June 30, 2006 at 4:48AM The Middle Path: using the government to use the market’s short-term amorality to long-term public good
This was written in response to this post over on Gavin’s blog. It’s been edited slightly to fix a few mistakes and incomplete phrases. You might want to read the original post before this one, but it’s not essential.
Personally, I’m of the opinion that part of the government’s job is to preserve the freedom of the market--and I’m in good company in that regard--and that it ought to be useds as a bulwark against where the market’s great strength--its amorality--come into conflict with the best interests of society as a whole.
You’ve probably guessed that Soros and Schumacher are two of my heros. ![[smile]](/images/smilies/smile.gif){kind=small}
To quote Mary Harney: “There’s only one thing worse than a public monopoly, and that’s a private one”. I’d argue that what we’re seeing here isn’t the legacy of a state monopoly, but the natural result of what happens when a company, any company, gets into a monopoly position. The great problem with eircom is that it ought to have been divided in two before it was privatised, with the half controlling the network made a non-profit semistate trust whose sole responsibility being the administration of the network, and rest of it privatised. At least then competition could have gone unhindered, with the trust selling off maintenance contracts for the network in return to access. But that would have been using the monopoly to encourage the market while keeping the government as much out of the business as possible.
Should the government have mandated several years ago, that all new housing estates be piped for fibre to the kerb or even fibre to the home technology?
Just so long as you put the responsibility on the people it should be on, namely the developers. But then again, they do everything they can to dodge out of providing the amenities they already have to provide. Putting it on eircom’s shoulders would be counterproductive though as they have no control over the developers.
It may have been sensible for developers to approach ISP’s or TV stations and offer a deal to cable homes with extremely fast connections, both to save money digging roads up again later, and give companies instant access to customer’s homes without a proxy like eircom - or even to enable a huge amount of homes to have technology that may not be available to them over copper.
If you assume that their primary desire is to provide housing rather than earn a few quid. But that’s not the case: once the houses are built and sold, their responsibilities to the residents are few. And their ability to do this is aided by the degree of speculation going on in the market; people buying a house for themselves might look for these things, but for property speculators it’s not so important.
South Korea has a number of advantages over Ireland: it’s very densely populated, far more so than Ireland if you leave out Dublin, and it’s outside of Dublin that the real problems with broadband penetration lie. Companies will use this excuse, as they do in the US, to explain away (a) the lack of demand and (b) the economic infeasibility of the enterprise.
A separate network administration trust could have helped encourage the kind of growth seen in Korea, but wouldn’t have required the kind of public investment the Koreans needed to make to achieve their goals. By creating a separate market for network mainenance, private competition for the contracts would have lead to reflexive growth of the levels seen in France at least. It’s about using the market’s greed to make a long-term good for all into a short-term good for its individual participants.
Markets are fundamentally shortsighted and greedy. This is what makes them so efficient in resource allocation, but it also what makes them blind to the long term public good, a point missed by both laissez-faire capitalists and anti-capitalists.
No comments.