You appear to be making a couple erroneus assumptions here. Firstly, that natural monopolies would be in the employ of a government body and could be fired. If that same tv cable company dealt directly with the consumer the only recourse a customer would have is to cancel their cable service. Not a big deal for television, but rather important for necessities such as water and electricity. Or would you argue that all natural monopolies should only be allowed to operate only while under the employ of a government? This defeats the purpose of the company not being run by the government.

Secondly, you seem to assume that the city is a dictatorship. In which case, certainly there would be a problem. In a democratic system if the municipal government was providing your tv or utilities and handling it poorly you could make your choice and not re-elect them. In a liberal democracy, you can fire them. Without this ability, granting the government the power to fire a company as per the first assumption becomes moot. If they're not accountable, there's no reason to trust them to make good decisions and dump bad service providers.

Therefore, the arguement that one can trust private monopolies because the city can fire them but that one cannot trust the city because you can't fire them is spurious.

Let's see. It seems I didn't explain things clearly enough. My points were (I should have stated them explicitly):

1) There are areas where a monopoly will tend to take over the economic activity.

2)The Main Point: If one observes "This is a natural monopoly" that does not inevitably lead to "The Government should be the monopolist." There are non-government monopolies.

You are quite correct. Not all monopolistic suppliers have the government as a consumer. That wasn't any point I was trying to make. (And, in passing, there are monopolistic consumers as well as monopolistic suppliers. Some are government monopolistic consumers and some are private monopolistic consumers.)

Regarding the city as a dictatorship (I presume you mean "an entity that the electorate can't remove" rather than "a totolitarian city counsel"): You may be able to vote out one set of city supervisors and replace it with another. It is much rarer (and usually requires fulminant rage by most of the electorate) to get a government service removed. There is a big difference between changing state governors, and getting rid of the state civil service highway construction department.

As to "trust", I would say "keep honest." That is the opposite of "trust" if you think about it. If I trust you, I won't ask you to cut the cards. I won't ask to see an audit before buying your business.

BTW, you didn't give an opinion as to why I hold these views (the "-Why" article.)

That "trust" vs "keep honest" thing probably needs a little clarification too.

Take two circumstances:

The city hires a contractor to fill potholes in the city streets.

The city establishes a "City Road Maintenance Department" to fill potholes in the city streets.

I maintain:

a) the city will be quicker to dump the private contractor and replace it with another contractor than it will be to fire the entire City Road Maintenance Department and hire a new crowd to get the work done. (How many uniion workers have you ever seen a municipality fire all at once, among other things).

b)Knowing that "a)" above The Way of The World will act as a goad to make the private contractor try harder and act to reassure the City Road Maintenance Department they needn't worry too much about their performance.

That doesn't mean I "trust" the private contractor. He would behave the same way if I signed a no-cut 100 year contract with his company.

Drew stated that

a) the city will be quicker to dump the private contractor and replace it with another contractor than it will be to fire the entire City Road Maintenance Department and hire a new crowd to get the work done.

I agree. But just as there are some unique advantages to using private contractors (as opposed to state employees), there are some unique disadvantages.

b)Knowing that "a)" above The Way of The World will act as a goad to make the private contractor try harder and act to reassure the City Road Maintenance Department they needn't worry too much about their performance.

Unfortunately, I think this is the triumph of optimism over reality. (hmmm, wonder how many times Drew has been called an optimist?) While I agree with Drew that government run monopolies usually result in poor service, I am not convinced that subcontracting out these monopolies to private companies is much of a solution either.

I won't name the companies in my example because I was told this by the president of one of them, but some cities manage their electric infrastructure similar to the method proposed by Drew. Every five years these cities accept bids from companies for maintaining their transformers and power lines. In addition to protecting the infrastructure, these companies have to replace power lines whenever needed (because of storms, etc.).

Company A is a very ethical company that conscientiously maintains the lines under their control and spends a good amount of the money they receive from their public employer on maintenance. Their bids for service reflect their expertise and commitment (that is, they are higher than the average).

Company B is a very practical company. They deliberately bid very low for this type of contract. When they win such a contract, they spend almost nothing on maintenance. They do the minimum necessary to fulfill the letter of their contract (for example, most of their expenses are strictly repairing storm damaged lines – they do not perform proactive maintenance). When their five year contract is up, they know many repairs will be needed soon (since they did not do much maintenance) and they do not even bid on the next five years for that particular city. Instead they go bid for the contract in another city and let some other company win the bid for the poorly maintained area. Even after it became clear how they operated, they still receive many contracts because some cities are required by their own laws to accept the lowest bid. I find Company B to be offensive, but they have a legal business model and they do quite well with it. Initially they may have even saved cities some money, but once everyone figured out what was going on, all firms dramatically increased their bids whenever they attempted to gain a contract that used to be held by Company B. In one extreme case, not a SINGLE company bid on a contract after Company B held it for five years. The city finally had to offer a ridiculously high rate for Company A to agree to take the contract.

I bring this up not to advocate state run monopolies vs. contract run monopolies. Rather, I think all monopolies cause problems. I'd rather see a system where cities ensured at least 2 sets of "pipes" (electrical, cable, phone, sewer, etc.) were available for consumers. This would dramatically increase the start up costs for some utilities, but I suspect it would prove much more beneficial over the long-run.

I find this discusion very interesting. Let me begin by stating that I work for "The City" in the Information Systems department. Thus I have contact with every department in the city and have some idea of what they deal with.

All of this overlooks another option - the Quasi municipal agency. In otherw words OF the town, but not BY the town. These agencies operate in a semi autonomous manner to provide such services as electrical, water, sewer, fire, etc.

These also present ther own problems. For instance, in my humble little burge, we have 5 independant "Fire Districts" They all operate independantly of each other, they have protected territories - I can't choose which fire district will respond when I call, and I can't fire the one that does and call another - however, in the histroy there have been cases where something burned a bit more than it should while two fire districts litterally fought over who COULD put out the fire (not who would, they both showed up to the party, but then they got all up in a tizzy over who could put it out, eventually someone pointed out that the thing on fire was in fact still on fire and that they could argue the point later but haddn't someone better put out the raging inferno as they were all there anyway?)

As someone who is tasked with improving data infrasturcture, I am actually stymied by the fact that The Town does NOT have control over these quasi private entities. What I am in the process of doing is extend network infrastructure and GIS product to these agencies. But they do not see the need 'we never had that before - we don't need it' sort of thing. They all want to see what it will do for them before they will commit any of their resources. Catch 22. I cannot show them the way they want to be shown unless and until I have the commitment of their resources to put it into place. Apparently conceptualizing is not a strength.

The Waste Water commission is a prime example. There is a copllection of data - a layer - that we woud like to have in GIS (Geographic Information System - think Mapquest on steroids) system. Once inplace the system can use this layer to do geometric analysis based on supplied criteria to aid in the planning of sewer system maintenance, upgrade, expansion, etc. This analysis will save the WWC much money in the long run. I've seen examples and read the case studies of this very application. In order to get the existing digital data for the system in a format that can be used in the system will cost us $3,500.00 A rather small amount in the larger scheme of things. However, this is an amount that exceeds the budgetary allowances of my department. The WWC - which we know has the money - wont part with it. Their response is 'when you have a working system, we will think about using it'

Now then, this is a "small town" so getting rid of the commisioners and replacing them with new ones that are at least in tune with the current centry is out of the question. "Small Town Politics" is much more powerful than I had thought. Representative Democracy does not work in the clasical sense...it's much more of a poularity contest with bias going to the "old families". This is a place where having a history in the town is means something. Apparently your actions in office do not. You also find out that 'everyone is releated to someone ' so that people wont vote for someone from a different "clan"

All of this puts a strain on your arguments as to what should or should not be. This is real world data that I interject.

I guess what I have to do is become a better salesman, since my option of having "upper management" apply pressure to people in order to get them to do what they don't want to is not open to me, even though upper management is "on board"

The other side of the argument against things here is amply displayed by the Company A and Company NOT A and the 5 year contract. Infrastructure is not sexy. Simply put, spending the necessary resources to provide regular maintenance in order to avoid more costly repairs later just does not appeal to people with a short event horizon. My father has recently retired from a full career as a civil servant working for the Navy. Time and time again he has had to fight very hard against the adoption of plans put forth by people who are only looking as far as the next election. In business terms we are comparing short term gains to long term gains. As long as everything looks good right now I'm fine. As discussed, Company A makes sure that the massive failures that they engineered by avoiding the necessary maintence do not happen "on their watch" and they go around looking for the places that Company B has just recently left after meticulously keeping them up. They then come in and show how Comapny B was the wrong choice and that they are much more cost effective - then they 'wait for their relief'

This is a symptom of career politicians. Since they are ultimately loking out for their own personal "next move" they do all that they can to look very good at the curent task - at the expense of doing the right things.

In this sort of situation, having something in place that is immune to these face changes is the best way to go.

Unfortunately, I don't know what that thing is, where to find it, or how to go about getting it in place.

The natural monopoly can be a cuase of this problem as well. Case in point. The Navy. They would like a new aircraft carrier for the near and distant future. Seems like a good idea, the existing fleet is ecentially very old - design wise. The problem is that since the government got rid of it's own shipyards and handed all that over to private industry things have changed. The privateindustry has coallessed (sp) into a "natural monopoly" at least as far as the ability to perform this sort of work. Fine. The problem is that this particular natural monopoly is using that monopoly to sell a product at hand to its sole consumer, and that product is not what the consumer needs or wants. This is simply because the cost to find the people who have the abilities to completely design a new aircraft carrier from the keel up is so very much higher than simply pulling out an existing hull design and putting new spaces on it - rearranging the chairs on the deck of the Titanic comes to mind. The natural monopoly is in this case making the argument that it will cost a lot of money NOW. The people who will be making the decisions have no real expectation of being ina position to be effected by the eventual result of any decision that they make NOW other than the short term result of looking like they spent resources unwisely NOW. In otherwords, doing the "right thing" is a sure ticket to political suicide NOW regardless of the fact the outcome may ensure that real suicide is being commited by The Governemtn as a whole (okay, so I'm taking it a bit far) The issue being that by the time new ship #1 actually hits water, the basic design of it will already be approximately 100 years old! By the time ship #1 hits the water, the people that are making the decisions now will have retired. Their personal well being will only be assured if htey show that they had good stewardship of the resources NOW. So, in short, do waht Comapny A did: Sell the future short to make/save a buck now.

The Supreme Court (of the US) seems to me to be an example how things might work better - that is, that once put in place, a justice can not and will not be removed unless s/he shows gross negligence and is impeached, dies, or retires. Any and all biases that were in place to get to that point can be tossed away and "do the right thing" can become the watch word once in the seat. This is a dangerous and slippery slope to go down, but at least it removes the short sight syndrome from the decision makers and restores a longer term view - since they cannot be immedeately effected by the initial response to one of their decisions, they are free to make unpopular but necessary decisions for the general good of the general population for the long term.

I guess this has just been a long winded way of saying what Don Q. said in his last paragraph - only with feeling. Certainly if there were two sewer commissions in town and both had a pipe to my house, the one that was willing to cooperate with me and reduce their long term costs would eventually provide both the least expensive alternative and theoretically, the best alternative since they would have the best maintained system - then they would eventually become the natural monopoly and we would be back to square one.

Adm. Tronthor