Privatization Is Theft

As I shall spell it this once, although if I hear anyone else on the BBC say "preyevacy", then I shall have a fit. Charles Davis writes:

Taxes entail coercion; this is why they're not called donations. Accordingly, one might think self-styled advocates of free markets and smaller government, Ayn Rand aficionados especially, would be cognizant of the fact that, when it comes to a moral claim over the things that said taxes go to -- from telecommunications to transit systems -- the coerced taxpayer would have the strongest case for ownership.

You'd be wrong, of course. When it comes to downsizing the state, most conservatives and libertarians have a raging hard-on for privatization, by which they mean the government auctioning off taxpayer property to the highest private bidder. The problem with this approach, from a Freedom! and individual rights perspective, is that those who were forced to invest in the state entity to be auctioned off are left with next to nothing to show for it, usually some multinational corporation instead swooping in to pick it up at pennies on the dollar.

Take the example of Guatemalan state telecommunications firm GUATEL. In the late 1990s the Guatemalan government, instead of handing the firm over to the workers and taxpayers who had supported it over the previous two decades, sold 95 percent of its stake to a private company called Telgua, which -- thanks in no small part to its being handed a monopoly share of the market -- continues to be the country's largest telecommunications provider.

At Reason magazine, the move is this week being commemorated as a clear victory against statism. "In Guatemala," former head of GUATEL Alfredo Guzmán tells the magazine, "we have a clear example that freedom works."

Yeah, I'm not so sure about that. While Reason argues the move is responsible for the widespread availability of phone services in Guatemala today, one can look elsewhere in Central America and see a similar story of proliferation. Even in behind-the-times Nicaragua -- and I say that endearingly -- I can get 3G Internet access pretty much anywhere I need (and unlike in the "free market" U.S., I can do so affordably using a prepaid modem).

But if we're going to call what happened in Guatemala the result of "freedom," more pertinent to me than the number of sexting Guatemalan teens there are today is how the transition from state to "private" telecom monopoly actually came about. And if you actually look at it, it begins to look less like a story of free minds and free markets and a bit more like the standard, time-old tale of one economic class, international capitalists, using the power of the state to exploit another economic class, in this case Guatemalan workers.

As former GUATEL head Guzmán himself boasts in the interview with Reason, the decision to privatize the firm was so politically unpopular (read: courageous! ) in his country that the Guatemalan government actually had to threaten its own citizens with jail time should they protest the proposed sale by striking. Rather than respect the right of its people to freely organize and voice their discontent as they saw fit, in this case by merely not going to work, the government of Guatemala threatened those forced to live under its rule with the prospect of time behind bars should they exercise those rights. Moves like that may make life easier for multinational corporations, but it ain't exactly "freedom."

Rather than hand the state's telecom monopoly to the highest bidder, the Guatemalan government could have -- and to my warped syndicalist mind, should have -- turned it over to the Guatemalan people. Each citizen of the country could have been given a share in the company and a say in how it was run; perhaps they'd vote to delegate that authority to an elected board. Or the state could have divided its telecom monopoly amongst its workers, who could run as a cooperative. Either option, or a combination of both, would have better protected the rights and, indeed, property of those poor Guatemalans who put their time and money into GUATEL than merely auctioning it to the multinational corporation with the most money.

Putting aside the financial and political reasons as to why that didn't happen -- maybe, I dunno, it's because rich capitalists have more a say over government decisions than poor workers? -- there's a cultural reason why actual liberty-and-freedom preserving options aren't given much consideration by the folks at Reason and other privatization zealots: it reeks of socialism. Sure, cooperatives are entirely compatible with voluntarism and even modern capitalism, but unless there's a CEO with an insane salary and a private jet involved, right-wing libertarians don't want to hear it -- after all, who would pay them to defend those insane salaries and corporate jets?

While they preach their love of freedom, it's clear that for many on the right the love of markets -- or specifically, corporations -- trumps all other concerns about force and state power. All human needs must be met by a corporation in a quasi-competitive marketplace (the second part's optional), in their view, lest we all become limp-wristed socialists prattling on about "sharing" and "community." That there are alternatives to such strictly defined systems of economics that are not based on state coercion -- and who do you think grants corporations personhood and limited liability? -- is not so much as acknowledged. The light at the end of the freedom tunnel is a McDonald's arch. Corporate ledgers are the gospel.

If minimizing the use of coercion in human affairs is your goal, however, as opposed to maximizing corporate profits, than faux-privatization schemes like the one Guatemalans were subjected to should be described for what they are: manifestations of corporatism, not liberty and free markets. Again, it bears repeating: Transferring a state monopoly funded by taxpayers to the control of international investors is not a win for freedom. The only thing that changes in that scenario is who profits from state coercion, politicians or capitalists -- if it even does that, given the ties between the two.

Instead of fawning over big business and demanding state power be given to state-created corporations, libertarians and other self-styled proponents of freedom on the right ought to be demanding that power be given to the people. That they're not suggests they should be described not as proponents of liberty, but of corporate capitalism. And no, Virginia (Postrel), they're not the same thing.