise can't be self funding or even profitable. E.g. my city's electrical plants and distribution are run by municipally owned company that pays dividends of the profit to the city.
      - robertlagrant 3y ago
        > Also public ownership doesn't mean the enterprise can't be self funding or even profitable. E.g. my city's electrical plants and distribution are run by municipally owned company that pays dividends of the profit to the city. You seem to be using examples I'd also cite as non-terrible reasons for a state/municipality to run something. I.e. things that are mature technologically, or at least we're willing to pause innovation and just stick with what we have, and just need an ultimately simple single product or service to be done efficiently. However, if you got the municipality to run the companies (one of which succeeded, for each machine in question) that risked a lot to develop the necessary machinery to build those plants, I think you'd have seen a very different outcome. I can also give a counterexample, if we're into anecdotes: Eskom, the South African state-owned energy company, is running South Africa into the ground with now daily scheduled blackouts, that have been going on for years. The government didn't let Eskom (back when it was private) to build enough power plants, and with South Africa's growing population, they don't have enough plants to keep online at once to serve their grid. This has been going on for 10+ years, but has really been hitting in the last 5. It doesn't matter to politicians, because they can afford generators in their houses and private healthcare. And there are no shareholders to care, because it's a state monopoly. There can be bad governance in the private sector and in the public sector. The difference is the blast radius is far larger when it's the public sector, as the state has far more capacity to do damage than an individual company does. And if a company gets even 1% as much capacity as the state to do damage, we call it "rent seeking" or "monopoly".

robertlagrant 3y ago

They aren't all natural monopolies. The main reasons to nationalise are: - there's no/not much innovation to do; it's just about running at low cost with a standard service (e.g. sewage) - the incentives are too misaligned to privatise (e.g. prisons; defense) - politicians can win votes by spending money on it, so it will be worse as a meddled-with private system than a nationalised system (e.g. healthcare) - there is an actual natural/positive monopoly (e.g. power transmission) None of that means that in this case a middleman power retailer should nationalise. If there's an actual reason, that's fine. But saying "some things are better national (or at least better than private with a lot of government interference)" doesn't mean that it applies here.

jampekka 3y ago
Why is nationalization the exeption and private ownership the rule? What are the conditions for private to be better?
- robertlagrant 3y ago
  Private is the default as we all have to pay for it with taxes now or inflation later. I guess you could ask why doesn't the state start a plumbing business?
  - jampekka 3y ago
    Yes, why not? They run the water and sewage "business" too. They are totally self funded as far as I understand. Private we have to pay through profits and rent seeking even more. Also public ownership doesn't mean the enterprise can't be self funding or even profitable. E.g. my city's electrical plants and distribution are run by municipally owned company that pays dividends of the profit to the city.
    - robertlagrant 3y ago
      > Also public ownership doesn't mean the enterprise can't be self funding or even profitable. E.g. my city's electrical plants and distribution are run by municipally owned company that pays dividends of the profit to the city. You seem to be using examples I'd also cite as non-terrible reasons for a state/municipality to run something. I.e. things that are mature technologically, or at least we're willing to pause innovation and just stick with what we have, and just need an ultimately simple single product or service to be done efficiently. However, if you got the municipality to run the companies (one of which succeeded, for each machine in question) that risked a lot to develop the necessary machinery to build those plants, I think you'd have seen a very different outcome. I can also give a counterexample, if we're into anecdotes: Eskom, the South African state-owned energy company, is running South Africa into the ground with now daily scheduled blackouts, that have been going on for years. The government didn't let Eskom (back when it was private) to build enough power plants, and with South Africa's growing population, they don't have enough plants to keep online at once to serve their grid. This has been going on for 10+ years, but has really been hitting in the last 5. It doesn't matter to politicians, because they can afford generators in their houses and private healthcare. And there are no shareholders to care, because it's a state monopoly. There can be bad governance in the private sector and in the public sector. The difference is the blast radius is far larger when it's the public sector, as the state has far more capacity to do damage than an individual company does. And if a company gets even 1% as much capacity as the state to do damage, we call it "rent seeking" or "monopoly".