[governance] [JNC - Forum] On the death of neo-liberalism

Wed Jun 1 18:29:37 EDT 2016

Agree with both Michael and Milton, at least in part.

Milton, it is true that state-control and state-owned enterprises are
associated with corruption. But it is often the privatisation of these
enterprises that escalates this corruption. And it is competition for
government contracts by private sector actors that oils the day to day
bribes and pay backs that is so prevalent in large parts of the world.

You say:  "Entities not subject to the discipline of market forces are
far more likely to rely on privilege and corruption to get things done."

Yes, this can be true. But it is also true that the "discipline of
market forces" includes being good at being corrupt and getting away
with it. When people are brought to justice it is often the corrupt
civil servants at the receiving end. It is rare for the corporate actors
who keep the cash flowing to get into trouble.

But I am not suggestion that statist model are necessarily less corrupt.

I also don't equate market fundamentalism and market liberalism at all.
That was not my intention or my understanding.

I personally don't like the term neo-liberal as it is relies on prior
ideological positions in a very broad brush stroke sort of way.

Market liberalism, if well regulated in the public interest, can be a
positive force and I do believe in the value of competition in many
contexts.

I use the term 'market fundamentalism' because that is what I see in
development discourse being pushed on many developing country
governments. It is an approach which asserts that open markets and free
trade will produce economic growth and opportunity, and that economic
growth will eliminate poverty.

Michael, there is quite a bit of research on how telecoms liberalisation
worked in some ways, but also not in others. Can look for references.
Sean O Siochru would also be able to provide links.

In many countries, including South Africa, the problem was that
privatisation took place before liberalisation - so state-owned
monopolies were replaced by private monopolies or duopoloies and the
competition that was supposed to drive investment and bring costs down
simply did not take place, not for a long time. Some markets are still
not competitive.

I would say the primary reason for Universal Service Funds not being
well-spent however is lack of policy vision and capacity within the
public sector itself, rather than restrictions imposed by operators who
pay license fees. And also really poor foresight... e.g. the condition
to use universal service funds to extend fixed line infrastructure at a
time when the mobile revolution was happening. Those funds should have
been redefined a long long time ago. It is public sector actors -
regulators and policy makers that are to blame for this not happening in
many places. And high license fees serves as barrier to diversifying
ownership and control and  makes it rally hard for smaller companies who
have to compete with large multinationals.

I would not advocate at all for a return to government owned monopolies
in the telecoms sector. But a lot of opportunity to create open access
public infrastructure, or to make use of infrastructure sharing, and
locally driven and owned community networks was lost in how this drive
to privatise and liberalise communications took place.

Anriette

On 01/06/2016 19:10, Michael Gurstein wrote:
> Clearly there was a need in the telecom sector to clear out the cobwebs
> (and the corruption) particularly given the technology innovation which
> was happening at the time.
> 
>  
> 
> However, the question is whether there was the need for the
> cookie-cutter neo-liberal approach to how it would be done and
> particularly how the sometimes nascent, sometimes real social benefits
> of telecom might be translated from the PTT era to the liberalized
> telecom era.
> 
>  
> 
> I've never seen this documented (a MA or Ph.D. topic for someone?) but
> it has been quite clear based on my direct experience with post PTT
> telecom policies in perhaps a dozen countries that the policy apparatus
> implemented at the insistence of the World Bank was directly of the A4AI
> persuasion
> <https://gurstein.wordpress.com/2016/04/05/the-a4ai-discussion-a-summation/>
> i.e. a neo-liberal package wrapped up in high-faluttin social
> contribution rhetoric.
> 
>  
> 
> The reality is that virtually all of the LDC's with which I had contact
> were effectively tied up in knots because of the way the privatization
> policies had been written (presumably by one WB designated
> law/consulting firm).  In every instance a portion of telecom revenues
> (sometimes gross sometimes (after convoluted calculations) net) were
> directed to be made available for extending telecom service -- as
> designated Universal Service programs.  However, these policies were
> written in such a way that these designated revenues rather than being
> made available to the state for utilization for this purpose were rather
> defined as revenues of the telco's which they were graciously making
> available for social benefit under state direction.  What that has meant
> in practice is that the telco's have a veto on how this money is spent
> even though they have no knowledge or interest in achieving any such
> social benefits.  Note that we are talking about very large sums of
> money into the $hundreds of millions and even low billions USD in some
> cases.
> 
>  
> 
> The result of this neo-liberalized mess is that in many cases the money
> cannot even be spent, or if spent is being spent on useless marketing
> efforts as defined by the telcos, or spent to subsidize additional
> infrastructure where either no additional infrastructure is necessary or
> where it simply is a substitute for a commercially justifiable
> infrastructure.
> 
>  
> 
> I can't answer whether or how much "a competitive market economy has ...
> to offer for development" but I do know that the activities of a neo-lib
> dominated WB made precious little contribution to resolving issues of
> digital exclusion in much of the LDC world through its imposed
> privatization program.
> 
>  
> 
> M
> 
>  
> 
> -----Original Message-----
> From: governance-request at lists.igcaucus.org
> [mailto:governance-request at lists.igcaucus.org] On Behalf Of Mueller,
> Milton L
> Sent: June 1, 2016 9:12 AM
> To: governance at lists.igcaucus.org; Anriette Esterhuysen <anriette at apc.org>
> Subject: RE: [governance] [JNC - Forum] On the death of neo-liberalism
> 
>  
> 
>> -----Original Message-----
> 
>> From: governance-request at lists.igcaucus.org
> <mailto:governance-request at lists.igcaucus.org> [mailto:governance-
> 
>> request at lists.igcaucus.org <mailto:request at lists.igcaucus.org>] On
> Behalf Of Anriette Esterhuysen
> 
>>
> 
>> Market-fundamentalist approaches to development and planning will stay
> 
>> around for a long time. They fit so well with the culture of
> 
>> corruption and focus on personal gain that many governments are
> 
>> practicing that it will be really hard to get rid of this approach -
> even if it is not explictly part of policy.
> 
>  
> 
> This is not a very accurate statement, Anriette
> 
>  
> 
> Corruption is strongly associated with state-control and licensing of
> industries. Take a look at Brazil's current drama with its state-owned
> oil company. Or, worse, Venezuela. Entities not subject to the
> discipline of market forces are far more likely to rely on privilege and
> corruption to get things done.
> 
>  
> 
> It's odd that you call market liberalism "market fundamentalism." While
> it is true that some simple-minded folks turned liberal political
> economy into a formula/dogma, sometimes misapplied, what I see MUCH more
> often is that opposition to market forces among certain civil society
> groups is religious and fundamentalist. It is knee-jerk and not based on
> any empirical facts or understanding of economics.
> 
>  
> 
> At any rate it's hard to argue with the record of liberalization in
> telecommunications and information. Unless you want to go back to those
> wonderful days of state-owned monopolies, 2% penetration and 4 year
> waiting lists for a line. The state-owned PTT is the epitome of a
> non-neoliberal approach so I hope you are willing to stand up for that
> paradigm or if not, bite the bullet and admit that a competitive market
> economy has much to offer for development
> 
>  
> 

-- 
-----------------------------------------
Anriette Esterhuysen
Executive Director
Association for Progressive Communications
anriette at apc.org
www.apc.org
IM: ae_apc

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