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Taming Modern Monopolies

(Image: withayou)

Analysts at the OECD, the Paris-based research agency, have just shared a grim prediction: If current trends “prevail,” all developed nations will show by 2060 “the same level of inequality as currently experienced by the United States.”

If we let those current trends continue, that conclusion sounds about right. But why on earth should we let those trends continue? The trends that have made our world so unequal reflect simple political decisions, not some inevitable unfolding of globalization. We can make different decisions.

Take privatization. Over the past four decades, governments around the world have chosen to sell a broad array of public services. These privatizations have increased the concentration of wealth. Carlos Slim, one of the world’s three richest men, obtained much of his $75 billion fortune by snapping up Telmex, Mexico’s formerly government-owned phone company.

But privatizers today are increasingly facing as much resistance as opportunity. In many countries, John and Jane Q. Public are beginning to reject the privatization mantra. The privatizers, turns out, have a problem with their pitch.

“Privatization,” as the Guardian’s Seumas Milne puts it, “isn’t working.”

Privatizers promise greater efficiency and cheaper prices. Most people have experienced the opposite, notes University of Glasgow economist Andrew Cumbers, and this perverse reality is spurring a growing global push “to take back utility sectors into public ownership.”

But not just any public ownership. Instead of the old over-centralized state entities “far removed” from ordinary citizens, privatization’s critics are looking at “new forms of public ownership.” Cumbers says. These models “encourage broader engagement and participation in economic life by the wider public.”

Denmark, for instance, is nurturing innovative “public-public” partnerships. In 2001, one of these partnerships built what then rated as the world’s largest wind farm. The partners: Copenhagen Energy, the municipally-owned local utility of Denmark’s largest city, and a cooperative run by the over 10,000 local residents who had purchased shares in it.

A similar cooperative-local government utility model, observes Andrew Cumbers, has helped the Danish island of Samsoe “become one of the first places in the world to become 100 percent efficient in renewable energy.”

Good moves. But in our new Information Age we need to do more than undo the privatization of the traditional “natural monopolies” in sectors like electricity, water, and public transportation. We need to turn our online monopolies into public utilities.

Corporate giants like Google, Facebook, and Amazon, argues analyst Richard Eskow, profit off publicly funded technologies like the Internet but operate “without regard for the public interest.” And they don’t even pay their own full tax share.

“Each of these Big Tech corporations has the ability to filter — and alter — our very perceptions of the world around us,” relates Eskow.

Over a century ago, Americans saw similar abuses in the new technologies of their day. This country was transforming at breakneck speed back then, from a rural to urban society. The nation’s newly overstuffed cities, big and small alike, needed to move and warm and light ever-denser populations.

Private corporations rushed in with new technologies to deliver these services, and municipalities in the early 1900s showered franchises with hundreds of millions of dollars for gas and telephone lines, street railways, and electricity.

In some cities, companies bid honestly against each other to win these lucrative franchises. In most, honesty would not be among the bidding criteria. Private utility companies passed politicians kickbacks. Politicians passed utilities monopoly pricing power — and signed franchise agreements that locked down exorbitant phone and gas and light rates for years to come.

“In no other way,” historian Otis Pease would later note, “can wealth be obtained so easily.”

Public anger at the holders of this wealth would, in city after city, turn many of these fabulously lucrative, privately provided services into public utilities. America, in the process, would become significantly more equal.

We could do the same today.

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