Comment by AnthonyMouse | Hacker News Reader

Comment by AnthonyMouse | Hacker News Reader

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> I would argue that if something may not fail you can only pretend to privatize. You only privatize the profit during the good times.

You can straightforwardly privatize things that can't be allowed to fail. Power generation is a decent example: If you have a hundred independent generating companies that all sell into a live auction market, they have to compete with each other which keeps prices down and the market as a whole remains reliable because there are many independent suppliers using different generation methods and if any one of them experiences a failure you can immediately switch to the others. The market has the incentive to be able to supply even during grid stress because the price will go up then, so suppliers with reserve capacity make back their costs for keeping it in reserve.

The problem comes when there is corruption. Instead of having a competitive market, the contract is assigned to cronies, or a lack of antitrust enforcement allows the market to consolidate until the suppliers are a cartel. Then, since competition is thing that gives privatization its advantage, the lack of competition causes the public to get screwed.

There can't be a competitive market. The entity that operates the grid has a monopoly on all customers in the area. So I would say entities that govern grids fall in a can't-be-allowed-to-fail-category while entities that govern generators do not (unless they buy enough generators in a region to effectively become a monopoly).

If you had a monopoly generating company and it failed then the power goes out even if the grid is up. It's just as important as the grid, but it's amenable to competition.

"Operating" the grid isn't the natural monopoly either. The natural monopoly is actually the physical space beneath the grid, i.e. the roads. If a storm knocks down a pole or some transmission lines need to be upgraded you could put out bids to any number of companies to come and do the work. If customers want to buy power from a generator, the grid is used to deliver it, but that doesn't mean the grid operator has to be an intermediary between the supplier and the customer instead of a vendor of the supplier paid to deliver power. It's not even obvious that they should be paying per kWh instead of funding distribution through taxes in the same way as the roads, since a well-functioning grid should never exceed peak capacity but using otherwise-idle transmission capacity has no variable cost.

And then what's the natural monopoly? Just physical ownership of the infrastructure, and some accountants to predict when demand is about to outstrip supply and bids should be put out to expand capacity.

Damned if you do, damned if you don't.

I didn't get to bid in an auction. Providers bid until they had enough then the price was fixed based on the most expensive source.

We also designated a windy chunk of government land next to my city to private wind energy. Besides land it needed a bit of subsidee to spin them up.

Big turbines happened that provide enough power to run the city.

Not that the city didn't have the money to do it themselves. Its dwellers could also easily afford it. That's just not how things work around here.

Mysterious actors blew up some pipeline some place in the north and the highest bit went up dramatically.

It didn't fail, people just couldn't pay their bills anymore.

The market was very good at increasing profit when demand was larger than supply.

One could imagine worse circumstances with a larger effect.

> The market was very good at increasing profit when demand was larger than supply.

That's what it's supposed to do. Then in the absence of regulatory barriers to entry, new suppliers enter the market to capture those profits, until the profits aren't so big anymore because there are more suppliers.

One of the things that messes people up here is that they want consistency but don't want to pay for it. You have a competitive market which is providing low prices until there is a supply disruption. Then prices are temporarily high. If you wanted to you could have bought insurance or futures etc. so that you would always pay a consistent price, but then you'd be paying a higher price than the market on the days when supply is good so that you could pay a lower price when supply is low. People then complain about that too, but those are your options; if you pick the "don't buy insurance" one then you're exposed to events, but you should be the one who gets to choose.

And maybe if you're poor you don't want the insurance, what you want is to have the lower price most of the time and cut back your usage when the price is high. But either way, that should be something you get to decide instead of something somebody decides for you.

Yes, markets are suppose to kick you when you are down.

My gut says it is like needing for example a car. You could rent or lease or you could buy one in cash on on credit. Each choice makes sense to someone. If it is to be a collective choice/deal it should be cheaper and I see no reason why it can't offer the same options. We have this weird tendency to shove all collective arrangements in governments boots where we know the outcome will be something stupid, turn into something ridiculous or both.

I really want to see gov processes strictly defined. Then we can have the government set up entirely independent bodies that strictly follow their charter. Ideally it pays no taxes, no one works there, no one owns it. I might even like blockchain for this purpose. We want 1234 new lease contracts for 2026, any company may bid, customers press accept. The one most accepted gets to provide the [proverbial] cars.

It seems doable.

> You can straightforwardly privatize things that can't be allowed to fail.

What are some examples of successfully privatized utilities?

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