So last night, I went with Phil Trotter and I.Borg* went to a public meeting organized by the Ontario New Democratic Party – Keep Hydro Public. I posted a solid twitterstorm from the meeting, culminating with directions to YouPayThePrice.ca, the NDP’s online set of advocacy tools for you to bug the provincial government until they shut down the privatization.
* Just a note on my ridiculous aliases for my friends here, and when I choose not to use them. In this case, the minute you stand for election for a government office, you become a public figure. So I refer to you by your real name. If you haven’t purposely made yourself publicly known in the media somehow, I’ll come up with a ridiculous nickname for you. W, eat your heart out.
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| Ontario NDP leader Andrea Horwath and Brampton MPP Jagmeet Singh talk to a room full of pissed-off Torontonians about the importance of publicly held utility companies. Photo by me, standing in the back. |
So let’s get the immediately practical part of this post out of the way first. The Wynne government of the province of Ontario has begun selling its ownership of Hydro One, the provincial hydroelectric utility.
I think this is a terrible idea for all the reasons described at YouPayThePrice.ca. Privatization of public utilities inevitably leads to higher prices to increase the short-term profits of the company, and because privately held utility companies can’t rely on the broader tax revenue of a state government to fund investments and upkeep.
Also, rural (and very indigenous) areas of Ontario will remain separate from the province-wide hydroelectric grid because a private utility won’t see any profit from the dispersed transmission lines needed for rural electrification.
That's the practical stuff. But there are philosophical issues about what exactly constitutes public ownership that are important to the right-wing opposition to publicly held utilities and services. Issues that advocates for state-run companies need to confront if we’re to achieve victory on all fronts.
There are two cases on the right in favour of privatizing all public utilities and resources. One, which I’ll call the conservative case, is the weakest: it’s the pure concession to a corporate venture capital lobby. The conservative politician’s friends at the golf club who work for a venture capital firm want to buy the power utility, so the conservative politician sells it to them.
A simple rebuttal: This is blatant government corruption, and we should send these people to prison.
The powerful right-wing case for privatization I call the libertarian case. This is the contention that, a) there is no such thing as public ownership because we are all disconnected individuals competing for our unique individual interests. So-called public ownership is therefore actually state ownership.
States are tools of oppression, says the libertarian. States use coercion, whether through the military and police, or through tax collection and regulations, to force otherwise free individuals to obey its commands. So in the hands of the state, a public utility like the power company is a means to extort money from free people.
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| The slogan is literally what state-owned utilities in democratic countries are for. |
If power generation and delivery were privatized, goes the libertarian-right case, it would be delivered in a competitive market that would encourage more efficiency. So people could choose which hydroelectricity supplier they could support as a customer. They could also choose to go off the grid entirely and generate power by other means, or live without power entire. It’s your free choice.
My own position seems contradictory, or at least paradoxical. I do believe that the state, throughout its history as an institution, is an instrument of violence on people. Any examination of the power of the police will show that.
But public infrastructure like electricity generation and transmission can’t be brought into existence by a market of private suppliers alone. That’s because of the nature of return on investment.
Private investment is driven by the need to maximize returns. This is how venture capital companies like Bain Capital or 3G operate. They buy assets – other companies and utilities – and radically restructure them, liquidating divisions and firing many workers, to create a large one-time influx of cash.
All this cash brings the value of the company up enough for their investors to profit from a very high income when they sell their shares. The venture capital investors have a strong ROI, even while they leave behind scattered wrecks of what were once viable businesses.
The culture of private investing values high ROI in the short term over long-term viability. You don’t make $1-billion in a month with long-term viability. You build a community with long-term business viability, but building a community doesn’t maximize quarterly ROI.
So no, a public utility isn’t ever truly owned by the public. Hydro One is a state-owned entity. But in a democratic state, the public have a voice in exercising control over any entity owned by the state. And the public has an interest in building strong communities.
An enlightened public has an interest in rural electrification to indigenous communities, for example, even if it won’t have an immediately high ROI. Rural electrification instead extends a community into previously isolated regions. It’s the same for all infrastructure. Private investors have an incentive against building new infrastructure because it’s difficult to monetize it for immediate ROI.
A democratic state is a tool for people to build vibrant, prosperous communities. If Hydro One is controlled by a democratic state that obeys the commands of its people, it will help build a community throughout the province of Ontario.
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