Friday, 26 February 2016

The Public Is Being Looted By Privatization And Deregulation — Paul Craig Roberts

In the US deregulation has resulted in high prices and poor service. When airlines were regulated, they competed on service. They had spare equipment so that mechanical problems did not mean cancelled flights. Stopovers did not involve additional costs.
When AT&T had a regulated communication monopoly, the service was excellent and the price was low. Today we have a large number of unregulated local monopolies, and the prices are high. The bottom line and managerial bonuses are more important than service. Customers experience constant service interruptions. Maintenance and broadband improvements are sacrificed to executive salaries.
In the US and UK public university tuition has risen so high that the universities have in effect been privatized. When I went to college there was no such thing as student loans. In-state tuition was nominal, and colleges provided inexpensive housing and meals. Most students in state universities were residents of the state.

Many aspects of the US military have been privatized. Services that the military formerly provided in-house are now contracted out to private companies at high costs.

Some regulation is good but it appears that the key problem is the lack of real competition that would drive down prices. Roberts points bout that in the communications sector there are a large number of local monopolies. A good example of competition driving down prices can be found in the example of ammunition purchases for the A-10 attack aircraft. A similar thing happened with the engine for the F-16 Falcon fighter. The prices of consumer electronics is another example (except that the companies have now maximised their profits by offshoring their labour - which is where regulation or tariffs would apply).

[Posted at the SpookyWeather blog, February 26th, 2016.]

No comments: