Privatization - What should be?

[afransen]

LCBO revenue and alcohol tax are two different income sources. Yes, the LCBO does charge alcohol tax on their stuff, but so does The Beer Store or when you buy a beer at a pub.

The problem with alcohol tax is that if you privatize they will come back around arguing that the tax is killing their business and would want it reduced. So in the end the province and taxpayers don't win.

Just remember Mike Harris, the king of Privatization didn't go after the LCBO because in his mind "it made a profit and didn't require taxpayer money"

Bumf. See excise taxes on gasoline and tobacco.

 

[doady]

Privatization is not the only way to decrease the congestion and environmental impact of highways. There is no reason why the government can't implement road tolls itself,and then use the revenues for not only road maintenance and construction, but also for improving public transit as well. Privating highways is pointless.

If anything, more things should become nationalized, like phone and cable infrastructure for example. These definitely should not be in control of private companies who have a monopoly.

 

[Dan416]

I voted status quo. I like things just the way they are.

 

[lordmandeep]

Well Canada really still is mostly dominated by like 2-3 companies in many industries.

Isn't Canada known for being an Oligopoly?

Its like how Rogers, Bell and Telus dominate Telecommunications.


Cellphones have come a long way but our cellphone networks are not that advanced compared to some third world countries. I was 13,250 feet in the Himalayas in India only 40 km from the Border of China and I had a almost perfect signal.

Here my signal died out going on Airport Road past Highway 9. I got it back after Highway 89 when I got away from the small rolling Hills of Headwater.

 

[kEiThZ]

^ Agreed. That's the problem. Privatization in some sectors has given us oligopolies instead of more competition. That's the worst of both worlds. I bet internet and telecom prices would be lower if the sector were nationalized. If we are going to privatize sectors, there should be real competition. For example, for telecom, that would mean letting in foreign firms. And for alcohol that would mean allowing corner stores to sell beer and wine and allowing several different chains of liquor stores.

 

[lordmandeep]

So If the mail is privatized it will UPS, Fedex and whatever Canada Post becomes.

Of course price fixing is not allowed but its rather easy for companies to come to an agreement about prices without anyone noticing.

 

[Whoaccio]

With respect to highways, I should have made clear that very few highways are ever actually "sold" to anyone. The most common approach nowadays is to simply lease highway operations and management to a third party for a given term, while all the actual assets remain or revert to public ownership once the lease expires. So the suggestion that a private interest would simply condo-fy a highway corridor strikes me as exceedingly implausible, given they wouldn't own the land and most likely have a lease contract explicitly requiring them to maintain a given amount of lane-kilometers.

Anyways, privatizing highways would yield numerous benefits, political, economic and environmental, which are not already being meet by the status quo. To begin with, governments lack the moral fiber to toll roads themselves. Every proposal which involves road tolls in the past decade has been rejected. Privatizing roads, if dealt with properly, would be easier. Driver's would understand the congestion relief benefits and unlike public tolls could be convinced that their toll revenue is supporting their choices and would be reinvested into infrastructure they find useful. The 407 group, for instance, used private financing to add 420 new lane-kms. If the DVP is massively congested, for instance, private owners would have incentives to invest more in it.

Economically, the pay out could well be more valuable than future income. If we used the payout to eliminate the provincial debt, for instance, we would be saving ourselves about 10b dollar per anum in interest costs. The key would be to determine what kind of return we are currently getting off the 400 network (negative), and seeing what we could achieve elsewhere. It is also true that we would probably get pretty high returns off of the sale. The 407 was sold at a 100% premium to its cost two years after opening, and even that was with a big discount due to the somewhat incomplete nature and ridership concerns. Something like the DVP or 427 would probably trade at a massive premium to their cost base.

Environmentally, it is a win as well. Part of the reason HSR is so popular in Japan and France is that their competing highway routes are for the most part privatized and run on a for-profit basis. Ditto for suburban-urban travel being. Privatizing the 401 would easily help a Mtl-Tor HSR become far more viable by adding 25-50 dollars onto each car trip.

 

[Whoaccio]

As to the LCBO & OLGC, Crown Corps shouldn't be used as a revenue tool for governments. Not only has evidence shown most of them to be poorly managed, only making a profit due to monopoly positions, it is unethical. In the case of the LCBO & OLGC, both of them were created with the explicit purpose of protecting Ontarians from the sins of alcohol and gambling. That is their mandate, like it or not, and giving them a parallel mandate of maximizing revenue for the Government by promoting said vies is totally antithetical to this goal.

I would also be skeptical of treating this stuff like "free money" for the government. In the case of liquor, the business is simply being redirected for the most part from small retailers into the LCBO/BeerStore who are very inefficient retailers by comparison. It's not a major deal, given that alcohol is a fairly small chunk of the economy, but the money is simply being redirected into inefficient monopolies which negatively impacts consumers, not created magically for the governments.

Personally, the LCBO is one of the quirkier bits of Canadian Social-Democratic folklore. In most of the world, especially in jurisdictions like Western Europe, a small corner store selling some local wine is a cultural hallmark and a corner stone of society. In Ontario though, the idea of independent alcohol retailers is viewed with some weird blend of fear and smugness, as if a monopoly like the LCBO or BeerStore is in some blizzard way more "equal" than what the rest of the world does.

 

[CodeMonkey]

As to the LCBO & OLGC, Crown Corps shouldn't be used as a revenue tool for governments. Not only has evidence shown most of them to be poorly managed, only making a profit due to monopoly positions, it is unethical. In the case of the LCBO & OLGC, both of them were created with the explicit purpose of protecting Ontarians from the sins of alcohol and gambling. That is their mandate, like it or not, and giving them a parallel mandate of maximizing revenue for the Government by promoting said vies is totally antithetical to this goal.

I would also be skeptical of treating this stuff like "free money" for the government. In the case of liquor, the business is simply being redirected for the most part from small retailers into the LCBO/BeerStore who are very inefficient retailers by comparison. It's not a major deal, given that alcohol is a fairly small chunk of the economy, but the money is simply being redirected into inefficient monopolies which negatively impacts consumers, not created magically for the governments.

Personally, the LCBO is one of the quirkier bits of Canadian Social-Democratic folklore. In most of the world, especially in jurisdictions like Western Europe, a small corner store selling some local wine is a cultural hallmark and a corner stone of society. In Ontario though, the idea of independent alcohol retailers is viewed with some weird blend of fear and smugness, as if a monopoly like the LCBO or BeerStore is in some blizzard way more "equal" than what the rest of the world does.

I don't think we'll ever see the LCBO privatized. Every time a government; Ernie Eves(PC) or Dalton Mcguinty(Liberals) try to even look at the idea, there met with public back lash created by the unions and private groups (eg. MADD)

 

[Glen]

I would nationalize a portion of our financial sector, along the lines with what Nsssim Taleb suggested..........

Nassim Nicholas Taleb, the author of “The Black Swan: The Impact of the Highly Improbableâ€, has a simple proposal to as he puts it, “save capitalism and free markets from the banks.â€

Nationalise the banks, limit the rewards to those who work in what he calls the “utility†part of the system and have a completely uninsured second leg that can take all the risks it wants and lose its shirt, he said in an interview in Davos at the World Economic Forum.

“They rigged the game. We pay them for their profits, there is no clawback so their incentive is to hide the risk they are taking.â€

“Which is why eventually as someone who loves free markets, a total nationalisation of the part of the business that requires insurance and does clearing and payments needs to happen.â€

I would privatize the TTC. Or at least vast parts of it.

 

[afransen]

I'm not sure I see the benefit of nationalizing the banks. It sounds like a recipe for mind-boggling waste, as politicians take deposits and lend them to friends at below market rates, without due diligence. After all, any losses can be covered from taxation...

It's important to remember, also, that banks are owned by people, including everyone who participates in the CPP.

 

[Whoaccio]

That is a weird proposal, considering two of the biggest screwups have been Fannie Mae and Freddie Mac, and the worst performing financial institution in Canada is probably the Caisse.

 

[lordmandeep]

No need to nationalize banks in Canada.

No way the govt can the banks as well as they are being run now.

 

[cowpie]

That is a weird proposal, considering two of the biggest screwups have been Fannie Mae and Freddie Mac, and the worst performing financial institution in Canada is probably the Caisse.

Fannie and Freddie were actually "privatized" in the 70s or 80s...there are lots of articles in The Washington Post on this and their CEOs.

 

[GraphicMatt]

It should be noted, though, that the reason Canadian banks are in decent-to-great shape is because of government involvement, regulation and oversight - the kind that wasn't there in the more 'privatized' US financial system.