I was particularly struck by the unquestioned assumptions in the article and I wanted to consider just one of them, because it seems to me to illustrate the problem.
In section three it talks about "Reverse economies of scale in critical infrastructure" and it has this to say:
QUOTE
The income a utility earns must cover the fixed costs of the maintenance and repair
of its network plus normal running costs.
That is obvious nonsense. Yet it seems to be the premise which underpins this part of the argument. As such it demonstrates a feature of the whole paper: it takes cetain assertions as given and proceeds to build a case on them
So let us look at this, in the context of the case being made.
On the one hand the authors talk of the inter-relatedness of things and this is the basis for their argument that we must look at the global economy as a series of increasingly interconnected things any one of which, if it fails, will lead to systemic collapse. For the purpose of this part of the argument it ignores that proposition, however. For here they are talking about a utility as a stand alone business, and there is the inherent presumption that it is a profit centre. Well it isn't. It is a cost of that same global system. Or, if you prefer, it is an end product that we buy
as a whole society, for the good of that society.
In their conception
QUOTE
As the economy contracts, then the customers of the utility have less to spend. A decline in revenue would mean that the utility income relative to the fixed costs would fall. If they
want to maintain the network, they may have to raise the price of their service; this would
drive away some customers, and cause others to use less services. Thus the utility revenue
would fall further, requiring further price rises, spending falls and so on. If the utility
cannot afford to maintain the network, the service deteriorates making it less attractive for
customers, who drop out, reducing income and so on.
We are talking about a utility here. Like water. The cost of maintaining a water supply is the cost of the infrastructure; maintenance and running costs. They don't change except with inflation and with efficiency savings deriving from new technology. Demand does not enter into it unless the utitilies are privatised: and that is one of the very obvious reasons why they should not be private. A nationalised water system is the most efficient, quite clearly. There is no possible argument to suggest otherwise because, as they say, it is stupid to build water pipes running parallel to each other and belonging to different companies. So we don't. The "grid" is shared, as they acknowledge. Why then, would we pretend that this is not a common resource and charge "customers" for the water? The only reason for doing that is to squeeze profit out of it, for the private sector.
There is no escaping the cost: nor the need of every citizen for water. We are not free to take our custom elsewhere, and although we can use less there is a limit to that. That limit need not be rationed by price: in fact it is indefensible to do it that way. Yet there is no discussion of that basic proposition.
It is always difficult to critique a paper as long as this one is but each small section I look at is predicated on just such assumptions: and you cannot build a case on false premises no matter how many of them there are: 10 broken bottles do not hold more water than one broken bottle
Water is a universal need and a rich person does not need any more than a poor person. He may wish to have more, but if we have a problem affording water then frankly his swimming pool can go hang no matter how much money he has. Because this is not about price.
