Re: When is State Capitalism Harmful?
From: Hlafordlaes (hlafordlaes_at_hotmail.com)
Date: 12/23/04
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Date: 22 Dec 2004 17:06:52 -0800
democratix:
>> The
>> US Postal Service, for example, turned a rather large profit last
>> fiscal year, but now what is the justification for its public
mission?
>> It cannot be providing the service at a price that extends the
service
>> to people who otherwise not be able to afford it, because the
profits
>> and still-low pricing prove otherwise.
>This is an overly simple argument. The best kinds of public enterprise
>are those where a scale is required that is beyond the reach of most
or
>all private investors. Besides actually having the reach that is
>required, a national government can benefit from the economies of
>scale, and from all the relevant information they need to run the
>business, that they have already aquired in the general business of
>governing. A postal system is a good example of this, as is the
>telecommunications infrastructure of Australia. A huge island with an
>average of 2 people per square kilometre.
Thank you for handily dismissing my example and then... using it
yourself!
>The point of state capitalism is that when it's public
>resources that are used to create wealth, it's the public who reap the
>profit.
Two objections to this. First, take into account game theory and human
behaviour, and you will find fewer disincentives to cheating and
greater prospects for substituting political goals for economic ones in
state-owened companies. Try to fire people in a state enterprises when
the government was just returned on promises of promoting employment!
Take France (largest public sector outside China) and Spain under
Franco (states in which I lived and worked.) In the first case, today
in the EEC we have the EDF (Electricité du France), a state-dominated
enterprise, being completely political in its defense of its own
nature, while employing the liberalisation of the sector in other
countries to make acquisitions. The private sector is rightly calling
"foul." Go back a bit and you have Elf, whose myriad corruptions are
both a matter of record and subject to recent, if not still ongoing,
investigations. Then there's Credit Lyonnais...
In the second case, wealth creation lagged extremely behind comparable
European countries under Franco's state enterprises (some of which were
customers of mine when I was a wee lad, and I can list a litany of poor
management practices!!!). Once this system was largely dismantled, the
country became a high-growth pocket, and still outdoes the European
average.
Second, if the purpose is for the public to reap profit, they may wish
to have the freedom to choose which enterprises they would like to bet
on, avoiding, say, the public railroad (low growth). So, instead they
buy shares in a publicly traded company on the stock market, or they
buy into a privately traded company, which provides them the wealth
that is your objective.
Your system, as a general proposition, has been tried. It did not
create enough jobs or wealth, utopian as it is and dependent as it is
on fair play in a mightily compromised system. Sure, put in controls
and ensure independence and you have... private enterprise with
government regulation!
Hlafordlaes
PS - If taxation is not voluntary in your democracy, I suggest you run
on a platform to eliminate it!
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