World Politics - A Reflection

Amidst our discussion of the successes and failures of the Palestinian utility service, two questions were often asked: is it the responsibility of the government or private industry to provide for the people, and what makes something political on a global scale?

The latter question, as it can be answered more quickly, will be the initial focus of my discussion. Something can only be observed as world politics retrospectively. As stated in class, we can make predictions as to what will become a geopolitical issue. For instance, given the historical example of the 2006 Palestinian elections, something as small as basic utilities and bureaucratic salaries can change the face of the Middle Eastern peace process. However, if plumbing went out in Rhea County, Tennessee, things won't get any more violent, regardless of all the complaints. Yet to truly judge if something is a political issue, it mus be judged on a case-by-case basis rather than categorically declared to be one. Though there are some things that are always geopolitical topics, such as meetings of the G8 or the Shanghai Conference, other smaller topics (such as said utility issue) can't be universally declared to be of great significance to the state of the world.

The second issue of the day was the responsibility of governments to their constituencies. Ought the state, frequently bureaucratic and inefficient, provide basic services, or should private industries serve that purpose? There are arguments for and against each side of the issue.

Governments tend to be large, bumbling instruments that don't always do the job right. However, they are responsive to public demand due to the election system, even if posts in the utility industry are determined by appointment. Who gets which post tends to be dependent on who is elected to do the appointing, and as a result it is reflective of public opinion. I am going to take the stance that this is actually preferable in a free market system, given the nature of the modern utility industry.

I tend to be a utilitarian. I value things on whether they provide the Millian "greatest good for the greatest number with the maximization of rights." I will argue that the utility industry, and other basic services, constitute such a unique portion of the market that it is nearly impossible for others to join, creating a system of monopolistic competition detrimental to free market principles.

In a free market with perfect competition, all competitors have complete freedom of movement in and out of the market. The price is set at the price line rather than the demand curve, and all is essentially "perfect". But this doesn't happen. Ever. In a modern economy, we tend to operate in a state of monopolistic competition. Markets are "open", meaning there are no legal barriers to entry as you would find in an actual monopoly. However, because the markets are thoroughly dominated by a few corporations (take Coke and Pepsi, for example), they tend to be hard to break into. The utility market has this issue, and one other. If everyone provided utilities, they would become unprofitable, meaning we would inevitably revert to a state of monopolistic competition. Demand is universal, but you don't need more than one provider for basic services. The ability of one toilet to flush or one strain of electricity isn't going to be much better than another. It may be more reliable, but reliability isn't privately exclusive.

The biggest issue with a private instance of monopolistic competition is the fact that, according to game theory, firms involved do not respond to public demand but to the actions of their neighbor. A government has no such restrictions, and fits the demands of their constituency.

Therefore, though government is locked into a position of a virtual utility monopoly, this is the way it should be. It is not a monopoly in the true sense of the word because of its responsivity to changes in the voting market. Therefore, it is more responsive to demand than a private firm is in this situation, making it more democratic and effective.

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Hopefully this is the last we have to say about toilets for the semester, but God only knows what will happen. I eagerly anticipate Tuesday's discussion.