HoltesThoughts: A Sustainable Economic Policy III

Management for the Public Good

The 19th century economist Henry George, articulated the principles of commonwealth public policy in 1890:

"With respect to monopolies other than the monopoly on land, we hold that where free competition becomes impossible, as in telegraphs, railroads, water and gas supplies, etc., such business becomes a proper social function, which should be controlled and managed by and for the whole people concerned, through their proper government, local, state or national, as may be." [[Paragraph 11 Georgist Plank]

Proper Government

By "proper government", one must understand that local, state and national government all have "proper" roles in regulation and operation of the kinds of goods and systems that tend to become monopolized. Certainly healthcare, most of our infrastructure of all kinds, and many other public goods risk being mismanaged and tyrannically managed when managed of and for private cabals (corporations) -- especially when they involve public monies (bills of credit/paper money) and government function. The record shows a little more than risk, more like severe threat that private management leads to monopoly and exploitation.

These attributes apply to all our national infrastructures to one degree or another: Banks, Healthcare, Defense, Communication, Transportation and Energy. They all require that the US manage them in the public interest. And ignoring Georgist principles has led to these public goods being allowed to become monopolies run for the private, separate Interest.

Proper Social Function

The United States has tried some private/public workarounds to this threat. For example creating non-profits to manage public goods like the Red Cross, or putting them under intense regulation as they did with public utilities. However, access to monopoly privilege is overwhelmingly corrupting and the companies subject to utility style regulation regularly wind up governing the ostensible governors on the commissions asked to regulate them. Unsound supporters of Henry George struck paragraph 11 after Henry George had his stroke and put in language that supported private controls of such "proper social functions", but his original concept was right. Proper social functions have to be run in the Public Interest and that requires they be controlled and managed by and for the people concerned. There are many goods that are best managed through public markets and freedom to buy and sell (competition). But in almost all cases, those markets are a local monopoly and while the folks buying and selling in them should have a role in their management they too need to be run "for and by the whole people concerned." But history shows that monopolies, run by monopolists, are run in a way that enriches the few and harms the many. The Monopolies must be constituted to run in the the public interest.

By and for the whole people concerned

When something is run by and for the whole people concerned, that means an enterprise that needs to be:

run according to democratic principles -- which is "by the whole people".
be run according to commonwealth principles -- which is "for the whole people".
Constituted so that all the people concerned need to be involved where they are concerned -- which means it must be constituted according to Republican and Federalist Principles

In essence if an enterprise is local it should be run locally. If it is connected to a system that is national, that connection should be managed collaboratively and nationally. If it affects people they should have a say in it's delivery requirements, oversight and planning decision making. If it costs people, they should have a say in budgeting decisions. If it is a proper social function then any enterprise constituted to address that function should be organized with representative, republican and democratic structures. I talk about these elsewhere. Features like having workers have a say in the companies they work for, are simply part of constituting a representative organization. Many utilities that once were operated at a local level have been usurped by larger organizations --> and that cuts local folks out of decision making on local matters. This needs to be rectified. Folks should have a basic right to be involved in local decision making. Not a purely pro-forma one where bureaucrats make decisions and then run their decisions past the citizens after they've already planned to build a bypass through their town.

Local Government should be a right. And local government should have a say over local utility matters and a role in Federal and State Governing. This is a matter of scope and who is "concerned" having a say in their concerns. It really is a basic thing. And once one understands what is meant by "proper government" this little paragraph opens up a whole army of arguments for better government of our national and local system. All politics, ultimately, is Local. Our Conservative friends like to talk about Subsidiarity, but this is what it really means.

A sane economic system recognizes there may be natural monopolies, but it also recognizes that you can't let the pirates run them. If someone wants to create a good that becomes a "proper social function", then let them be "king" (CEO), but saddle them with a parliament, courts and regulatory oversight. Those provide sufficient democratic and republican forms to keep such kings in a nice house but not a palace built on the backs of the oppressed. If you don't do that then you've granted the wannabe "king" a letter of marquee and created a pirate with the right to privateer on the public good. [more to come]

Next Post: Sustainable Economic Policy IV