The marvels of the free market

[Deleted]

Imagine you're a baker. Your business is profitable, your employees are well paid and they get plenty of benefits. Your bread is excellent and even though you're the only baker in the neighborhood you sell it at a fair price. Your customers are satisfied so no one can think of any reason for things to change.
One day though someone settles in the neighborhood and opens a bread shop next to your bakery. Since your new neighbour doesn't make the bread himself he will have to buy it somewhere.
Imagine now that there is a law that forces you to sell him 25% of your products, at a price low enough to ensure that your competitor will make a sufficient margin. Obviously you would have to raise your prices to make up for the loss (which eventually will lead you to lose more customers).

That is exactly what is happening to our electricity market. EDF (Electricité de France), which held a monopoly on the distribution of electricity until recently will now have to sell 25% of its production to private power companies, none of them producing a single kWh.
EDF must sell them its electricity at a lower price than that of the market, so to make up for the loss an increase of 30% of the public tariff is planned over the next 4 years.

I had been told that the privatizations would lower prices. Have I been lied to?

[onlymark]

Yes.

[bjd]

I get upset about the electricity/gas as well as water. I don't think public services such as electricity and water or trains should be in the hands of private enterprise.

I am sure many of the more hard-to-reach and rural areas of France would still not have electricity if it had been up to private investment from the start.

[Deleted]

My "Russian" colleague has gone through an amusing transformation over the years. (He was actually born in Marrakech in a refugee family that had fled to Morocco.) He was about the most dogmatic anti-communist that any of us had ever encountered and just about anything could set him off during the Mitterrand years. We didn't even dare tease him about politics, because it could turn ugly really fast.

However, as the years have gone by, he has turned into a complete communist without even realizing it. I think the sub-prime bank bailout was absolutely the last straw for him, and now whenever the "capitalists" are up to their usual dirty deeds, he is ready to throw bombs.

[hwinpp]

I agree with bjd. And with Askar and Mark, come to think of it.

Same thing happened in Germany. And we pay a lot more for power than you do in France.

[fumobici]

Things that are natural monopolies- where it makes sense to have a single infrastructural network rather than multiple redundant ones- stuff like railroads, electric power, water, roads, sewer, data cables, are more logically government run whereas things amenable to competition are better left to private enterprise. Of course competition is one thing business truly hates as it eats into profits, so left unregulated businesses will tend to form secret alliances and collude to price fix to increase profitability, so even when private enterprise is the logical supplier of demand the governmen acting as the consumers advocate needs to keep a close eye on the private sector to assure an actual competitive business environment. Unregulated free enterprise is not generally amenable to competition.

[Deleted]

I have long believed that pharmaceutical laboratories should be added to the list of government controlled enterprises.

[fumobici]

Absolutely. Most of their new drug patents are the direct result of their collaborations with public research institutions. The public should directly finance all vital pharmaceutical research and whatever results should be generic for anyone to make upon release. The whole pharma industry, like the health insurance industry are two huge industries that don't really do anything useful other than suck up metric fucktons of money. Health care costs can't really be contained without deliberately crippling both.