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Services subject to natural monopolies are good candidates for being run cooperatively, by / on behalf of the market participants, so that there is not the ince

by Empact 2y ago

Services subject to natural monopolies are good candidates for being run cooperatively, by / on behalf of the market participants, so that there is not the incentive to extract rents via market power. Government-run may be practical from e.g. a fundraising perspective, but these services could be run wholly privately as co-ops.

AnthonyMouse 2y ago
In theory having the government run it should have the same effect. In practice what happens is that voters don't separately elect the utility's board and then the mayor gets elected on the basis of some school or tax issues and allows the government-run utility to become wasteful or corrupt. What could be interesting is to have the local government found a co-op, i.e. they issue a bond to do the build-out and then hand the network to a co-op in exchange for a contract to pay the debt, essentially giving the co-op the backing of the government's credit rating for the initial build-out. Then the co-op board gets separately elected by its customers so they're directly accountable to the customers for any shenanigans.
- BehindBlueEyes 2y ago
  Easier said than done these days. We had a coop managing out drinking water with local government support. Being a coop excluded them from grants and eventually the board burnt out and gave up. Local government now operates the thing - you'd think they'd be accountable to voters but they can only get grant money with strings attached. They can repair a few pipes only if they install chlorination that no one wants and will add more maintenance costs because of pressure from health and safety - the provider must guarantee water is safe at the end point so boiling water, which everyone does here, is no longer acceptable apparently. There isn't a big enough population that increasing the cost of water would make a difference. All that to say, voters here do care about utilities, and the coop solution worked for about 25 years iirc but it can't work in today's "one solution fits all" regulatory context anymore, at least where i live. Things are far from that simple in practice.

by Empact 2y ago

AnthonyMouse 2y ago

In theory having the government run it should have the same effect. In practice what happens is that voters don't separately elect the utility's board and then the mayor gets elected on the basis of some school or tax issues and allows the government-run utility to become wasteful or corrupt. What could be interesting is to have the local government found a co-op, i.e. they issue a bond to do the build-out and then hand the network to a co-op in exchange for a contract to pay the debt, essentially giving the co-op the backing of the government's credit rating for the initial build-out. Then the co-op board gets separately elected by its customers so they're directly accountable to the customers for any shenanigans.

BehindBlueEyes 2y ago
Easier said than done these days. We had a coop managing out drinking water with local government support. Being a coop excluded them from grants and eventually the board burnt out and gave up. Local government now operates the thing - you'd think they'd be accountable to voters but they can only get grant money with strings attached. They can repair a few pipes only if they install chlorination that no one wants and will add more maintenance costs because of pressure from health and safety - the provider must guarantee water is safe at the end point so boiling water, which everyone does here, is no longer acceptable apparently. There isn't a big enough population that increasing the cost of water would make a difference. All that to say, voters here do care about utilities, and the coop solution worked for about 25 years iirc but it can't work in today's "one solution fits all" regulatory context anymore, at least where i live. Things are far from that simple in practice.