Posted by: graemebird | November 24, 2009

PRIVATISATION / Big Business Must Grow Out Of Small Business Success: No Exceptions.

“Why is Henry against the privatization? Is it because they haven’t done a C?A?”

You are just wasting your breath with this moron Cambria. I’ve gone over and over this issue many times, in great detail, and to the point of repetition to the nth degree.

Why is this un-nuanced dope jumping to the conclusion that Henry is against privatisation???? I would sign the petition too. But that doesn’t mean that private business isn’t the idea when done right.

You cannot call, selling off all the gear to crony-town, and not reforming the industry more generally …… you cannot rightly call this process “privatisation” in any positive sense. The idea of privatisation, as originally validly conceived, wasn’t a steal and splurge deal as Cambria, cronytown, and the consultants would now seem to have it. Rather it was to wind up with a proper, functioning market, at the end of the process.

Now with privatisation we have taxeating bloodsuckers selling stuff THAT THEY DON’T OWN, in order to get money to waste on rubbish. The end result being utter failure to reform the market. Its not about flogging off the old stuff. Its about getting the new stuff built.

Any privatisation that requires a public-private-partnership at the end of the process needs to be halted immediately. Any privatisation that winds up needing heavy regulation at the end of the process, to keep crony-town in line, must be stopped as a matter of urgency.

In fact, in the final analysis, there is no great urgency to privatise anything more. Rather the urgency is to have reform that builds up the private sector around the government stuff. Crowding it out, and making the government stuff less relevant in the long run.

Tactically speaking we ought to stop any further privatisation. To force the stupid economists to engage their minds in the process of AUTHENTIC INDUSTRY REFORM. Selling stuff isn’t reform. Not even close. In fact keeping the old stuff in government hands is highly useful and a way of keeping the private business “honest” as it grows larger and more important than the old government stuff each year.

In hindsight we didn’t need to sell off Telstra. Rather we needed to split it into its underground and overland properties and its operational entity. Then we needed to set up the rules and tax-exemptions that would have other small competitors grow up around the two companies. In hindsight we didn’t need to sell off the Commonwealth bank. We needed to reform the banking system so that proper competition could grow up making the Commonwealth bank less important all the time. And we don’t need to sell the post office now. We can open the whole deal up to competitors without selling anything. Or with slowly selling one Post Office at a time. Same goes with electricity generation. We can get these guys charging at cost off-peak and profiteering during peak our. Peak hour profiteering will bring on the private competitors if we reform each industry so that its easy for the private sector to accumulate the capital to take the government on.

The iron law of enlightened privatisation is that big business needs to come from small business success. No exception ever. Building new stuff. Not flogging off old stuff. Matter of fact I wouldn’t mind if we made infrastructure a tax free, sole trader only affair. If you haven’t reformed any infrastructural industry well enough to at least allow for the possibility of it all being down via the sole traders, then thats an acid test that you need to go back to the drawing board. Or find someone else who can do the job.

Good on Henry for coming down on the right side of this. Sometimes you have to acknowledge that your leftist antagonists can be right once in awhile.



  1. I fail to see how leaving companies in the hands of government could allow proper competition to grow. Telstra a just awful. Awful at everything. There once was an international standard on what internet speed you could call broadband and Telstra halved that speed. At the same time privatization isn’t going to magically change reform industry to enhance maximum prosperity across the land. The “stupid economists” do need to do some thinking on reform, but surely leaving industry in the hand of the state is a loose-loose situation.

  2. Leaving the companies in the hands of government won’t make the proper market grow. And selling it won’t make the proper market grow. Neither will make the proper market grow. The idea is to establish conditions that will make the proper market grow.

    So for example with the coal electricity market. Supposing you get 100 million in inheritance from an aunty. You drive down the coast until you find an area of coast that is not suitable for beach-front living. And you figure you will put up a port, a coal liquification plant and a small nuclear power station. Better still you will house the whole thing in a pyramid array setup that can withstand an earthquake of ten on the richter scale and a Tsunami.

    That way people can ship you coal from Grafton or via the train from anywhere else. And you can then ship liquid coal from where you are to anywhere at all. And provide electricity to the grid as well.

    Well you don’t have the legal capacity to do any of that. You will be working through 3 layers of government to do this and multiple agencies buggering with you. So selling you a coal electricity station won’t change this state of affairs. And not selling you a coal electricity station will not change this state of affairs.

    And so “privatisation” is a big fat furphy. Since nobody wants to change this state of affairs. In fact selling the coal station is burning our bridges. Since now we have private operators in a captured market position who do not want to change this state of affairs.

    I cannot get people to make the mental leap to see how corrupted the process of privatisation has become.

  3. I believe we need to strip down the current problems of privatisation to their fundamental premises in order to change liberalism’s dogma that selling off assets asap is best for the economy.
    You’d need to explain this “captured market” concept in more detail to change people’s axioms I reckon.

  4. Right. But the worst enemy for this in my view is the neoclassical economic consultants. You try and talk to them and they have no sense of what you are talking about. They seem to be house-trained to gather all the assets together to have one deep-pocket auction that only the bigshots can involve themselves with. Then they want the communists to take a controlling interest in it. So its faux-Right triangulaters selling us out. They end up arguing that nationalisation by the communists is freedom.

    To me publicly owned goods are un-owned goods and subject to homesteading principles. Not auction. But because there is some complexity involved with this idea in the modern era the conversation is terminated with ….. “homesteading doesn’t apply” and thats the end of the matter. Well its true that it doesn’t apply in the literal sense. But we expect people on the libertarian side to be more philosophical then that. Its my fellow economics graduates letting us down bigtime.

    Its better to call a halt to privatisation right now since that forces a reassessment. See even Costa is a good guy. But he’s mired in free-to-choose economics. And his energy privatisation scheme was a pretty good one. But even letting that go ahead means we don’t get to tackle the problems that stop me from buying a chunk of land and building a small coal-electricity plant without having to argue about it. You must know in advance what you can and cannot do without any taxeater voicing his stupid opinion on the matter.

    You see infrastructural goods are trans-spatial goods. Property titles for trans-spatial goods…. for ownership, sale, construction and investment in trans-spatial goods….. well its much more complicated then under freehold.

    Now we have to solve all these problems so that one day, and as quickly as possible, that all these goods will be private. That way they represent REPRODUCING CAPITAL. Capital that creates revenue that leads to more capital that leads to falling prices.

    As opposed to government capital that drains more from the system. Or crony capital where prices fall far slower than they ought and people pay themselves the big salaries and then go on to political power.

    What this requires is that libertarians get happy with quite extensive regulation in one or two fields. Thats a big gear change.

    There are two types of regulation. One that represents an initiation of force. But the other represents a clarification of property titles so that everyone knows where they stand and that there is no chance of having to settle it through the courts.

    These regulations could be different for every State. Even different for each council. But they have to be of that nature of clarification, providing knowledge in advance.

    For example. Imagine you have congestion charging. And imagine I want to dig up the pavement in front of your shop in order to put in optic fibres. Everyone needs to know in advance where they stand so that no schmoozing is involved at all. Just a notification to the council and to the congestion tax chargers and to your shop.

    And it might be that If I close off the road I have to pay the lost congestion tax, and double the lost tax to the shop-owners. But this has to be clarified in advance and not a thing to do with schmoozing levels of government. The formula that I have to use to calculate compensation has to be there to protect me, and allow me to sum up costs in advance, no matter how unpopular I am.

    So we’ve been going one way with wanting to get rid of the initiation of force. Now we’ve got to realise that while we must get regulations down to less than 1% the total number that are there now some matters need quite a handy amount of regulation. Freehold maybe one page of regulation. Pollution maybe a page and a small booklet of specs showing maximum levels. Banking half a page of principles. Maybe 18 pages of regulations, since these guys are going to try and cheat early on. Later we can cut that down still. But infrastructrue will require a book of regulations. Because you need to know in advance when you can tunnel under a road. Under freehold property. When you can build a bridge with a road over people. All that stuff and what the compensation will be. What circumstances can you exercise eminent domain. The idea is to set it up that eminent domain COULD BE exercised at a massive premium if the developer really really had to do it…… but that in practice it was almost never exercised. It might be a 500% premium. And only when he’s bought out most everyone else by exercising options at about 150%. But with these projects you need to know exactly in advance where it is you stand.

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