All I have said of the railroad applies, of course, to the telegraph, the telephone, the supplying of cities with gas, water, heat and electricity, -- in short to all businesses which are in their nature monopolies. This is where the term natural monopoly originated. To the early progressives, who were far from socialist, the term natural monopoly usually referred to undertakings that involved rights of way through the community. They argued that water, sewer, electric and gas lines, public transit, roads and railroad lines should all be publicly owned. This is from the famous progressive economist, Henry George. Detroit mayor Hazen Pingree pulled Detroit out of a similar depression over a century ago, after lumber barons had stripped Michigan bare of timber and left the state to rot.A statue to Pingree was erected just outside of city hall, built with donations from ordinary working people. Yet few people, other than Detroit historians, know much about Pingree, or that he was a big supporter of the progressive economics of Henry George. [13] As civilization progresses and industrial development goes on, the concentration which results from the utilization of larger powers and improved processes operates more and more to the restriction and exclusion of competition, and to the establishment of complete monopolies. This we may see very clearly in the railroad. It is but a sheer waste of capital and labor to build one railroad alongside of another; and even where this is done, an irresistible tendency leads either to consolidation or to combination; and even at what are called competing points, competition is only transitional. The consolidation of companies, which in a few years bids fair to concentrate the whole railway business of the United States in the hands of half a dozen managements, the pooling of receipts, and agreements as to business and charges, which even at competing points prevent competition, are due to a tendency inherent in the development of the railroad system, and of which it is idle to complain. [14] The primary purpose and end of government being to secure the natural rights and equal liberty of each, all businesses that involve monopoly are within the necessary province of governmental regulation, and businesses that are in their nature complete monopolies become properly functions of the state. As society develops, the state must assume these functions, in their nature cooperative, in order to secure the equal rights and liberty of all. That is to say, as, in the process of integration, the individual becomes more and more dependent upon and subordinate to the all, it becomes necessary for government, which is properly that social organ by which alone the whole body of individuals can act, to take upon itself, in the interest of all, certain functions which cannot safely be left to individuals. Thus out of the principle that it is the proper end and purpose of government to secure the natural rights and equal liberty of the individual, grows the principle that it is the business of government to do for the mass of individuals those things which cannot be done, or cannot be so well done, by individual action.... [30] In the first place, I think it may be accepted as a principle proved by experience, that any considerable interest having necessary relations with government is more corruptive of government when acting upon government from without than when assumed by government. Let a ship in mid-ocean drop her anchor and pay out her cable, and though she would be relieved of some weight, since part of the weight of anchor and cable would be supported by the water, not only would her progress be retarded, but she would refuse to answer her helm, and become utterly unmanageable. Yet, assumed as part of the ship, and properly stowed on board, anchor and cable no longer perceptibly interfere with her movements. [31] A standing army is a corrupting influence, and a danger to popular liberties; but who would maintain that on this ground it were wiser, if a standing army must be kept, that it should be enlisted and paid by private parties, and hired of them by the state? Such an army would be far more corrupting and far more dangerous than one maintained directly by the state, and would soon make its leaders masters of the state. [32] I do not think the postal department of the government, with its extensive ramifications and its numerous employees, begins to be as important a factor in our politics, or exerts so corrupting an influence, as would a private corporation carrying on this business, and which would be constantly tempted or forced into politics to procure favorable or prevent unfavorable legislation. Where individual States and the General Government have substituted public printing-offices for Public Printers, who themselves furnished material and hired labor, I think the result has been to lessen, not to increase, corruptive influences; and speaking generally, I think experience shows that in all departments of government the system of contracting for work and supplies has, on the whole, led to more corruption than the system of direct employment. The reason I take to be, that there is in one case a much greater concentration of corruptive interests and power than in the other. [33] The inefficiency, extravagance and corruption which we commonly attribute to governmental management are mostly in those departments which do not come under the public eye, and little concern, if they concern at all, public convenience. Whether the six new steel cruisers which the persistent lobbying of contractors has induced Congress to order, are well or ill built the American people will never know, except as they learn through the newspapers, and the fact will no more affect their comfort and convenience than does the fitting of the Sultans new breeches, or the latest changes in officers uniforms which it has pleased the Secretary of the Navy to order. But let the mails go astray or the postman fail in his rounds, and there is at once an outcry. The post-office department is managed with greater efficiency than any other department of the National Government, because it comes close to the people. To say the very least, it is managed as efficiently as any private company could manage such a vast business, and I think, on the whole, as economically. And the scandals and abuses that have arisen in it have been, for the most part, as to out-of-the-way places, and things of which there was little or no public consciousness. So in England, the telegraph and parcel-carrying and savings-bank businesses are managed by government more efficiently and economically than before by private corporations. [34] Like these businesses -- perhaps even more so -- the railroad business comes directly under the notice of the people. It so immediately concerns the interests, the convenience and the safety of the great body, that under public management it would compel that close and quick attention that secures efficiency. [35] It seems to me that in regard to public affairs we too easily accept the dictum that faithful and efficient work can be secured only by the hopes of pecuniary profit, or the fear of pecuniary loss. We get faithful and efficient work in our colleges and similar institutions without this not to speak of the army and navy, or of the postal and educational departments of government; and be this as it may, our railroads are really run by men who, from switch-tender to general superintendent, have no pecuniary interest in the business other than to get their pay -- in most cases paltry and insufficient -- and hold their positions. Under governmental ownership they would have, at the very least, all the incentives to faithfulness and efficiency that they have now, for that governmental management of railroads must involve the principles of civil service reform goes without the saying. The most determined supporter of the spoils system would not care to resign the safety of limb and life to engineers and brakemen appointed for political services. [36] Look, moreover, at the railroad system as it exists now. That it is not managed in the interests of the public is clear; but is it managed in the interests of its owners? Is it managed with that economy, efficiency and intelligence that are presumed to be the results of private ownership and control? On the contrary, while the public interests are utterly disregarded, the interests of the stockholders are in most cases little better considered. Our railroads are really managed in the interests of unscrupulous adventurers, whose purpose is to bull and bear the stock-market; by men who make the interests of the property they manage subservient to their personal interests in other railroads or in other businesses; who speculate in lands and town sites, who give themselves or their friends contracts for supplies and special rates for transportation, and who often deliberately wreck the corporation they control and rob stockholders to the last cent. From one end to the other, the management of our railroad system, as it now exists, reeks with jobbery and fraud. [37] That ordinary roads, bridges, etc., should not be maintained for profit, either public or private, is an accepted principle, and the State of New York has recently gone so far as to abolish all tolls on the Erie Canal. Our postal service we merely aim to make self-sustaining, and no one would now think of proposing that the rates of postage should be increased in order to furnish public revenues; still less would any one think of proposing to abandon the government postal service, and turn the business over to individuals or corporations. In the beginning the postal service was carried on by individuals with a view to profits. Had that system been continued to the present day, it is certain that we should not begin to have such extensive and regular postal facilities as we have now, nor such cheap rates; and all the objections that are now urged against the government assumption of the railroad business would be urged against government carriage of letters. We never can enjoy the full benefits of the invention of the railroad until we make the railroads public property, managed by public servants in the public interests. And thus will a great cause of the corruption of government, and a great cause of monstrous fortunes, be destroyed. [38] All I have said of the railroad applies, of course, to the telegraph, the telephone, the supplying of cities with gas, water, heat and electricity, -- in short to all businesses which are in their nature monopolies. I speak of the railroad only because the magnitude of the business makes its assumption by the state the most formidable of such undertakings. [39] Businesses that are in their nature monopolies are properly functions of the state. The state must control or assume them, in self-defense, and for the protection of the equal rights of citizens. But beyond this, the field in which the state may operate beneficially as the executive of the great cooperative association, into which it is the tendency of true civilization to blend society, will widen with the improvement of government and the growth of public spirit. schalkenbach.org/library/henry-george/social-problems/sp17.html
Posted on: Sun, 11 Jan 2015 01:43:02 +0000
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