Summary

For the few natural national monopoly industries that form fundamental components of our economy, we must nationalize them. By nationalizing these industries and operating them as transparent bureaucracies with tight democratic oversight, we remove the authoritarian control of our economy and democratize their associated bureaucracies. In essence, by ending the for-profit oligarchies that control these monopoly industries, we transform these monopoly industries into public utilities where: 1) the entire US electorate becomes the shareholders by birthright, 2) Congress becomes the board of directors elected by these shareholders, and 3) the President becomes the Chief Executive Officer also elected by the shareholders for each and every monopoly utility. Operating these monopoly industries as public monopolies ensures that these monopolies do not unfairly undermine other businesses and consumers where such adversarial authoritarian structures necessarily undermines all other political and economic activity.

The relevant monopoly industries at the Federal level include: 1) interstate railroads and aviation airways, 2) interstate highways, 3) interstate energy grids, 4) communication backbones and satellite orbits, 5) postal service, 6) the monetary system, 7) insurance funds, and 8⁠) credit intermediation. At more local levels, the Federal government should also assist government in acquiring and operating democratically all state and local level monopolies such as broadcast airwaves, wired and wireless communication networks, local roads and railroads, local energy grids, water and irrigation systems, and wastewater evacuation and treatment systems. By clearly delineating those industries appropriate for socialization and those appropriate for privatization we ensure limited government by drawing a clear line inscribing the proper role for government and delineating what properly lies beyond the powers of government.

Another type of natural monopoly closely related to all of these industries also requires more responsible Federal government stewardship of our mineral and fossil fuel resources, since the Federal government owns over 25% of all land in the US. These resources are currently squandered to satisfy influence peddling corporations which pocket substantial profits and enrich themselves at taxpayer expense. These resources belong not only to the American People, but we must take seriously our stewardship role so that our descendants have access to these resources too. These natural resources include the broadcast airwaves and the aviation airways which are not produced but exist as natural features and they must be treated as a public common with democratic institutions mediating their use.

Introduction

One of the most important roles for government at any level is to manage the natural monopolies of the People. Some natural monopolies are simply what some have called a gift of nature. Other natural monopolies involve active intervention of labor and other productive resources. Some natural monopolies involve renewable resources where the pace of use is limited. Others involve natural resources that are not at all renewable and therefore their use is limited for all time. Basically these natural monopolies can be categorized as such:

  • Non-depleted resources: These are resources that are not produced through human intervention but are available for our productive use and include such things as land, easements, aviation airways (flight corridors), satellite orbits, and broadcast bandwidth. Again these resources are simply a gift of nature and require no human intervention to produce them. These resources are also not depleted through use. For example, though only one satellite can occupy the precise orbit location at any given time, the use of that satellite orbit does nothing to inhibit future use of that orbit or deplete the orbit path. Since these resources are not depleted from use, they carry no cost to society to use them other than that their use for one purpose precludes their simultaneous use for another purpose (in other words, opportunity cost only). Therefore democratic mechanisms at some level are essential to mediate between the competing needs and wants for these resources.
  • Intermediation monopolies: These are resources which are not produced but rather are merely the aggregate pool of resources of society. For example, insurance risk pools are an attempt to set aside some portion of resources to cover catastrophic events. Such pools are more precisely projected the larger the pool (the variance of payouts declines due to what probability theory calls “the law of large numbers”). Similarly credit intermediation works best when credit pools are available to all and where all borrowers pay interest premiums according to their debtor experience rating. Similarly for defined benefit pension plans which also involve risk pooling and probabilistic projections.
  • Renewable resources: As the Federal government alone owns over one-quarter of the land in the United States a significant proportion of such renewable resources fall under Federal management (additional renewable resources fall under state and local control as well). Other such resources require Federal or even international treaty to mediate use, though the resource has no owner per se (such as Ocean fisheries). Since these resources are renewable they can be used at a particular pace without future damage. Most conventional water uses fall into this category as well as forests, crops, topsoil, fisheries, and so forth. Without careful management and responsible stewardship we can destroy these resources and rob our descendants of the same renewable resources we enjoy (for example by causing the extinction of entire species of fish). Pricing and taxation might be used to ensure such resources are only used at a renewable rate, but such pricing can still be graduated to allow access to essential resources based on one’s ability to pay.
  • Non-renewable (limited) resources: These resources are not renewable and so their availability for our consumption is limited for virtually all time. Mineral ores fall into this category such as iron, copper, thorium, lithium and so forth. Likewise fossil fuels are essentially limited and non-renewable in that they require a major extinction event and thousands or millions of years of heat and pressure for the Earth to replenish these resources. Some uses of water are likewise limited such as the use of water to make concrete. Though this use of water is fairly small compared to the total water resources available on Earth, it is important to underscore that water is indispensable to life on Earth and once used for concrete it is permanently removed from Earth’s water cycle. We also make use of significant water resources such as aquifers, glaciers, and major lakes which comprise fresh water resources established over thousands years of natural activity. While fresh water is continually deposited on Earth as part of the water cycle, our depletion of these ancient fresh water deposits constitutes a non-renewable fresh water resource (similarly for old growth forests compared to young growth forests). Though these resources are limited, some of these non-renewable resources are often reusable, so that, for example, the same copper once extracted from the Earth can be used again and again in one product after another as each product reaches the end of its useful life. However such mineral reuse requires careful end-of-life processing of expired products or the resource might become unavailable for reuse or too expensive to recover.
  • Produced natural monopolies: These are resources which are produced through human intervention but necessarily involve natural monopoly cost structures because of their natural traits. There are generally only several industry categories that fall into this natural monopoly category with current technology: 1) energy grids such as electrical power lines and gas and oil pipelines; 2) communication networks; and 3) transportation networks including water and irrigation systems and wastewater removal.
  • Socially designated monopolies: These resources include the postal system, the monetary system, military defense, education, libraries, waste hauling and disposal, criminal justice, civil courts, diplomacy and many of the other core functions of American government. These are functions that are not naturally monopoly functions but which we elect to make into limited monopolies because it is socially desirable to do so. Imagine the type of venue shopping which would occur if parties to a contract had to select which civil court system would adjudicate disputes including enforcement of judgements (the drug cartel wars provide some indication of how such a non-monopoly civil court system might look). Similarly, the private sector and markets could handle waste hauling and disposal, but in that case, market solutions actually create perverse incentives to inappropriately dispose of waste – encouraging individuals to inappropriately dump waste to avoid disposal costs. Therefore we typically subsidize waste hauling and processing through government programs funded through tax revenue to avoid such perverse incentives and ensure waste is properly handled.

A just economic system requires democratic and deliberative mechanisms to mediate between demands for these monopoly industries and resources and to allocate these resources to their best uses (where best can only be determined through fair democratic deliberative mechanisms). When the demand for such resources is small compared to their abundance, such social mediation is unnecessary. For example if our digital communication networks provide sufficiently abundant bit width to meet the needs of every digital sender of bits and every digital receiver of bits, on demand, and as needed, then mediation between the desires for such bit-width is rendered completely unnecessary. Similarly if land and air-rights easements are abundant compared to the desire for their use, the division of such resources can be left to haphazard allocation mechanisms such as the first homesteader or prospector to arrive to the location.

On the other hand, as the various claims and designs on such resources exceeds their availability the need for a fair and democratic mediation mechanism increases dramatically. For example, the availability of broadcast bandwidth is insufficient for the the many uses for such bandwidth. We might all like to have our own broadcast bandwidth to effectively communicate our own views to the rest of our peers throughout our community. Yet insufficient bandwidth is available to meet those desires. So instead we need to establish a democratic and transparent mechanism, at the most decentralized level appropriate to the task, to mediate such designs on these resources. So whenever the desires for use of a monopoly resources exceeds the availability of such resources we need a democratic mechanism to mediate among those competing uses. For non-monopoly resources other mechanisms such as markets, private grants, private allocation, and other mechanisms are entirely suitable, but for these monopoly resources, democratic mechanisms are indispensable for a just and harmonious society.

A taxonomy of natural monopoly resources:

Gift of Nature Produced
Non-Depleted Broadcast Airwaves
Airway Corridors/Flightpaths
Satellite Orbits
Land
Easements
Intellectual Products
Depleted Renewable Topsoil
Fisheries
Forests
Freshwater
Horticultural products
Communication Networks (wireless, wired)
Electrical Grid
Energy pipelines
Railroad beds and track
Roadways
Labor-power
Non-Renewable Minerals
Fossil Fuels
Old Growth Forests
Ancient Water Deposits (aquifers, major lakes, glaciers)
Water used for concrete

Insurance risk funds too are monopoly resources, though constitute a category all their own. In the case of a risk fund, whether it is depleted or non-depleted depends on its form. If an risk fund sets aside money in case of a catastrophic event, it is a non-depleted resource. On the other hand, to the extent insurance risk funds either stockpile products in the event of a catastrophic event, those products are deplete-able, though scarcely depleted while in their stockpile. In the case of money, nothing need be produced for this monopoly resource. In the case of stockpiled products, the products are obviously produced. So in terms of the table, insurance risk funds relate in some sense to all but the lower left quadrant (all but the depleted gifts of nature).

Non-depleted resources: Non-depleted resources we can use as much as we want and in any ways we want. That does not mean we can use every square-inch of land to grow corn. The use of non-depletion resources such as land is often coupled with the use of deplete-able resources such as topsoil. However, some land we use for nature preserve or wildlife refuge. Some we set aside in crop rotation. So there are many types of uses that do not entail depletion of other resources. The point is that economic activity related to the consumption of these non-depletion resources alone, does not cost our planet. So economic activity in these sectors can grow without any collateral damage.

Depleted though renewable resources: In the case of depleted though renewable resources we can use these resources until the point that our pace of consumption equals the pace of renewal. Since many of these resources are on Federally owned land or are drawn from various public commons with federal control and international treaties involved, governments have the duty to steward these resources just as a private proprietor might in the case of privately owned resources. To expect government to take a laissez-faire attitude in its role as steward of public commons would be like expecting a private owner of land to remain stoic while someone else trespasses and destroys the private owners property.

Depleted and non-renewable resources: These resources are the most difficult to steward. While often seen as abundant and inexhaustible, that is never the case. These resources represent finite limits on our productive capacities and so ultimately our abilities to consume.

Oligarchical attacks on democracy

For more than a century, monopoly and oligopoly corporations have declared war on the government of the People of the United States of America. In particular, they have sought to carve up our democracy in the pursuit of endless profits. They have wrestled control of our Department of Interior to take our natural resources and at the same time demand subsidies from the US taxpayer in the process. It is not enough that these monopolists are granted exclusive use of the natural resources of the People of the United States. Rather than saying thank you, they then demand we subsidize their operations too.

It is important to underscore that I am not talking about all corporations here, but those corporatist corporations which supplant our Constitutional government with dictatorial procedures for their own narrow interests. The radio and television networks have likewise stolen our airwaves and demand Congress violate our first amendment rights by restricting our use of those airwaves. When asked by the American people for fair news standards and equal access for all political campaigns, they scoff at us and condemn the American people for attempting to regulate their corporate free speech rights: free speech rights these corporatists got only by denying the rest of America their own free speech rights to enjoy access to these broadcast airwaves.

This has occurred repeatedly with each area of our American democracy. The banks have taken over our public monetary system for their own profits. The automobile industry has taken over our roadways to fuel their own wasteful excesses. The military industrial complex makes all of public discourse subservient to their own insatiable desires for imperial adventures around the globe and the wasteful expenditure from the public treasury that necessarily accompanies such military aggression. If we start to add together the authoritarian takeover of our government and economy we quickly see how a significant proportion of our economy – a significant proportion of all of our productive lives – is devoted to serving these ungrateful and tyrannical oligarchs. The only way to end this is to take back our economy and our government from them and make government and industry serve human needs rather than making humans serve the whims of industry and this corporatist controlled government.

Monopoly Industries

Often we see rhetoricians promoting a false dichotomy between privatization and socialization. This false dichotomy distraction conceals the real question of what is the proper role for government and where government powers should be limited and the converse question of what is the proper role for private corporations and where they too should be limited. Permitting private monopolies to invade the proper domain of government forfeits our democratic government to the predatory nature of private monopolists. The traditional debates over privatization and socialization instead seek to carve out these governmental realms where the oligarchs are freed from democratic oversight. When AT&T, Comcast, and The Federal Reserve Cartel all promote their private interests and the superiority of their private monopolies over public monopolies, they do so not on the grounds of limited government, but instead based on their own special-interest view that they alone should be permitted to invade our democratic government and our public commons for their own private for-profit aims. They seek to hold the reins of governmental power, but reject any requirements to adhere to the will of a democratic electorate.

Privatization is a perfectly desirable goal for competitive industries where all bidders can compete fairly along side one another for government contracts. Privatization in monopoly industries only creates pools of wealth extracted from the public taxpayer for profiteers to joust over, and this infighting creates an enormous waste of resources as those resources are misdirected into such profiteering battles. For example, we as a people, pool our funds into an insurance fund to insure against catastrophic events. Such an insurance fund requires actuarial labor where calculations help determine the size of premiums required to cover statistically expected benefit payouts. It is certainly reasonable to privatize these actuarial services, the computer hardware systems used for such calculations and so forth. None of these services need nor should be provided directly by government employees. However, the insurance industry then steps in and insists we need to privatize an entirely separate function: their function as self-appointed authoritarians who want to skim money out of our insurance funds for their own private gains (as much as 25 or 30 cents of every dollar for their profits, dividends, executive bonuses, battles for market domination, etc.) and thus decide behind closed doors how our government and our economy works. It is essentially institutionalized insurance fraud where the private insurance company are granted the privileged position of defrauding the public. Such a function should not be competitively bid; should not be privatized, should not exist at all. However, these thieves hold themselves out as comparable to the hardworking actuarials and insist that this thievery function also be privatized, and then they boast that government will fail to steal from us all as efficiently as these privately held for-profit corporations. The entire operation of such a monopoly sector, such as insurance, becomes the never ending battle to lure policy holders from one insurance fund to the other with predatory discounted premiums only to surreptitiously raise them later and the cycle begins again. Moreover the carving up of the insurance sector into a few oligopolistic providers means that they pour enormous resources into advertising, predatory pricing schemes, denial of benefits, and so forth: all to dominate and profiteer off of this monopoly sector at our expense. The American electorate are then divided into a senseless debate between those who suspect there is something sinister in the claims of these thieves and those who get lost in the privatization debate – a tenet they legitimately hold dear, but miss that they have slipped into a defense of thievery. We need to advance a platform that escapes these false dichotomies and advocates for a government of the people, by the people and for the people, where monopoly resource profiteering is simply impossible.

Among the many maladies we face from these invasive, authoritarian, oligarchical, and for-profit monopoly Industries:

  • allow oligarchs to sidestep our constitutional government and claim immunity from the US Constitution because they have moved the legitimate realm of government to their own private corporation (for example the Fourth amendment violations in the Eliot Spitzer case as the monopoly bank performs unwarranted searches of banking activity);
  • allow oligarchs to ignore the desires of the citizenry so that democracy is shunted into ineffectual attempts to regulate the natural monopoly industries when the government should be transparently and democratically operating the natural monopoly industries instead;
  • turn the wealth rightly belonging to the entire public in common into the private wealth of a few privileged oligarchs (such as Federally owned mineral resources and fossil fuels, or private monopoly profits gained by the oligarchical control of our monetary system, risk funds, and credit intermediation);
  • allow the creation of immense pools of graft which not only fuels government corruption but even endorses and institutionalizes it.

Certainly there is no justification for government interfering in the commerce between individuals, partnerships and corporations interacting within competitive markets. However there is equally no justification in allowing for-profit monopolists to dominate over others and turn those for-profit monopolists into authoritarian oligarchs holding the reins of government.

The for-profit monopolists become another tentacle of government in several ways. First, they are chartered by government to serve specific governmental functions. Whereas you and I exist independent of government, and government is created out of the collective actions of each and every person, corporations on the other hand are themselves a creation of government as much as any other government edifice. Moreover since these are natural monopoly industries for which these corporations are chartered to control, they are chartered to fulfill a specific governmental function which should be reserved to our republican institutions as guaranteed in the Constitution. However, since these natural monopoly industries require democratic mechanisms to mediate among the many competing demands for access to such monopolized resources, and we should demand that these be operated in a transparent and democratic manner without the profiteering involved. Placing oligopolies and oligarchs in the position to dominate these monopoly resources allows them to enrich themselves at the expense of all other Americans: including all the other American enterprises. Granting that power to hand over commercial regulation to a cartel of AT&T, Verizon, and Qwest is a power not granted to Congress nor to any individual states (such as Delaware) which charter these corporations and grant them the governmental powers over monopoly resources and the ability to regulate interstate commerce. They are therefore placed in a privileged position to enrich themselves at the expense of all other Americans, which is highly corrupt.

Introductory Economics and Natural Monopolies

Aside from the natural monopoly resources, certain industries involve the provision of products and services that are necessarily monopolistic though produced through human intervention (not merely gifts of the Earth on their own). Whatever attempts government or others might make to regulate these industries they will tend towards monopoly operation. Typically these monopolies, oligopolies, and cartels end up regulating government rather than government regulating them. In some cases governments have been successful in creating a meager imitation of a competitive marketplace in an industry by leveraging governmental powers and the monopoly powers in the industry to impose an oligopoly within the industry.  Under these circumstances, the existence of a few or even a dozen colluding oligopolists creates the appearance of a competitive market place since the more efficient monopoly operation is replaced by a less efficient oligopoly operation. The very monopolistic powers along with government sponsorship allow the inefficiencies to persist and permits every oligopoly corporation operating in the industry to enjoy sizable monopoly profits despite the glaring inefficiencies.

Several industries exhibit these natural monopoly tendencies:

  1. Transportation networks such as highways, roadways, railroads, aviation airways, and so forth.
  2. Communication network systems – both wired and wireless (since bandwidth is necessarily limited).
  3. Energy grids and pipelines such gas pipelines, oil pipelines, or aqueducts and water irrigation systems
  4. Wastewater disposal systems
  5. Monetary systems
  6. Credit intermediation systems
  7. Security (including police, fire, and ambulance services)
  8. Postal systems (not as a natural monopoly but as a compelling socially designated monopoly)
  9. Industries which rely heavily on Intellectual products (because intellectual products are created through human intervention but are non-depletable when used to produce other products)

Basically, natural monopoly industries often comprise the resources and industries which tie us together as a people. This list shows many varied industries that involve inherent monopolies for diverse reasons. For energy grids and networks, the monopoly tendencies are due to the efficiencies gained by sharing the same conduit or connection for all interactions within the system. Even when it is desirable to create a high availability communication network, for example, by providing multiple redundant cables across different routings, it still must be operated as a single system or the users receive none of the benefits of redundancy. Two cables operated by two separate operators instead means that one segment of the population faces an outage when the other segment does not. Operating the two cables as a single monopoly means that when one cable is severed, the other serves as a redundant backup cable for the entire population. Cell phone subscribers face a similar issue when they find themselves in one area where their companions have service and they do not, and then in another area where they have service and their companions do not. Again, operating the inherent monopoly portions of the industry as a public monopoly ensures that the greatest availability of service, both in space and over time (in other words, due to outages).

For all of these monopolies, somehow revenue must be raised to cover the costs of producing the service, but the question of how revenue is raised is necessarily a question of public policy and deserving of democratic deliberation. Connecting a postal system to every mailbox in the United States, where each paid the actual cost of their own individual postal service, means some need to pay very little (maybe less than a dime) while others would need to pay so much that the system would collapse (maybe hundreds of dollars for a letter). Instead we democratically deliberate and impose a single fee structure on the postal service so that the person mailing a letter to their next door neighbor subsidizes the letter carried from the Florida Keys to the outback on Alaska’s Aleutian Islands. We create this subsidy because there are great social benefits to having a high-available postal service to the far outreaches of the country. If we instead allowed private for-profit corporations to cherry-pick segments of the postal system such corporations would go after the low cost segments and make our national postal system impossible.

Natural monopoly versus monopoly

It is important to clearly distinguish the inherent natural monopoly industries discussed here in this article from other monopolies. First of all, a monopoly industry is about the inherent features of a particular industry, product, or service. In other words, something about the production process for that product or service makes it inherently monopolistic. One way economists describe this is in terms of the cost structure in the monopoly industry. The cost structure for these monopoly industries is inherently a diminishing cost structure as the scale of the industry grows. As more and more customers use the service the average cost falls lower and lower. You might think that would be the case for any industry, but it is quite rarely the case.  Most industries exhibit rising average costs. For example, while a farmer might experience average cost declines as she increases production at first, eventually production can only be increased further by applying greater resources on average to the production process. This decreasing returns to scale is a natural mechanism that keeps farming and most other market processes competitive rather than monopolistic.

A communication network is nearly always more efficient the larger the scale (or at least conversely, the fewer the providers). When government regulators maintain an oligopolistic (several sellers) in wireless mobile phone service, we all pay a higher cost in terms of increased user fees, less reliable service, and less pervasive service. We may think our rates our low because we can only compare them to other oligopolist rates. We have no real basis for comparison.

What is more, we do not really gain any reductions in fees from competitive processes. Oligopoly markets behave much the same way as monopoly markets in terms of the monopoly profits and price gouging they afford. This occurs because the competitive struggle over price is turned into one over market domination where social resources are wasted to dominate the industry and grow larger and eliminate competitors. So there is also great waste that takes place in rent-seeking, profiteering, and the jockeying that takes place for each oligopolist to dominate the market. There is also tremendous waste in the duplication of infrastructure such as redundant cell phone towers or redundant fiber optic cables: one each for each oligopoly corporation operating in the monopoly industry.

So while Dell or Walmart or Ford might constitute oligopolists who attempt to leverage their brand and their supply chain relationships to dominate and even monopolize their markets, that is completely different than an AT&T or Verizon or Burlington Northern Railroad where the actual service provided is inherently monopolistic. In the first case, immense effort, labor, and resource expenditure goes into concentrating wealth and power in the markets and industries. While in the natural monopoly case, the concentration and consolidation will take place naturally and only immense effort, labor, and resource expenditure could possibly ever attenuate it. Often government regulators will expend such immense effort to keep a monopoly industry from being dominated by a single monopoly and creating the appearance of competition, but this effort is completely misguided since it merely turns an inherently monopoly industry into one that appears to be competitive because the industry is somehow carved up into several oligopolist providers.

While these other monopolists (like Walmart or Dell) may still engage in unseemly monopoly practices such as graft, sabotage of democracy, predatory pricing and so forth, this is a completely separate problem from the natural monopoly case. For one, the barriers to entry in the market are raised artificially by the oligopolists themselves. Often the barriers to entry are created by deliberately decreasing prices which is a benefit for consumers. If IKEA stopped offering low prices, the competitors would all come back. Dealing with the other monopolists could be handled in a decentralized and community-based way through a tax on monopoly power or eliminating the private for-profit operation of truly natural monopoly industries which use their natural monopoly position to carve out other monopolies. For artificial monopolies, If the only ‘wrong’ such a monopolist has committed is to offer quality products at really good prices then there is no public interest in ending such a monopoly (it may be hard to find such examples, but they undoubtedly exist). The key difference then is whether the monopoly arises naturally due to the cost structure of production in the industry on the one hand, versus monopolies that arise due to tremendous ongoing effort on the part of the monopolist themselves on the other hand. The natural monopoly is what desperately needs reform: or more precisely we need to socialize our natural monopoly industries.

It is also important to underscore that many times the other monopolies (those that are not due to natural monopoly industry conditions) are made possible by the persistence of for-profit oligarchical natural monopolies, as those for-profit natural monopolies can leverage their privileged position to carve out new monopolies in non-monopoly industries. This occurs, for example, in money and banking as the for-profit monopoly operators of our nation’s monetary system (the Federal Reserve) leverage their privileged position to create monopoly banks and other financial institutions that are too-big-to-fail. Without the privileged for-profit control of our monetary system, these banks would not be in the position to carve out other monopolies in banking and finance and would be forced to compete on a level playing field with all other community banks and credit unions (or even online banks operated out of a garage).

Democratic socialism: ensuring socialized monopolies are also democratized monopolies

Several Features are necessary to differentiate the type of socialization I advocate here. There is a world of difference between the United States Postal Service and the Federal Reserve system, though both might reasonably make claims to being socialized government enterprises. The most striking difference is that the postal service operates in a revenue neutral fashion so that the constituents of the system need not pay fees high enough to cover profits for the system: either for the public treasury or for private gain. On the other hand, the Federal Reserve System is operated in such a way that it is undemocratic, opaque, secretive, and is a revenue enhancing operation where private bankers and financial traders walk away with personal gain in addition to the profits transferred to the public treasury (the portion of our debt that is quasi-monetized). However, though the postal service is closer to the proper way to socialize such natural monopoly industries, both are operated in a manner that insulates them from public oversight. Both cases are therefore overly oligarchical. In contrast we should establish nationalized monopolies that employ direct Congressional oversight (or socialized monopolies with direct legislative and county board oversight in the case of more localized monopolies).

So it is important to list some of the salient features of a democratized and socialized enterprise to differentiate form the oligarchical types of socialization that preserve the same oligarchical arrangements but simply declare them to be a part of the government.

  • democratic controls
  • transparent operation
  • deciding to either :
    • reduce fees to entirely eliminate profits or
    • or allow profits transferred to the public treasury
  • careful controls to eliminate any opportunities for rent-seeking and power mongering among the government employees, executive, and legislators
    • no gifts from contractors
    • no jobs for family from contractors
    • no jobs after leaving office for contractors
    • no contributions from contractors (contractors not allowed to give contributions at all)
    • clear criteria for contract awards and hiring with intense scrutiny whenever deviating form those criteria (as in the case of no-bid contracts)
    • focus on employee compensation and contracts that are interchangeable with broad market circulation and, on the other hand, pursuing socialized production of the opposite non-competitive products
    • careful scrutiny of purchases, contract lets, and salary levels that are out-of-line with other economic sectors
    • complete transparency of contracts, hiring, budgeting, revenues, expenditures, assets, liabilities, surpluses, etc.
    • clear separation between the legislative determination of abstract goals, requirements, and performance standards on one hand from the day-to-day practical and concrete implementation on the other hand.
    • and most importantly ensuring that the privatized portions of government are largely off-the-shelf commoditized products and services rather than highly specialized built-to-spec products and services.
  • No industry panels that interfere with the democratic control and oversight of the public monopoly bureaucracy. Such industry panels are inevitably suggested as a ‘reasonable’ measure since the industry experts know the industry (the Federal Reserve Board of Governors is one example). However, these industry experts know an industry designed to cheat the American people. What we need instead is to remake the industry into one that serves the American people. The best way to build and foster that type of expertise is through the democratic process as Congressional members deliberate in committees, meet with constituents, gather industry testimony and so forth – a learning process involving a diversity of opinions and knowledges. This type of expertise if far superior than the narrow expertise of an industry panel (though industry leaders should be as welcomed as anyone else to offer testimony).

Questions for democratic decision-making

So for any inherent natural monopoly industry there are always many questions to pose for democratic deliberation regardless of the particularities of the industry. All sorts of more specific question arise for each specific public natural monopoly, but these typically apply to any such socialized monopoly:

  • how to collect revenues to cover the costs of producing in the monopoly industry
    • through public treasury (i.e,  general taxes)
    • through a dedicated tax such as an excise tax
    • through user fees such as:
      • flat rate
      • price discrimination
      • income proxy for price discrimination
      • discounts for children, elderly, disabled, students, military
      • frequent user discounts
      • family discounts
      • etc.
  • how much funding to appropriate to meet peak load demands; in other words, how many resources should be devoted to the system so that peak load contention is minimized or to instead allow some degree of service contention to serve as the rationing mechanism, or to charge a peak period surcharge to ration the system’s resources (note such peak-demand contention also arises in other situations such as hospital emergency rooms where the provision of care is limited and the needs for care necessarily vary dramatically across time; there the process of ‘triage’ serves to ration the contention over such insufficient resources in the face of peak utilization)
  • How rapidly to adopt the latest technology and therefore how quickly to depreciate fixed assets for technological advancement purposes
  • how to ensure privacy and what various guarantees of privacy to include
  • keeping public monopoly specific information separate from government law enforcement systems to ensure privacy and Constitutional privacy guarantees
  • what are the base services to offer
  • whether to impose user fees high enough to bring profits for the public treasury, to refrain from profits or even provide external subsidies to the monopoly product to encourage use of the monopoly service
  • for socially designated monopolies (rather than natural monopolies) whether private competitors are allowed and in what areas (like UPS and FedEx for parcel service competing with the United States Postal Service)

Other more specific questions arise when socializing: the monetary systemcredit intermediationcredit reporting, specific insurance funds, railroads and roadways, wireless and wired communication networks, energy grids, water treatment and irrigation systems, natural and cultural treasures, firefighting services, and so forth. However, regardless of the general and specific issues involved, they are always issues worthy of democratic decision-making and for which market mechanisms provide no suitable answers. In contrast to competitive industries where we can vote with our dollars and select the producer or merchant that provides just the products and services we need, such a market avenue of choice is not available in the case of these monopoly industries. Instead our choices necessarily involve public policy debates and compromise to achieve a monopoly provision of resources that meet the needs and desires of the greatest number of constituencies involved. However, our current oligarchical approach instead turns over these issues crucial to the People to those who have leveraged their undue political influence to dominate and control these industries for their own profiteering.

Price discrimination

Among the issues for democratic deliberation listed above, price discrimination may sound like an undesirable feature. However, it is a favorable pricing approach in natural monopoly industries because, when possible, it actually increases the benefits for everyone involved. With price discrimination, a monopolist charges low prices to those who are only able and willing to pay low prices for the service and high prices to those willing and able to pay high prices for the same (or similar) service. Because of the peculiar traits of monopoly industries, both prices increase the net revenues of the enterprise, but those willing and able to pay only a low price for the service would be left out if the monopolist cannot discriminate the big spender from the small spender. In many ways progressive income taxation as a method to fund non-market government services offers similar benefits.

Of course that is the trick. How can a monopolist distinguish those willing and able to pay a high price from those only willing or able to pay a low price. Presumably to do that, the monopolist would have to know the thoughts, feelings, and desires of each consumer. So instead monopolists typically try to find proxies for price discrimination. For example the separation of coach class, business class, and first class on airliners is a form of price discrimination. Those who pay wildly higher prices for first class accommodations are not merely willing to pay such a large differential between coach and first class accommodations, but are actually willing and able to pay much more for even coach than the typical coach traveling passenger. The problem is the monopolist would need to read minds to distinguish those willing and able to pay low fares from those willing and able to pay high fares. A slightly larger seat and some free spirits induces the first class traveler to reveal their preferences and to admit their high-priced inclinations. And the price discrimination on airliners is often quite necessary. The airline would typically be unable to fill a plane if everyone had to pay the first class fare and revenues would be insufficient to cover the costs of the flight. On the other hand, if everyone paid the discount coach fare, the airline could also not cover the costs of the trip. So price discrimination is quite important in that case and is the best way to maximize the net revenue of each airliner-trip. While an airliner flight is not strictly a natural monopoly its cost structure behaves just like that of a natural monopoly until the plane reaches full capacity utilization. In other words each additional passenger involves a marginal cost near zero, meaning the average cost of each passenger continues to plummet until the plane fills to capacity (consider what the average cost to make the trip with one passenger versus what it average costs to make the trip when divided over a filled to capacity airliner).

Unfortunately, often regulators try to discourage private for-profit corporations from engaging in price discrimination. The regulators feel that despite the benefits of price discrimination, it also serves as a tool to for predatory pricing and to dominate the industry and wipe out the competition. So by pursuing anti-trust regulation of monopolies we again undermine the smooth operation of the economy by denying to monopolists an essential tool to attain greater efficiency. So in the case of inherent natural monopoly industries, we should not only no longer try to fight the tendency toward monopoly and instead embrace the monopoly tendency, but also take full advantage of price discrimination mechanisms to improve the efficiency and capacity utilization of these monopoly resources. By employing price discrimination we bring the capacity utilization higher so that, for example, the per-passenger-mile energy use declines as well achieving other efficiency realizations. So price discrimination is a benefit for our purposes with none of the detriments of predatory pricing and market domination with private for-profit control of a monopoly industry. Price discrimination can increase the net revenues for the monopoly service or alternatively ensure revenue neutrality with lower average prices (because utilization levels climb).

This means publicly, democratically, and transparently run natural monopoly industries have a very favorable pricing benefit due to the availability of price discrimination. Since the Federal government already collects income information from taxpayers to collect taxes, the same information can be used to inform an effective price discrimination strategy and provide discounts for those with less means and therefore less likely to pay the full price of the monopoly service. Imagine a revenue neutral communication network operated as a public monopoly. The average prices charged to customers must cover the costs of building and maintaining the communication network. However, the marginal cost of each customer is nearly zero dollars. In other words, once the infrastructure is built it costs virtually nothing to allow another person to use the system. Think of using the internet without any peak level contention. That means that any customer paying over $0 adds to the net revenues for the system. By offering lower-income customers deep discounts, it decreases the average price everyone must pay while still allowing the low-income customers to participate in the network (the average cost decreases because the capacity utilization climbs and so the same total cost is spread over more users). While occasionally for-profit monopolists attempt to offer such programs, the costs are still higher for everyone because the customers must also cover a handsome profit for the private monopolists and often cover an immense regulatory bureaucracy that tries to keep the private monopolists from siphoning off too much profit. So publicly-run monopolies support a progressive-tax-like pricing structure where those least able to afford to pay for the costs of the system pay less than those able to shoulder more of the costs. Yet at the same time by involving more customers in the monopoly – even to the extent of universal participation – it lowers the costs everyone pays on average..

Decentralization and Community Based Economics

Two of the key values of the Green Party are Decentralization and Community-based economics. So one may reasonably ask how the socialization of monopoly industries adheres to those key values. My contention is that the operation of inherent monopolies as transparent bureaucracies with strict oversight from the most democratic institutions we have, fosters both community-based involvement and decentralization as well as grassroots democracy. It does this because we are admitting that certain industries will tend toward national monopoly no matter what we do and, rather than fight it, we embrace it with democratic decision-making and transparent operation. By carefully separating the natural monopoly operations from the other operations we actually create greater opportunities for community-based economics to thrive. For example, by operating our electronic monetary system and credit intermediation system jointly as a nationalized operation, the needless duplication of bureaucracy and production are eliminated. By operating it as a democratically controlled public utility, this simplified operation facilitates equalized access to all commercial and financial participants regardless of their size and influence. We all can become our own bankers. Though we are dependent on the centralized infrastructure of the system, that infrastructure is vastly more simplified than the current oligopoly controlled infrastructure, but now access to the system is equalized.

In addition, the Green Party “Social Justice” key value says that “All persons should have the rights and opportunity to benefit equally from the resources afforded us by society and the environment.” The only way to ensure we “benefit equally from the resources afforded us by society and the environment” is to socialize and democratically mediate the utilization of both natural monopoly industries and the other monopoly resources as well. Moreover the ability to designate particular industries such as the postal service as monopoly industries goes directly to the heart of ensuring equal access to a social resource as determined through democratic deliberation.

Natural monopoly industries at the local community scale

Other natural monopolies are more appropriately decentralized, but still nevertheless constitute natural monopolies. For example, municipal road networks and municipal water systems. Since they are also natural monopolies, we should count on decentralized operation of these monopolies at the level of municipal, county or state government. Though there are still some economies of scale involved and advantages to consolidation, such economies of scale tendencies are not so strong that every roadway in the United States should be maintained and operated by one National division of streets and sanitation. On the other hand, if every block in a community needed to administrate its own snow ploughing and pothole repair this would be too cumbersome too. The county or municipal scale is entirely appropriate for such operations, though with improved public deliberation and debate over the process.

Often times a national natural monopolies could be run as a series of localized monopolies. For example the interstate highway system could have been pieced together from a patchwork of state run super highways much like the federal highways system was created. The problem here is that the administration can become more cumbersome since states need to coordinate the connections between segments and the uniform standards of the system might be compromised. So while in general I support socialization on the most local level possible there are a wide variety of criteria which we should consider when making such decisions about scale. Three consecutive states or communities might have disagreements about the need for infrastructure, but that does not imply the community or state in the middle should have complete veto power to prevent commerce between its neighbors. So sometimes, in rare cases, some less local governmental powers are important to mediate among conflicting views with regard to these natural monopoly infrastructure questions.

Furthermore, if we fail to recognize the inherent and natural tendencies that foster the great concentration of power and wealth in inherently national monopolies, we actually undermine decentralization and community-based economics. By allowing private for-profit dominance of natural monopoly industries we actually invite plutocrats to dominate our political institutions as well. Without the public operations of such monopolies one of two things occurs. Either no one is there to provide these monopoly services and communities become isolated and cutoff from one another (for example, no roadways or communication networks between them), or a private for-profit enterprise will eagerly step into the void and provide such monopoly services and accumulate immense profits for themselves in the process by wielding its new found monopoly powers over the community in a manner that is completely the opposite of community based and decentralized economics. Furthermore it undermines the Green Party’s other key values such as social justice and grassroots democracy. Moreover the monopoly-profit potential creates a source of governmental corruption since now we have permitted a rent-seeking struggle over the spoils of this natural monopoly profiteering which goes to the corporations and politicians most willing to undermine the US Constitution and the trust of the People.

What about the bureaucracy of a government run monopoly?

Needless bureaucracy is clearly something to be avoided. However we do not avoid bureaucracy by permitting for-profit oligopolies to control an industry: they accomplish their private for-profit goal through a bureaucracy just as government would accomplish the goals established democratically through a bureaucracy. However, surrendering these monopoly industries to private for-profit oligarchs actually exacerbates the problem of bureaucracy. A natural monopoly will be run by an immense bureaucracy whether it is a democratic and transparent one on one hand or an oligarchical and shadowy one, on the other hand. The common approach in the United States to deal with natural monopoly industries is to create the appearance of competition. However, the basis for genuine competition involves hundreds or thousands (or more) of separate businesses each providing the same service. Or at the very least the barriers to entry into the industry must be low, which is impossible for the natural monopoly industry case. When those products and services are instead provided by a handful or even a few hundred closely colluding businesses where entry into the market is based on fealty to the existing governing elites, this is an oligopolistic industry.

And oligopolistic industries have nearly all of the unfavorable traits of a privately monopolized industry. The businesses are not really responding to the market, they make the market. That is these businesses collude to carve up the market and impose monopoly powers on the consumers – both individuals and other businesses – in the market. It is not merely limited to price gouging. The oligopolists also compete by expanding the market in unscrupulous ways. The monopolists will also promote over investment and over exploitation of natural resources because they can reap more profits by increasing the scale of production (not merely by producing more efficiently as in the case of competitive enterprise). For example to create the semblance of competition, cable television providers will each install separate cable networks throughout a city or region. They can do this because they can charge drastically higher prices due to their monopoly or shared oligopoly positions. No one gains any cable redundancy in this scenario. Those using cable provider A lose their service when cable provider A’s cables go down, even though cable provider B’s cables run right up to the same home or building.

So typically the bureaucracy is compounded by the misguided attempt to avoid monopoly and by imposing several oligopolistic bureaucracies onto the industry (the bureaucracies of the monopolies themselves and then the unwieldy regulatory bureaucracies within government which is often, if not always, captured by those industries they attempt to regulate). Furthermore, each corporation has its own bureaucracy, so having two bureaucracies instead of one public monopoly bureaucracy already compounds the problem of needless bureaucracy. Yet it gets even worse, because due to the inevitable heavy concentration of market share in the inherently monopoly industry, various layers of government will create more bureaucracy to try to regulate the behavior of the pseudo-competing oligopolists. Or the government bureaucracy will purposely divide a monopoly in two, creating more bureaucracy but creating the appearance of competition. The regulatory bureaucracy itself becomes an impediment as the regulatory bureaucrats become entrenched in their positions. Again this is not what economists mean by competition or a competitive market and it is certainly not a free market when created by such regulatory hand-waving as the corporatist spin doctors would have us believe. This duopoly still has all of the negative hallmarks of a monopoly industry, except now it also has incentives to waste resources on achieving market dominance and a large government bureaucracy to regulate it as well.

So anyone who genuinely wants to minimize bureaucracy has two choices as far as I can tell. The first choice – and the best choice – is to encourage government to step in and to operate any monopoly industry through a bureaucracy that is as transparent and as responsive to democratic institutions as can be – and that includes tight democratic oversight as well as thorough customer response systems. The second option is to try to avoid the development of such monopolies. For example, one could outlaw railroads. or outlaw the internet because such infrastructure inherently requires a cumbersome bureaucracy of some sort to operate it. This latter option is not desirable in my view, since the broad customer base proves these monopoly industries are services desired by large segments of the population. More than this, these natural monopoly industries actually form the bedrock of much of our modern economy.

But does not efficiency require a profit motive?

The governing elites in these monopoly industries – in defense of their privileged position – inevitably insist that the profit motive is essential to the efficient operation of such an industry. At the scale of the monopoly industry, the profit motive barely enters into the achievement of efficiency. It is not that these for-profit corporations do not constantly try to increase their profits, but they do so through bureaucratic mechanisms. In other words they set standards, goals and expectations of their vast hierarchy of employees and expect them to fulfill their duties which in concert bring the corporation handsome executive bonuses, substantial dividends and generous retained earnings. So those doing the day-to-day work do not reap the profits. And those who reap the profits do not do the day-to-day work (or do a very small portion of that day-to-day work). So just as a set of shareholders, boards-of-directors and executives might fashion policies, procedures, goals, and measures of success to manage and direct their employees in this vast bureaucracy solely to create a program to maximize profits, so too can the People, their Congressional representative and their elected executive fashion a program to achieve the democratically determined goals of the people. All of the same governance problems remain, whether this is a private for-profit monopoly or a public democratized monopoly. However in the case of the public monopoly the goals of the enterprise can be fashioned to meet the needs of the public and the users of the system and not myopically to maximize profits.

It is also important to remember that in the faux-maintained oligopolistic industry, the major thrust of attention in maximizing profits is focussed on wholly inefficient rent-seeking activities as each oligopolist tries to dominate the market, increase consumption of their customers and accelerate the obsolescence of the infrastructure. In many ways the very definition of efficiency becomes circular for these monopoly industries as efficiency is measured solely as profitability even as the industry leaders end up encouraging vast overconsumption of natural resources (as we have seen in the auto industry domination and control over our roadway infrastructure).

While non-executivies might also receive modest bonuses and stock options to share some of the benefits of success in a natural monopoly industry controlled by for-profit private corporations, such bonuses and stock options are not the lynchpin of their bureaucratic operations. Employees are motivated by all sorts of incentives. In a favorable work environment, many employees work diligently to meet their assignments and complete their duties because the culture or work simply enforces certain expectations that they do so. Each employee depends on the others pulling their own weight and so that alone aids the operation of any enterprise. Moreover, employees are motivated by desires for career advancement, pay raises, and the honor of their peers. Bonuses are quite far from the most important motivator for employee dependability. In many cases they are simply a bone tossed to employees to push them to subscribe to the profit-seeking mindset and culture.

In fact, in public service, such profit-motive is a detriment to the system: including public service within these natural monopoly industries. In public service we want to attract people seeking other non-monetary rewards: for example those simply dedicated to public service. Reducing motivation to the profit-seeking alone attracts those most interested in profits above all else. We should hardly be surprised by the level of corruption in public service when we treat profits as the only legitimate aspiration for a public servant – or anyone else – to embrace. In fact replacing in-house public service employees with government contractors to inject the profit motive into the scenario is completely misguided since all of the governance problems that existed for the government employer / government employee relation remain in the case of the government buyer / government contractor relation. By insisting – without good reason – on relying on the profit motive to meet the needs of the public for service – we invite a corrupting and corrupt influence into government: particularly when the profiteering involved is comprised mostly of rent-seeking behavior which inevitably overwhelms natural monopoly industries when operated privately and for-profit.

Constitutional Basis

Several key provisions of the constitution apply:

  • Article I prohibitions to Congress and the states on the granting of titles of nobility.
  • Article 4  guarantee to a republican form of government.
  • Article 1: the broad power granted to Congress to levy taxes when it is to provide for the general welfare.
  • Article 1: the examples of industries explicitly socialized in postal roads, postal service and the monetary system.

First it is important to consider the meaning of the prohibition on granting titles of nobility. This could potentially prohibit several things. It could prohibit the actual designation itself though not accompanied by any powers of nobility (such as designating someone the Archduke of Florida). The prohibition can be against merely the religious symbolism as noble representatives of God might grant to others noble rank. The prohibition can be against granting the powers traditionally enjoyed by nobles such as seignorage, eminent domain, complete control over any public commons, and so forth. My reading of these sections is that they prohibited all of these senses that Congress or a state might grant a title of nobility. If a democratic republic  can grant the powers of nobility over specific domains within the borders of the United States, that would completely undermine the republic the framers sought to establish. The prohibition cannot be merely enjoining the granting of a titular designation. Such a grant would hardly be worthy of inclusion in the Constitution.

So I read these sections of Article 1 as prohibiting the states and Congress from granting any privileges of nobility to anyone and that all such privileges must remain the prerogative of the republican government (either at the federal or state level as constituted within the Constitution). To grant these powers of nobility would constitute a slippery slope which eliminated the republic. Combined with Article 4’s guarantee to a republican form of government, the intention of these sections is clear.

Yet these natural monopolies are indeed components of the public commons. Just as postal roads were recognized explicitly as a power necessary for Congress, later transportation networks are likewise part of the public commons (transportation of fuels over pipelines, passengers over railroads, freight over railroads, power over electrical girds, or bits over data networks).

With great wisdom, the US Constitution already supports the nationalization of inherent monopolies. The very first power granted to Congress is the power “To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” It is also clear that the framers thought of such natural monopolies as essential for providing for the general Welfare of the United States. For example, Article One of the US Constitution grants to Congress the specific power to “establish post offices and post roads”. The basis for such Congressional power is precisely the same basis I use in my advocacy for the establishment of any and all desirable natural and socially designated monopoly industries as public utilities.

The monetary system was also explicitly listed in the US Constitution as a power of Congress alone even so far as to explicitly deny the powers over money origination and regulation to the individual states. Like all natural monopolies the framers understood that it was crucial for the general Welfare of the United States for the monetary system to be provided through government and not through independent states or private for-profit corporations. Though the early leaders of the United States controversially chartered a National Bank, they still did not give that bank the power to originate money and regulate the value thereof (although the banks later surreptitiously usurped that power through fractional reserve lending).

Essentially the framers of the Constitution socialized the vast majority of economic sectors appropriate for nationalization: the post office, postal roads and the monetary system. The monetary system, post offices and the supporting infrastructure for post offices were the key  monopoly industries familiar to the framers of the Constitution. There were no energy grids; there were no other communication network technologies (other than snail mail) and there were no railroads. Modern insurance and credit intermediation were still in their infancy and not as well understood as monopoly sectors as we understand today.

And our postal service is precisely the type of monopoly industry that fits right alongside all the other examples I have given. Our postal roads involve economies of scale and therefore constitute a natural monopoly. On the other hand the postal service itself rightly serves as a socially designated monopoly to create a subsidy for rural postal delivery. By far the greatest costs of postal delivery goes toward urban deliveries. However, the cost per piece or the cost per address for delivery in urban areas is far lower than the cost per piece or cost per address for delivery in rural areas. If it were not for the great volume of deliveries in cities, the postal service could not affordably serve the rural areas. Moreover those living in rural areas would find paying the actual cost of rural delivery so out-of-reach that rural living itself would be a greater hardship. If the postal monopoly guaranteed by the Constitution were relaxed, then private for-profit enterprise could easily cherry-pick the low-cost urban routes and undercut the already low price of a letter. However, if we allowed that to happen, we would also have to tragically abandon the rural delivery system for lack of adequate revenues.

On the other hand, there are many constitutional problems with our current approach to these natural monopoly industries. First these natural monopoly industries are typically operated by for-profit corporatists in areas properly reserved as a governmental role because the very policy decisions made by these industries which lie at the center of commerce serves to regulate interstate and intrastate commerce: a role reserved only to Congress. Such for-profit corporations in a natural monopoly industry can decide which commercial establishment gets credit and which does not. They decide how much commerce to fuel – even so far as to push us toward ecologically dangerous overconsumption.

Moreover, the privatization of natural monopoly industries is meant to grant a private for-profit interest the privileged position against all others, thus undermining the general welfare of the People. So the decision to maintain these as private for-profit corporations grants to these corporations a privileged position that promotes the special interest of these corporations over the General Welfare of the People. In addition, the natural monopoly industry corporations themselves are typically chartered by individual states which therefore leads states to unconstitutionally exercise powers to regulate interstate commerce throughout the United States by delegating to specific adversarial corporations the privileged position to operate these monopoly industries.

Furthermore, Article Four of the United States constitution guarantees to every state a republican form of government, yet these private for-profit monopolists carve out fiefdoms for themselves where they make essentially governmental decisions in a purely authoritarian and non-republican manner. For example, they decide how our broadband bandwidth is used or how much suburban sprawl we will pursue. Longstanding jurisprudence has held that states are prohibited from engaging in such regulation of interstate commerce, but the chartering of nationally operating oligopoly corporations within natural monopoly industries allows states to skirt both this regulatory prohibition and the guarantee to a republican form of government for the people of that state and all of he others.

Much that these monopolists do to increase their own monopoly profits has an adversarial impact on the rest of us. And while the existing monopolists understand they must do something to appease the US electorate to continue to siphon off their monopoly profits, they do as little as possible to still maintain their privileged position. While we have not seen the absolute hinderance of interstate commerce to such an extreme, we do experience a hinderance of interstate commerce every day in the monopoly price gouging, the capricious and elite access policies and the insatiable and uncontrolled accumulation associated with these inherent natural monopoly industries. While we have no experience regarding how much better interstate commerce would flow without the imposition of these oligarchical rulers over our interstate commerce, those with experience in various industries can no doubt imagine the possibilities. We gain a glimpse of their hopes and aspirations in various industries calls for net neutrality that would allow more fluid interstate commerce across our communication networks. Likewise, we see similar situations in the struggle throughout America’s cities to recoup the losses of our intercity streetcar systems which the oligarchical auto, tire, and oil industries replaced with suburban sprawl and traffic jams. We see it in the speculative gaming done through red-lining in banking which allows credit intermediaries to siphon off immense profits for themselves but needlessly undermines the prosperity of our communities.

Without the smooth running of our monetary system, credit intermediation, insurance funds, energy grids, communication networks, transportation networks, renewable natural resources (water, forests, fish, wildlife, wildlife habitats, etc.), exhaustible limited natural resources (fossil fuels, metallic ores, etc.), natural treasures (Yosemite, The Grand Canyon, Yellowstone, The Great Lakes, etc.) our commerce  – intrastate and interstate – would seize-up and stagnate. So I believe we already have ample Constitutional authorization to Congress to produce and operate these monopoly industries immediately.

What about our privacy from government and Other Constitutional Protection?

The operation of certain monopoly industries by government agencies implies that certain agencies of the government will have information about persons that it would not otherwise  have. For many this issue raises serious concerns. For example, the post office necessarily has information about the names and addresses of nearly everyone in America. With only a little effort, the post office could learn still more about each person simply from the direct mail marketing reaching each person. From someone’s direct mail, we can learn that they may be expecting a new baby, or have an interest in stamp collecting, or an affinity for star gazing, and so on. If the government ran our checking account system of electronic ledger deposits, they would know the amount and date of every transaction that took place. If the government operates the railroads or the tollway systems, they can know precisely who drives on the tollway systems or rides the trains and where they travel.

While such information potentially creates government access to somewhat private information about us, the operation by private for-profit monopolists hardly solves the problem without proper legislation and adherence to the spirit of the US Constitution. For example, the FBI currently colludes with the banking sector to invade the privacy of depositors by disclosing large cash withdrawals as a part of the ostensible counter-terrorism efforts. In fact, the recent public humiliation of Eliot Spitzer which deposed him as governor of New York because he admitted to frequenting a Manhattan female escort service was made possible by these very measures. Because Spitzer made large cash withdrawals to pay for the escort service, his bank reported him to the FBI because they ostensibly suspected the Governor of New York might be a terrorist.

So we need to ensure the laws and procedures of our public bureaucracies adhere to the letter and the spirit of the Constitution whether those bureaucracies are private for-profit corporate bureaucracies or public democratically controlled bureaucracies. We can ensure all legislation creates a firewall between the monopoly enterprise such as our electronic monetary system and the criminal investigative arms of government. The sharing of records with law enforcement should always involve due process whether Citibank is sharing those records or whether a new Bureau of Electronic Clearing is sharing those records. In many ways the judicial precedents already favor greater scrutiny of government agencies than private for-profit corporations. Whereas Citibank can claim it has no obligation to follow the US Constitution, a US Bureau of Electronic Clearing under the auspices of the Executive branch and the President of the United States could not credibly make such a claim.

Conclusion

These are issues discussed in most any Economics introductory textbook, but usually in the latter portion of the book which many semester-long courses never reach. All the virtues of markets disappear when confronting uncontrolled natural monopolies and oligopolies. However, there are many beneficial traits gained from natural monopoly industries: it is just that private for-profit monopolies will hoard all of those favorable traits for themselves at the expense of their customers and everyone else. Government regulation is often put forward as an alternative to socialization, but over a century of experience with government regulation has shown us that it is government that gets regulated by the oligarchs and not the oligarchs regulated by government. Therefore the only way to preserve the greatness in the American vision is to socialize monopoly industries, impose tight democratic oversight and high ethical standards, and run them as transparently operated government bureaucracies. Anything less will allow the steady march toward plutocracy to continue.

Policy Prescriptions

  • In Congress, I will steadfastly push for greater nationalization of natural monopoly industries appropriately socialized at the Federal level.
  • For other natural monopolies, more appropriately socialized at the community level (such as, energy grids, wireless broadcast, and wired communication networks), I will push for legislation which supports local communities in doing so.
  • For existing nationalized industries I will push for more responsible stewardship by sponsoring new legislation which imposes the sorts of democratic socialization I advocate here, including:
    • The elimination of separate executive boards and other undemocratic interference which deny the guarantee of republican government inscribed in the US Constitution. The officers of such nationalized industries should report directly to the President and respond to the guidelines and performance standards determined by Congress
    • Requiring all nationalized industries to develop and maintain clear reasonably concise Public Common Interface documentation (PCI) that guides the public in how to use the public monopoly services, all user-rates and so forth with a goal of equal access to all and rate discounts for those on limited incomes. The development and amendment of each PCI will involve Congressional hearings, a public comment period and recommendations from the agency’s staff. For example, the rail system should make it clear how an operator can schedule access to the rails, use the rail system, board passenger trains, and precisely the minimum requirements for locomotives and other rolling stock required for private carriage. Similarly, the electronic monetary system must clearly describe the protocols for interacting with the system and provide a published list of the rate schedule for making electronic transactions or clearing checks.
    • Requiring real-time accounts and budget reporting and uniform systems for full transparent disclosure of operations. These industries should not be competing or jockeying with private industry and the public but should operate solely to serve the public, communities, and competitive private enterprise. Therefore these public monopolies need not maintain any trade secrets but instead must operate transparently.
  • As a general rule, government should only produce these monopoly industry products and services and only a few other exceptions:
    • Nuclear power should be Federally operated with at least some military protection. We worry about other nation-states acquiring nuclear material yet currently we fail to secure our own nuclear material in the US and keep it out of private for-profit hands (I believe current nuclear fission technology is unsafe and irresponsible, but that until we phase it out we must secure it from private for-profit monopolists).
    • At the state and local level I support the rights of local communities to empower government to engage in the retailing of intoxicants and other controlled substances such as liquor, cigarettes, marijuana, etc.
    • Products which are highly specialized and cannot be acquired through competitive bidding or purchased off-the-shelf like any other consumer might purchase them. So, for example, construction services, standard vehicles, office furniture. and office equipment are all completely acceptable for privatization and competitive bidding, while much military hardware is not suitable for purchase from private for-profit oligopolists. While these are not necessarily natural monopoly industries they involve complex hardware so precisely specified as to creates some of the same graft and corruption problems inevitably involved with private for-profit operation of natural monopoly industries.