Privatization

As a laissez-faire capitalist, I support the privatization of everything the government does. Everything.

Unfortunately, many governments at various levels (state, local, federal) have made trials of something that they have called "privatization" without trying real privatization. Since this pseudo-privatization is really not based on letting the market work, it doesn't work to efficiently meet needs, and often people are dissatisfied and become fearful of privatization. They become more convinced than ever that government is necessary to meet our needs and is somehow magically able to do so in ways that cannot be done by voluntary self-organization. Government becomes like a powerful drug addiction that people will not turn loose of. And unfortunately those of us who aren't addicted and would like to refuse to be a part of it have no choice but to deal with the consequences anyway.

For example: suppose a city decides to "privatize" its garbage pickup. True privatization would be this: the city stops collecting the taxes and fees used to support the garbage pickup service. It sells (possibly by auction) all of the buildings, equipments, dumps, etc. that have been used in providing its service. It discontinues the service entirely. After that, the city does nothing.

Now the people have an unmet need to have their garbage hauled away. Entrepreneurs realize that the people of this town have this need and get to action because there is money to be made. Some of them obtain land and turn it into private dumps. They may contract with citizens to give them a place to take their garbage to. But of course most people don't want to haul their own garbage. So more entrepreneurs, or possibly the same ones who start the dumps, obtain vehicles and start businesses hauling garbage away to the dumps. If they don't run the dumps themselves, they contract with the people who do. Anticipating these needs, some of these entrepreneurs probably arranged to buy some of the city resources at auction. Some of them might even be people who were formerly employed by the city for garbage pickup.

Some garbage services might offer daily pickup. Others offer twice weekly pickup for a lower cost. If the garbage pickup is late (as it often is in my neighborhood under the socialized garbage pickup system we have today), people switch to a competing service. If there is no competing service, then there is money to be made starting one, and some entrepreneur may do this, starting a more reliable service that will be able to charge higher rates, assuming that people care enough to pay for a more reliable service. Some entrepreneur realizes he can save money if he creates automated garbage pickup trucks, and this service is offered. Some entrepreneur realizes his pickup service can be available on call, any day of the week, so this service is offered. Some entrepreneur realizes he can make money offering an additional service where your garbage pickup men also clean up your yard. A dynamic market forms where people are constantly seeking to do a better job of picking up the garbage because doing so makes them money.

Unfortunately, cities don't do true privatization. Instead, here's what happens: the city scraps its own garbage pickup service and puts out a request for bids from private services. The city makes ONE choice of a private service for everybody. The city might pick the cheapest service. Or it might not. You might think it's better to pick a more expensive service that's more reliable. Or you might prefer to do it as cheap as possible. Either way, your individual preferences, and those of your neighbors, are not likely to be respected. The city might not even use price and quality of service to make its decision: the contract might go to the mayor's brother-in-law. Cronyism. (You'll note that such a situation can't occur under the true privatization scenario, where if somebody picks his brother-in-law he has to live with the consequences himself and can't impose them on other people.)

And of course the city signs a two year contract with the service provider. Lock in.

The garbage pickup company now has a lucrative government-granted monopoly. They'll pick up the garbage. But if they are late once in a while, their customers can't fire them. If they were in a free market, their customers would vacate them one by one at their own pace. But a city government cannot possibly react that fast, and may be locked in by a contract any way. The garbage pickup company has no incentive to come up with new services, or make its existing service better to customers. They just have to make sure they do the worst and cheapest job possible without making enough people angry enough to call the city council that the city council actually reacts strongly enough to affect their bottom line.

As more and more cities "privatize," such companies grow fatter, bigger, and less responsive. There's no market for little, agile, companies to spring up and meet needs with a fresher more energetic approach, because nobody has the money to consider switching to an alternative to the city monopoly service.

This, my friends, is what your government calls "privatization." But the truth is that it is socialism. You are meeting your needs as a collective, not individually. The city gets to brand the failures of a system that is collectivism, socialism, communism as if it were the failures of privatization, the free market, capitalism.

Over and over governments use this technique to brainwash you into fearing the free market. They make you and your neighbors fearful of what would happen if you didn't have the government to take care of your needs. You might sometimes notice that the government doesn't do a very good job of meeting some needs, but you'll be too afraid that without the government doing the job (complete with compulsory funding and compulsory participation) things would be worse to consider that there might be an alternative. And they'll try to work hard to meet enough needs that nobody gets too unhappy, as governments have since the first conquerer rode into the first conquered peaceful community and proclaimed himself "king." Like those kings, the governments will use its successes and what few services it does provide as propaganda to show people how benevolent their government is and how it helps them in ways that could never be done by ordinary people working together on their own accord.

By the way, you'll see the same thing with "deregulation." Deregulation means getting rid of the regulations. Governments never do this. But they will eliminate a couple of rules, possibly making others, and they'll take the opportunity to make a lot of noise about how great they are for trying "deregulation," just before the new system fails. Perhaps dramatically, as in the case of the California energy crisis, spawned by "deregulation." Of course, when you look at such failures, you never actually see a market without regulations. You see a situation where companies where regulated to the hilt and then suddenly allowed to set their own prices, or you see a situation where a government granted monopoly was suddenly forced to produce and sell its services at a forced price, possibly below cost, to new competitors. Of course these systems fail, but they don't represent a failure of freedom.