Privatizing Everything

I’m sure it’s obvious to anybody who’s read this site for any length of time that I believe in privatizing everything. As you’re likely away I’m also fairly vocal about my beliefs, Hell I have a shirt that says this. Being vocal about one’s beliefs leads to discussions and many of those discussions are with people who don’t agree with you. I greatly enjoy civil discussions with those who don’t agree with myself because it forces me to look at my beliefs and hopefully forces the other person to look at their beliefs.

When talking about privatization the first argument always made against it relates to logistics. I’m going to use the example of city water. Many cities, including Minneapolis, require people living within it’s territory to purchase water from a monopoly source. No competition exists in Minneapolis, or most other cities, for water provision because these cities often grant a legal monopoly to a single company or themselves. I would love to eliminate these monopolies and allow for competition in this era to flourish.

This counter argument to this is that you can only lay so much pipe and thus it’s impossible for any competition to crop up. Those claiming that competition in this arena is impossible usually spout something about “natural monopolies.” The inability to see a possibility for competition is actually an inability to think outside of currently established norms. When a free market is allowed to exist competition is guaranteed because there is always money to be made when a monopoly exists. Monopolies are generally large and inflexible beasts which opens the market for more efficient operators. This means new solutions will come up that few have likely even thought about.

There are several options available in the market of providing water. Let’s first discuss pipes. As it stands cities usually claim ownership on all water pipes running through its territory (even the water pipes on your own property although they often make you pay for them outside of just taxation). In a free market either the property owners would own the pipes crossing their territory or there would be several companies that owned spans of pipes. This is similar to Internet cabling, a handful of companies own the main cables. The thing is the companies that own the cables also want to make money off of those cables. The motive of profit leads them to license the usage of those cables to other companies withing to provide Internet services to their customers.

One possibility in the free market of providing water would be pipe owners making money by licensing the usage of their pipes to water providers. That way one company can spend its time creating pipe infrastructure while another can worry about the logistics of providing clean drinking water to customers. Such a scenario would be a great example of division of labor which is ultimately the whole point behind economics.

The building and licensing of pipes isn’t the only option to get water from one location to customer homes. It’s very likely that many peoples’ homes would sit above a well and thus those people would simply pay to have a well drilled and plumbing hooked up (this is what most people in rural areas do). But let us assume a piece of property was sitting over an area with no well access and no pipe infrastructure. If you live in a rural area you’ve likely noticed that many homes are heated using furnace fuel. Long pipes aren’t running through rural areas that get furnace fuel from one location to the farmers’ homes, the fuel is delivered by trucks.

There is no logistical reason why those living in areas that lack a well and have no piping infrastructure can’t use trucks (or trains, or any other means of transportation) to move water from a source to a holding tank. This option would actually be easier in many cases then running endless miles of pipes from a reservoir to rural areas. Such an option would also likely involve people catching rainwater to store in their water tank which would be another aspect to take into consideration.

These are two potential solutions to a problem that likely has many more. The beauty of the free market is that it allows for experimentation to find the most efficient solutions to various problems. The government seems to believe only in one size fits all solutions which is a symptom of being a monopoly. We can’t even imagine some of the innovative way services would be provided in a market free of government tyranny. A statist can argue that a natural monopoly exists in the provisions of certain services, but only if you are unwilling to realize other solutions exist to providing those services. Just a little thinking outside of the box will allow you to realize natural monopolies don’t exist. People are innovative and using that innovation to provide services better than a current provider is likely to lead to profits which is as noble a motivator as any.

3 thoughts on “Privatizing Everything”

  1. Interesting thought. In Texas we deregulated power and there are some similar comparisons. They Split TXU into a power Generation company and power delivery companies. So I have Oncor that maintains the powerlines going to my house and the Dallas area. There are other delivery companies in other parts of the state. Since there isn’t a good way to compete on lines these guys are regulated by the PUC so I pay like $2 or a bit more a month. That covers costs of wiring things up and maintaining power lines. Then I can pick whichever power generation company I want. I have been with TXU (before they were deregulated, Reliant, Green Mountain, Amigo, and Brilliant). There are many more companies I haven’t tried. I get to pick a contract that I want (length of time, fixed pricing vs variable pricing, which type of fuel they use (coal, natural gas, wind, etc)). Ever since we passed this law the price I pay per kwh of electricity has fallen every year. When I buy power from company X obviously they have no way of knowing if the power they produce winds up at my house, but they have to deliver as many Kwh of power to the grid as I use of the type that I purchased. So if I am on a 100% green plan, they have to deliver the amount of power to the grid from wind or solar that I use. The system works great down here.

  2. That’s a great example of privatization not only working be benefiting customers by lowering costs. I don’t think people stop to realize that as a monopoly provider the government is a slow an inefficient provider of any good or service. As there is no competition on the markets they control they are able to charge whatever they want and never have to increase efficiency to generate a profit (as they never have to generate a profit).

    The example of being on the green energy plan is also a great demonstration of the superiority of competition. Those who wish to have all their power come from renewable sources can sign on with a company willing to give them that while those who don’t care can sign on with a different provider. Either way you go there is choice and thus more customers can have their desires fulfilled.

  3. Yeah another side effect is that because Green Energy is exposed and shown that there is a market there for some consumers the price on it has fallen a ton. It used to cost like 16.6c a Kwh on Green I think it is around 11c now. Maybe cheaper (not sure since with my energy inefficient home I went for the cheapest option I could find). So just by having that option, it has encouraged more supply of green energy which should make the environmentalists happy as they get more green energy and it makes me the Libertarian happy as I am not forced to buy it if I choose not to.

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