Proper way to privatize a state-run monopoly?

[brian0918]

I was recently involved in a discussion of monopolies, and the subject of British Telecom came up (history here). BT was the state-run telecommunications service, which was privatized in 1984 and (obviously) became an immediate monopoly. The government created the Office of Telecommunicatons (Oftel) to put a virtual market pressure on BT, to help ensure that the company could not use its monopoly to eliminate new competition.

What does Objectivism have to say about state-created monopolies and how they should be handled once they are privatized? Was privatization the wrong choice to make in the case of BT? Was Oftel a violation of the private BT company's property rights, or was it justifiable given the monopoly that was handed over to them?

I guess what I'm asking is simply what the morally-sound solution should have been in the case of BT.

Edited March 27, 2008 by brian0918

[DavidOdden]

What does Objectivism have to say about state-created monopolies and how they should be handled once they are privatized?

As far as I know, Rand didn't write about the sell-off issue, so there really is no answer. But given general principles of Objectivism, obviously state-controlled monopolies should become not state-controlled monopolies. The state-enforced exclusive control over the market should be ended immediately, and the "stuff" should be sold off, with the proceeds going to compensate the various victims. Whether that would mean selling the entire lot to Rupert Murdoch, or breaking it up into a half dozen chunks, you can't say abstractly. You'd have to look at the bids (or have an educated estimate of the likely bids, under either scenario).

[brian0918]

As far as I know, Rand didn't write about the sell-off issue, so there really is no answer. But given general principles of Objectivism, obviously state-controlled monopolies should become not state-controlled monopolies. The state-enforced exclusive control over the market should be ended immediately, and the "stuff" should be sold off, with the proceeds going to compensate the various victims. Whether that would mean selling the entire lot to Rupert Murdoch, or breaking it up into a half dozen chunks, you can't say abstractly. You'd have to look at the bids (or have an educated estimate of the likely bids, under either scenario).

Can you elaborate a little more? What "victims" would there be? Would they decide the sale based on the highest collective bidder(s)?

Edited March 28, 2008 by brian0918

[volco]

I had thought about the issue in different opportunities and came up with some conclusions.

When a state run industry such as public education (a non asset) must be terminated the proper way could be to stop funding it while creating new private institutions to replace it. (like setting up new colonies instead of reforming old cities - like what the English did on the Americas and the opposite of what the Spanish did)

When a state run monopoly like oil (an asset) is to be privatized, I guess it should be to the highest bidder, and the income distributed equally among each citizen (in checks or tax refunds) . However when the gov owns underground oil, then probably the private owner of the surface land should get the underground property rights.

[DavidOdden]

What "victims" would there be?

The victims of improper government force are ubiquitous. You simply have to look to see where the government improperly uses force. It levies taxes by force; it prohibits voluntary actions by force. I can't recall meeting a single person who isn't a victim of government force. There are differences of degree, and type of victimization. In the case of BT, the victims would be those people who use phones, and businesses which would profit from being allowed to compete in the telecom business. In the case of British Rail, that would be the antecedent rail companies, as well.