Private Or Public? De or Regulation?

6 Feb

Paul Craig Roberts, a critic of the Bush Administration, and former Assistant Secretary of the Treasury during the Reagan Administration in 1981-82, contributes regularly to Counterpunch.  In his article, dated January 30, ‘Which is Worse? Regulation or Deregulation’  on the website, he briefly explored the topic on regulation and come to the conclusion that it depends on situation.

Using the deregulation of airlines as an example, he cited cheaper advanced tickets as a plus which is however offset by shortcomings such as other passengers having to pay for higher fares. Deregulation has also caused the bottom line to matter so much that it has ‘lowered service, removed meals, and results in periodic bankruptcy, thus forcing the airlines’ creditors to pay for the low fares. Pilots, flight attendants, and aircraft maintenance crews subsidize the lower fares with reductions in salaries and pension benefits.’

His argument is valid but external pressures such as the volatility and competitiveness of international markets, coupled with globalisation and climate change considerations have made the debate on regulation of air travel and the industry more complicated than just one of deregulation or regulation. The answer to all these issues, is likely ‘re-regulation’ which he himself purports at the end of the essay.

It is his argument of socialization vs privatization that provokes more debate. He opined that privatization has gone too far in America and gave the example of private prisons to illustrate how it has gone too far, to the extent that the country ‘has the largest prison population in the world’ even for those convicted of minor crimes such as drug use and ‘hate crimes’.

On this argument, basic services which would directly affect human rights, such as potable water, education, health care, utilities and housing would be better served by a stronger public sector dominance (rather than private interests).

Since human rights are non-negotiable, even the poor or less affluent in a society should have access to these services and not be deprived of them due to their economic situation.

While free market capitalists would be quick to argue that privatization (even of basic services) would lead to productivity increase, cost cutting, less tax demands on citizens, and more efficient allocation of resources, there is often a hidden cost.

For example, in depriving someone from an acceptable standard of health care, society is preventing that same person from contributing to the economy at his best. The same can be argued in providing education. By depriving a person of his education (if he is too poor to study), society is depriving itself from a person who could contribute in the future. Such costs are hidden but nevertheless, should form an important consideration for they affect society well-being.

It has often been argued that the executive or legislative could ‘politicize’ these state sectors by using it as a pawn for holding onto political power. That is however beside the point as there is always the possibility of legislative or executive powers trying to overstep its boundaries. Safeguards such as the judiciary and rule of law can help prevent these basic state providers from being manipulated by the government in power.

The debate on private or public and de or regulation is manifold, based on a spectrum ranging from regulation to de-regulation lying on an axis of socialization to privatization. To be solely concerned on hard economic statistics such as the bottom line or productivity is to miss the larger picture. Humanitarian concern should be a priority when it comes to basic services, especially if it is concerned with any possible human rights violations.

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