The Debate on Privatizing Utilities: Government vs. Cooperatives

When discussing the privatization of utilities, the debate often revolves around balancing efficiency and public welfare. For a system to be efficiently privatized, two critical conditions must be met. These conditions are crucial in determining whether privatization benefits the public or poses risks.

Consumer Choice: Essential for Fairness

The first condition necessitates that consumers have a meaningful choice. If there is only one provider of a service, it should remain in the public domain. This is particularly important for services like water and electricity, which are fundamental to life. While in some remote areas, there might be only one telecommunications provider, the majority of the population should have at least two, ideally three or more options for service providers. This condition is non-negotiable. Privatizing a service without providing consumer choice allows the owner to profit at the expense of the public, which might be more detrimental to the community.

Service Non-Essentiality: A Flexible Condition

The second condition relates to the essential nature of the service. In cases where consumers can live without the service, this condition can be more flexible. For example, while a mobile phone is not a necessity for survival, it is a matter of convenience and choice. However, utilities like water or electricity are fundamental to life. Privatizing them would require the establishment of entirely separate systems, ensuring consumer choice between different service providers. Nonetheless, even in such cases, the essential nature of these services might not fully satisfy the condition that they can be done without. For example, advanced water recycling technologies can offer alternative solutions but might not completely replace the need for traditional water infrastructure.

Governance Challenges and the Disproven Arguments

In essence, the privatization of utilities often presents governance challenges. While there might be financial gains for some stakeholders, it can be impractical to manage these utilities through private businesses given their vital nature to society. As a democratic socialist, it is my belief that no basic services such as health, power, water, railways, etc., should be privatized. My Tory U.K. and LNP Australia governments seem to have a different view, primarily driven by their desire for their mates to make big bucks rather than concerns about efficiency.

Should these businesses run an efficient, affordable, and effective service to the community, I might be prepared to concede the idea. However, the overwhelming evidence suggests that when utilities are privatized, the primary beneficiaries are shareholders. Prices are often driven up, cost-cutting is brutal, and infrastructure is neglected. When profits fall, taxpayers are left to foot the bill, resulting in a drain of resources to rectify the losses and provide the necessary fixes. In the end, hard-working people effectively provide "welfare for the wealthy" or "additional" welfare over and above all the tax breaks and other benefits they already enjoy.

Disproven Myths and Beliefs

Tories' beliefs in right-of-centre government being more fiscally efficient, private businesses being more efficient, and trickle-down economics working, have all been disproved over the past four to five decades. These beliefs are often disingenuous and serve to enrich the elites at the expense of the broader community. Governments, particularly those with a strong public sector, can often provide more equitable and sustainable services without the risk of privatization.

When evaluating the privatization of utilities, it is crucial to consider the long-term implications for public welfare. Privatization should not be seen as a panacea for efficiency, but rather as a potential risk that can lead to unfair financial burdens on the public. Instead, governments and cooperatives can work to provide these essential services more effectively and equitably, benefiting society as a whole.