Sunday, 7 April 2013

Lipstick on a Pig

I've just read the following article claiming to make the case for why "public services" need to be run entirely by the state without privatisation. Link It is full of very serious errors which I will examine, not least of which is the concept of "public service".

First off, let's establish a few things:

1) People Suck (TM). It can be trivially observed that some people are bad and some are good. If this were not true then there would be no crime, no need for a Police force, etc because everyone would agree on a moral code and we'd All Get Along (TM). Some people are selfish, dishonest, greedy, misogynistic, racist and so on down a list of negative traits. This is not to say that there are not many people who are great (there are loads, some of which I am deeply lucky to count as my friends) but People Suck is quicker to type than Some People Suck Most Of The Time But Most People Are Decent Until The Chips Are Really Down, Then Most Folk Will Look Out For Themselves And Those Important To Them. This is simply an empirical observation of human behaviour.

2) Capitalism is the exchange of goods and services for mutual benefit This exchange for mutual benefit is what separates humanity from universally being subsistence farmers, growing and making every single thing they need themselves. See here. Capitalism is not based on greed, neither is it evil. If fact it is a positive-sum game. Greed and exploitation do not arise from capitalism, they are simply explained by tenet 1: People Suck. If you want a well written explanation of how complex economic activity arises spontaneously without any requirement of planning by a state or any other agency, try I, Pencil

3) Capitalism generates wealth, governments consume it. Governments do not have any money of their own, they do not invest and get paid dividends, have savings accounts or anything else like that. Governments confiscate money from people by force, money that other people have earned through their efforts. This is politely known as taxation. This is not a comment on whether taxes can be moral or are justifiable but an empirical observation. If you do not pay the taxes the government legally requires you to, you will be arrested, prosecuted and imprisoned. The only other source of money for a government is borrowing but since this must eventually be repaid using tax revenues it is clear that a government only ever obtains money through force.

4) Only people act. Companies, governments, the public sector are made up of people. Anything they do, good or ill, is not done by the nebulous entity of "company", "government" or "public sector" but by people choosing to do it. It is essential in acknowledging this to remember tenet 1: People Suck.

People may not like these statements but I invite anyone to demonstrate that they are factually inaccurate.

Let's get on with the content of the article:

The primary aim of a public service is to provide a service to the public. This service exists to avoid negative social impacts and protect crucial social utilities from the instabilities of capitalism.

Within living memory it was considered basic common sense that essentials like food, water, energy, access to health services, housing, sanitation and sewage, social care and core manufacturing industries were too important to expose to the volatilities of the free market.

"Within living memory it was considered common sense". By whom? Within living memory (and still today) gay and lesbian people were persecuted by some parts of society. It would more honestly be written "I believe". This is most charitably viewed a case of the logical fallacy argumentum ad populam.

Aside from this practical view, there were also two core value statements:

1) A person or entity should not seek to profit from a person’s need to eat, heat their homes, drink water, be treated when sick or have a roof over their head.

2) A person’s access to such necessities should not be based on their ability to pay.

Value statement 1 is so staggeringly naive of how the real world actually works I am astounded. It doesn't stand up to any reasonable scrutiny. If no person or entity can profit (i.e. benefit from doing work) from providing the basic human needs of food, water, heat and shelter then the only way to provide them is through altruism. The idea that a society will provide all of these freely to everyone no matter how much they eat, drink or leave the doors and windows open is immediately, completely destroyed by tenet 1: People Suck. The pro-state argument states that these can be provided by the state instead.

It is also destroyed by the fact that every single iota of economic activity in a society is based on expenditure of energy. Food is grown, water is purified, heat generated and shelter constructed by expending energy. When a farmer produces a crop various inputs are required aside from seeds, rainwater, sunshine: fertilisers, possibly pesticides, farm machinery to plant and harvest, fuel to run them, transport to take the produce to be processed into packaged products for the consumer. All of those things require energy in their manufacture and operation. Since no person or entity can be allowed to profit from providing food, it follows that they will have nothing to trade for the goods and services, and therefore the energy, they need to produce the food (or purify and deliver the water, provide shelter etc). Energy cannot be produced without cost so no private sector entity will produce it (since no benefit can be derived from doing so) and it would theoretically fall to the state to generate all the energy.

A counter argument would be that the state only generates energy for the provision of food, water, heat and shelter. This is simply impossible as the processes that ultimately create these things are inextricably tangled with processes that create other things. Production of e.g. tyres for agricultural equipment or transport to consumers are made at the same factory that makes tyres for cars, motorcycles etc. The same argument applies to manufacture of chemicals whether used directly like fertiliser or indirectly like fuel, steel, plastics, glass, everything really. Any attempt to gather sufficient information to segregate costs for human needs from costs for non-essentials would inevitably fail due to the nearly infinite complexity of such a mutually interdependent system. Thus the state's only option is to provide the energy for free.

Value statement 2 is a restatement of value statement 1. If no entity can profit from provision of the needs then no payment can be taken and ability to pay is irrelevant. What about providing at cost? These goods cannot have a cost since no-one in the production chain can profit. The only cost is therefore borne by the state which produces all the energy required for all economic activity. However, in order to acquire the resources to generate the energy the state must raise money through taxation of economic activity. Economic activity that provides human needs is inseparable from economic activity that provides non-essential so either all economic activity is taxed (taxing human needs) or none is. Since taxing human needs violates both value statements then no economic activity can be taxed and therefore no tax revenue can be raised, no energy generated and thus no economic activity at all. Thus the entire system necessary to support the value statements is negated by reduction to absurdity.

This has ended up rather longer than I envisaged so I'll split it into more than one post.