In the name of Profit

The Government, as defined by the Oxford dictionary, is a group of people with the authority to govern a country or state; a particular ministry in office. Whether this group comes into power by the will of the people or by way of armed conflict, what is undeniable is the fact that while it is in power, it seeks to remain in control. To remain in control, it has to do two things : Firstly, to protect the political region under its control from external invasions, and secondly, to ensure that there is no revolt and rebellion. The former, I will not go into in this article, but to do the latter, it has to try to provide at least a bare minimum level of comfort among the people it chooses to govern. (Of course, suppressing the population with armed force is a promising approach, but doesn’t offer the leaders the most comfortable lives.) Certain systems of government do so merely by policing the people to ensure that they do not settle their differences by violent means, while having a laissez-faire approach to all other aspects of society, whereas other systems offer other services to the people, such as building of roads, and provision of rations, fuel, gas and water. Over time, countries and other internationally recognized political powers have moved away from the former system and more towards the latter. Today, the governments of the most powerful and populous nations of this world do more for their people than they have ever done in the past. It is also this form of government that I intend to write about in today’s article.

To understand a government, I feel that it helps to think of it like a company where the leaders of the country are the directors, the various government authorities, officers and servants are the employees of this fictitious company, and the people are the shareholders. Think of it as an umbrella corporation with each arm of the government being a subsidiary company and each department of each arm being a company subsidiary to that subsidiary company. Think of it in terms of a hierarchy of companies, all of them owned by that mega-corp known as the Government.

Just like there are different kinds of companies offering different kinds of services and functioning differently, there are different kinds of governments. For the purposes of our discussion today, let us consider the kind of system where the government offers every conceivable service and manufactures and sells every conceivable product. From construction of roads, buildings and other infrastructure, to supply of water, electricity, and even consumer electronics, this government does it all. Moreover, this government allows private individuals and privately owned companies to also provide these services and manufacture and sell these products with certain exceptions and under the condition that the products and services are subject to government approved regulations. This government does not allow private parties to make and enforce laws, provide basic nutritious food, medicine, electricity, water, fuel and gas, construct roads, bridges, airways, railways and tramways, and to engage in other allied activities, alleging that these activities are of public interest, and therefore ought to be exclusively handled by the government using taxpayer money.

In this background, an upstart politician raises his voice and speaks out against this approach of the government. This politician advocates allowance of private competition in fields of public interest, alleging that the control of public resources holds back innovation in these fields. He speaks out against the regulations of the government, saying that they stifle the private businesses and do not allow them to perform in the best manner. He demands that the market be allowed to decide whether private individuals can offer better services than the government. While the man does make fine points, it is necessary to examine this problem from a neutral perspective in order to properly solve it. Is privatisation really needed? And, if so, to what extent? That is what we hope to figure out next.

Let us first consider the functioning of an enterprise run exclusively by the Government. This enterprise is funded by taxpayer money, and every profit of this enterprise and that of every other public enterprise eventually enters a pool (which also contains the money of the taxpayers), a share of which will be allotted to this enterprise in the following financial year. When the enterprise makes a loss, it is bailed out by relying on the aforementioned pool of public money. There is no real incentive to profit, but that is in line with the directive of this enterprise, as the enterprise does not exist to make a profit, but merely to serve the people in every way possible.

Moreover, unlike private enterprises, public endeavours are subject to many more regulations, which leads to more red-tape and bureaucracy. In addition to this, there are more levels in the hierarchy of a public corporation, owing to the fact that even the directors of these companies have to report to the ministers of State, if not directly then through the officers of the departments that their companies are subsidiary to. These factors greatly slow down the functioning of the publicly owned ventures.

The worst aspect, perhaps, of government companies, is that the employees are government servants, and as such have certain protections that render them much more resistant to scrutiny. In many cases, it is not even allowed to prosecute public servants without the prior sanction of the government. This sense of power and protection can breed a culture of laxity and could lead to catastrophic failures that would have been avoidable otherwise.

Keeping this in mind, consider a government that not only insists on undertaking all ventures by itself but also forbids private entities from engaging in any business. Consider how this kind of government could treat its people with the absolute power that it holds over them. It could show them only what it wanted them to see, and could allow them only ideas that it wants them to entertain. It could suppress the voice of any dissenter by disallowing him or her access to every product and service. It could do anything, because if one owns every resource, one also owns everyone who relies on those resources. Of course, it wouldn’t last forever. This tyrannical government would rest on the shoulders of the people until they have had enough, and then with a great heave, the people would throw off their shackles, and the government would fall. This has happened before.

I’m sure that you have been eagerly expecting me to also make reference to corruption, and I can understand your confusion as to why I have not addressed it yet, owing to the fact that it is generally seen to be the most insidious drawback of government ventures. The reason I haven’t addressed it yet, is because this is not a drawback only of public companies, but also of private ones. I am referring not to lower-level corruption that you would expect from public services, but to ones higher up in the hierarchy. Do you think that the hiring process is always fair? What is the culture of kissing ass for promotions, if not just another form of corruption? What of exorbitant vacations and salaries offered to the top brass of companies on arbitrary lines? Anti-competitive tactics? Aggressive takeovers by means of undercutting and abuse of public need by profit gouging? Are these things suddenly not in the same theme as corruption just because they’re done by private companies?

While public companies do appear to be sinking ships, perhaps we should consider what kind of ship a private company is. Is it perhaps a battleship with its cannons locked onto you? Let us see what they offer, shall we?

Private companies start off on an investment, usually by those people who see the potential of profit in the proposed venture. They start with a debt. The goal is to pay off this debt and still have enough to make profits. At the end of the financial year, it must be decided if more debts are to be taken, and further, what section of the profits must be re-invested to ensure the company not only functions for the next financial year, but is also able to prevent competing companies from putting them out of business. To do so, they have to focus on improving their product/service, cutting costs, increasing efficiency, and so on. (Oh, by the way, to a company, the wages of its employees are considered costs.) The end result is better and cheaper products and services. Seems good, doesn’t it? What could possibly go wrong, you wonder, if we privatised the entire government? Brace yourself, my friend, for the ride ahead gets pretty bumpy.

The biggest enemy of any established company having its own customer/consumer base is every other company engaged in the same business, because these competitors eat into its profits. Therefore, every company, naturally prays for the failure of its competitors. Of course, it doesn’t stop at praying. Corporate espionage, adversarial advertising, monopolistic trade practices, and so on are some of the side activities that companies engage in to the extent that government regulation stops them from doing so.

That brings us to private enemy number 2! Government regulation. If there’s something that private businesses hate about as much as each other, it is their common enemy, the rules of conduct as laid out by the government, or in other words, the upper limit to the amount of bullshit that they can get away with. Do you love the environment? Do you want to make sure that global warming is slowed down to a sustainable level? Companies don’t, and for a very simple reason : Regulations, whether they’re for the benefit of humans, or for the benefit of activities and entities that are beneficial to humans, stand in the way of cutting costs and maximising profits, and therefore private corporations will not only try to look for loopholes within them, but also try to engage in what is called as lobbying. In case you don’t know what that means, Encyclopedia Britannica defines it as any attempt by individuals or private interest groups to influence the decisions of government. What? Did you think that certain political figures — we both know who — actually believe that Global Warming is a myth?

Back to the topic at hand, consider a situation where every aspect of life is handled by private ventures. Legislation and law enforcement, provision of necessary resources like food, water and even breathable air. Imagine having to pay for protection of your civil liberties. Imagine having to pay for breathable air. Imagine what happens when one such company bankrupts all others using anti-competitive means. Imagine being milked for all your money’s worth for drinking water. Imagine being put behind bars or being executed for drinking water, eating food and even breathing air without paying the requisite credits.

Dystopian future aside, consider the implications of cutting costs i.e. employee salaries. Do you think that these cuts are going to make it to the salaries of upper management and the owners? Of course not! The rich continue to become richer while the poor become poorer. The capitalist dream of making it big is sold by those who have already made it big to those who they hope to subject to their modern day slavery. How many people with their dreams of making it big actually succeed? For every Steve Jobs and Mark Zuckerburg, there are countless nameless faces struck down into poverty and being forced to do low end jobs because they could not make a product or service that they could sell enough to make a profit, because they could not compete against bigger players, and because they had no idea where even to begin. It is a world populated by the employed and run by the employers. If privatisation benefits any class the most, it is the class that already has it better than the rest.

So, does that mean that we oppose privatisation? No, of course not. Privatisation has its own perks, and to shun it completely is to look towards a future devoid of innovation and growth. However, it can’t be allowed to run wild. There must be sufficient regulation, enough to curb malpractice and enough to prevent any private entity from gaining monopoly over public resources, but not so much as to crush sustainable and humane growth. Companies have to be prevented from engaging in practices that hurt their employees and other innocents, and they must not be allowed to commit acts of price gouging their customers and of engaging in monopolistic trade practices. They have to be kept under watch.

Again, the same question arises as the one in the article about the media : Quis custodiet ipsos custodes? (Trans. Who watches the watchmen?) Who indeed? The answer is fairly obvious, of course. You know them too. Oh, don’t look around! After all, you are one of them. The people must watch the government. The people must stand against their governments. The people must ensure that they are not betrayed by their protectors, and at the very end, the burden of doing so does squarely fall on their own shoulders, as it is their interests that are under attack.

After all, is it not written: Vigilantibus non dormientibus æquitas subvenit (Trans. Equity aids the vigilant, not the sleeping ones [that is, those who sleep on their rights])?