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▲ renhanxue 5 hours ago

It should not really be controversial. Classic liberal economics (from e.g. John Stuart Mill and on) generally acknowledges that natural monopolies exist and that it's generally beneficial for everyone if they are publicly owned.

▲baron816 3 hours ago | parent | next [-]

It's a really tough, unsolved economic problem.

Just having government run it doesn't solve all the issues, and often adds in opportunities for corruption.

Utilities have to balance investment in infrastructure. We have good reason to move away from carbon heavy sources of electricity, but investing in those new sources and the transmission capacity doesn't just happen for free.

We also need to consider delivering electricity to rural areas, which is usually quite expensive. San Francisco is considering taking over the local utility from PG&E. That might save money for local ratepayers, but would almost certainly make things more expensive for other people in the state who were effectively being subsidized by SF.

Figuring out how to do these things efficiently and balancing multiple goals is not something governments have a great track record of. I think there's a lot of opportunity to construct better market structures to incentivize investment and competition AND keep rates low.

▲kennywinker 3 hours ago | parent | next [-]

Private utilities typically under spend on infrastructure maintenance and improvement.

So, private owned is more expensive (see article) and under funds the future.

So the only “tough unsolved” part here seems to be that a lot of people have been fooled into thinking private is better.

▲glenstein 3 hours ago | parent | prev | next [-]

When we say electricity is a "natural monopoly" what that means in the history of transmission utilities, states have stuck a bargain to grant monopolies in exchange for being tightly regulated, and so there's no version of reality where the state isn't already immersed in regulating them.

Every state in the country has a public utilities commission and they are constantly immersed in complex policy work from implementing legislation to working through an endless docket of cases that fine tune policy to specific tasked out responsibilities like getting a "standard offer". Sure it's complicated but I can't think of any reason that defaults to "don't regulate". We regulate healthcare too, and Medicare is always cheaper than private alternatives.

The problem with leaving private actors to their own devices when they have monopolies is that every conceivable grey area of judgment calls that impacts profitability will be subject to abuses of discretion, such as building out overpriced infrastructure, and investing in cheaper, unreliable transmission infrastructure instead of building for the long term.

▲nekusar 3 hours ago | parent | prev [-]

> It's a really tough, unsolved economic problem.

It's only tough if your politics is Republican or libertarian, and "privatize everything"

▲kennywinker 3 hours ago | parent [-]

I think “neoliberal” is the word you’re looking for. Centrist democrats are guilty of privatization too.

▲teiferer 2 hours ago | parent [-]

In Berlin, the left (a party literally called The Left) was leading and eventually implementing an initiative to privatize tens of thousands of city-owned housing units. The same left which has just been elected to re-collectivize those same housing units.

(Tbf when they did the first of these two things, lots of housing units were unpopular and empty.)

▲AnthonyMouse 3 hours ago | parent | prev | next [-]

> Classic liberal economics (from e.g. John Stuart Mill and on) generally acknowledges that natural monopolies exist and that it's generally beneficial for everyone if they are publicly owned.

The general problem here is that the "natural monopoly" tends to get drawn far too broadly.

For example, people call the telephone network a natural monopoly, which was Ma Bell's argument for making it a monopoly. But which part exactly is the "natural monopoly"? They were telling you what kind of telephone you could use (and requiring you to rent it from them), and tying not just local phone service but long distance service to the use of their last mile lines etc.

Even when they got broken up, the thing that kept the AT&T name was the (solitary, still a monopoly) long distance carrier, as if that was unquestionably still a natural monopoly. Then the internet came and proved otherwise. It turns out if you want to make a connection between New York and Los Angeles, it doesn't matter very much whether it's routed through Houston or Denver or Chicago, and if you have to you can even use a route that goes through Orlando and then Seattle. So transit is a competitive market and "long distance service is a natural monopoly" is BS.

The actual natural monopoly is the trench or utility pole on the road that carries the cable. At worst the cable itself, but installing the pole or digging the trench is way more expensive than adding another cable to an existing one (in the absence of some regulatory capture or inefficient incentives making it otherwise). And it's certainly not the things at either end of it. The other end of the cable that goes to your house should be at a local peering exchange where different companies compete to patch your cable into their equipment.

It's the same for electricity. The natural monopoly is last mile distribution, not generation or even really transmission.

And then if you give a private company a monopoly on something that isn't even a natural monopoly, of course the results are stupid. The thing that causes good results in markets is competition. So what you want in order is competitive market > local government monopoly > private monopoly. But you still don't want the second for any part of the system where you could have the first.

▲nine_k 5 hours ago | parent | prev [-]

Were you born into a world with electricity naturally occurring in sockets?..

▲patmorgan23 5 hours ago | parent | next [-]

> A natural monopoly is a monopoly in an industry in which high infrastructure costs and other barriers to entry give a market's largest supplier an overwhelming advantage over competitors. An industry is a natural monopoly if a single firm can supply the entire market at a lower long-run average cost than if multiple firms were to operate within it.

https://en.wikipedia.org/wiki/Natural_monopoly

▲_verandaguy 4 hours ago | parent | prev | next [-]

I'm going to assume ignorance rather than snark here.

A natural monopoly is one where a product or service is:

- Widely considered fundamental to the public good (and in most cases, has very inflexible demand, meaning that people will often pay any sum to access it)

- Whose cost overheads are either fixed or grow slower than the variable costs (meaning that the investment required to scale the service not accounting for costs that scale with individual usage benefit from economies of scale)

- Easy to be gamed for profit in the hands of a profit-driven entity (either in the form of extortionate pricing directly, or cost-cutting on things like infrastructure maintenance; a good example here is how PG&E has infamously failed to maintained their power lines in California, leading to large-scale wildfires)

In the modern day, the best example of these are public utilities: water, power, road networks, public transit.

In these cases, the latter two points are used to justify public ownership, which in turn defeats the third point.

▲nine_k 4 hours ago | parent [-]

I know. The post I was answering to spoke about predatory companies that privatize the air and water of the world we were born into, or similar. Apparently it was edited to read more sober, which is good.

▲renhanxue 4 hours ago | parent [-]

I think you replied to the wrong post, then.

▲mixdup 4 hours ago | parent | prev | next [-]

> Were you born into a world with electricity naturally occurring in sockets?

Massive swaths of the US required government action to get telephone and electric service. In many cities/counties, the city or county owns the power utility. In other rural/suburban situations the power utility is a non-profit cooperative that was encouraged/bootstrapped through low interest loans in the 30s and 40s. Telephone universal service was achieved because AT&T agreed to it in exchange for the government allowing it to be a (natural) monopoly

▲ErroneousBosh 4 hours ago | parent [-]

> Massive swaths of the US required government action to get telephone and electric service.

In the UK, British Telecom had plans to roll out what we'd now call "Fibre To The Premises", offering digital communications at maybe as much as 256kbps, multiple telephone lines, and even Video-on-Demand, by the middle of the 1980s across the whole country starting with rural areas.

However, it was smashed up and sold off in bits by the rapacious Conservative government in 1984. Now where I live is on track to get BT fibre - or fibre of any sort really - by 2034.

▲mixdup 4 hours ago | parent [-]

Telephone and data is an interesting one. It's an area that on its face is a natural monopoly, but in much of the US we ended up with two telecom providers

Telephone was a monopoly because it doesn't make sense to have more than one company string a wire to every house and business. But, all that wire could carry until the 90s was a voice call

Likewise, in the 60s/70s/80s cable TV became a thing but it didn't make sense to have more than one TV wire to every house, because it already has all the TV you can get, and at the time all it could carry was video channels

In the 90s these networks converged: when everything is digital, a network carrying digital signals can carry any kind of data

So, in urbanized and suburban areas we largely have a competitive market in what would otherwise be a natural monopoly. The problem is, because it's competitive in like 80-90% of the country everyone's been relieved of their universal service obligations (which applied only to voice service anyway) so there's been little incentive to expand into more rural and underserved areas

▲renhanxue 4 hours ago | parent | next [-]

In Sweden there are many cities where the infrastructure (dark fiber to the premises) is publicly owned, but the public infrastructure owner offers no end-user service. Instead, internet service for end users is an open market where everyone uses the public infrastructure. It works really well and is really cheap for the consumers.

▲nine_k 4 hours ago | parent | prev | next [-]

> it doesn't make sense to have more than one company string a wire to every house and business.

Not necessarily so. In cities it is quite normal to run 2-4 optic fibers to most buildings; my building in Brooklyn has 2 different fibers and a cable link. Equally, there are 2-3 national mobile providers which cover most of the entire US.

In the suburbia this breaks, or course.

▲hsuduebc2 4 hours ago | parent | prev [-]

I'm always bamboozled by the price of internet connection around the US and that there is a data limit one can upload or download. Perfect example of this milking while making service worse over time.

▲ssl-3 3 hours ago | parent [-]

Other than the very early days of dial-up (where there were monthly limits on connect hours), my internet has always been without limit. Whether some form of dialup (POTS, ISDN, POTS with MLPPP), or DSL, VDSL, DOCSIS, or even LTE: I use what I want and the connection never slows down, and the bill stays the same.

There's an ISP that has completed a buried fiber rollout in my neighborhood as of a few days ago. I'll get plugged into that soon-enough; I got a card in the mail that says it's time to give them a call to schedule an install.

The price has stayed ~about the same over time for broadband; I've always paid about 50 bucks per month for always-on broadband. Sometimes a bit more and sometimes a bit less, but right around 50 bucks anyway. If I were to chart it with an inflation adjustment then the price would be trending downward.

Speeds, meanwhile: They trend upward. Quality of services improves.

A quarter of a century ago, my 860/160kbps DSL used to go down every morning promptly at 0200, stay down for about 10 minutes, and then come back with a different dynamic IP, and I was frequently on the phone with them about some issue or other.

The 500/20Mbps DOCSIS I have today is solid-enough that I can't think of any aspect worthy of complaint, and I've only made one phone call about it in the past 6 years.

I've always lived in the US. Am I doing it wrong?

-

edit: The new fiber provider actually just called me. I signed up for 500/500 fiber for... 50 bucks per month, and they'll install it tomorrow afternoon. The price trend continues.

▲Bayano2 5 hours ago | parent | prev | next [-]

That's now what natural monopolies mean, "natural" alludes to the fact that by nature, only one company will be able to operate and maintain and other companies will be locked out due to barriers of entry or other complications. Look into it

▲shimman 5 hours ago | parent | prev | next [-]

No, but I was born into a world that requires a massive amount of collaboration, specialization, and mutual respect for one another to enable our society.

▲edvinbesic 5 hours ago | parent | prev | next [-]

Natural != occurring in nature in this context

▲horsawlarway 5 hours ago | parent | prev | next [-]

This is a wonderfully uneducated response to the above point.

Go google "natural monopoly" please. No one is arguing that work is not happening to provide a service.

We're arguing that capitalism clearly fails to achieve good outcomes for optimizing the quality and cost of that service in the case of natural monopolies.

▲rayiner 3 hours ago | parent [-]

Virtually nobody argues that completely free markets should be used for services that are natural monopolies. The actual debate in practice is between rate-regulated private companies, public owned but privately operated companies, and publicly owned and publicly operated companies. There are good and bad examples of all three.

▲jkahrs595 5 hours ago | parent | prev [-]

This is what’s called “bad faith”