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How SBC (AT&T) Pillaged South Africa's Economy
Kifoth writes "For 8 years, SBC and Telekom Malaysia controlled South Africa's only telecommunications company, Telkom. Telkom had a government granted monopoly in order for it to connect the large parts of South Africa that had been neglected under apartheid. Instead of helping, SBC abused their position and raised Telkom's prices to be among the highest in the world. The billions they made here ultimately went to fund their AT&T merger. From the article: 'SBC, described as "congenitally litigious", is said to have played a major role in the failure of South Africa's telecoms policy to develop a competitive telephone service. Under SBC's control Telkom not only failed to meet its roll-out obligations but behaved "as a tax on industry and a drag on economic growth."'"
Seriously, I didn't see this one coming.
"16MB (fuck off, MiB fascists)" - The Mighty Buzzard
How South Africa's Government Pillaged South Africa's Economy
they hate black people.
This shows why monopolies are bad and a more liberal economic policy is better
Well if you set up a monopoly it will be abused, you need very strong regulators to keep anything clean. Doesn't matter if its a state run monopoly (NHS, BT (before privatisation), British Rail etc) or a granted monopoly.
They couldn't have committed the malfeasance they're accused of with out the ANC letting them. A few bribes would have done the trick. Problem is not muli-nationals; it's corrupt goverment officials who sign "exclusive" contracts. It's easy to tax foreign companies and allow multi-comptetitor access to markets. Problem is 3rd world kleptocracy.
Nothing has changed.
Interesting story, but to actually get anything out of it. You have to Google all over the place.
Government enacted monopolies are anathema to free markets.
Uhhh.. yes. And what does that have to do with a critique of capitalism gone awry? You are aware that there are positions between libertarian free markets and completely state-controlled economies, right?
Read the EFF's Fair Use FAQ
"This shows why monopolies are bad and a more liberal economic policy is better"
Is that what it shows? How would a more "liberal" economic policy have done in the face of a corrupt regime (ANC)?
Song song, different tune. Confessions of an Economic Hit Man.
Mediocre writing, interesting story though.
You should blame the politicians who voted to allow the monopoly deal in the first place. Do you believe for one second that they did not know what they were doing?
As much as I hate government interferance in business, if you're going to have a government granted monopoly you should have government set prices.
A company with a "government granted" monopoly abused it. Shocking!
Incidentally, any true monopoly must be government granted. Without the government's force to keep competition away, it's merely a really effective competitor in an open market, like Wal-Mart.
A monopoly, whether government owned (e.g. the US Post Office) or government granted (e.g. AT&T and the Baby Bells in the US, before cellphones, cable company phone service, etc.), is not required to innovate and improve to retain customers, like a free-market business is. Because of this they will tend to deliver a lower quality product at a higher price.
To the SA people, you got the government you elected, so blame yourselves, then fix the problem at the ballot box!
"It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
I needed a new reason to switch providers.
I know Verizon's coverage is excellent, but can anyone attest to their business practices?
South Africa is not prepared and not used to Companies entering the market and exploiting us on such a scale. Our Governmental system and laws were not in place to protect humans from such a selfish act that 1 company can destroy our economy. Every South African hates Telkom for doing what they did, this leads to South Africans HATING American Companies for hurting so many millions of people, which in turn makes South Africans HATE Americans and HATE Captalism. South Africa is a SOCIALIST country. Captalism has reached its peak, and is now failing the human race. Socialism is the next evolutionary step towards Ultruism. America is falling behind, Europe has learned from has embraced Socialism, America is set it in it's ways and the AMerican people will always try and exploit anyone they know. Such a sad way to go through life.
And please before I get flamed for disliking the American system and pure Capatalism, there is no price you can put on a human life. For such a "advanced" state you guys dont even have free medical and medicine. You guys hate each other so much that you can ACTUALLY put a price on human life? Thats sick. Everyone has the right to live, all medical should be free. I lives in America for 6 months, I hated it, I went back to live in London for another 5 years, then returned to South Africa where I am not living for the last 3 years.
No. They did what companies do, make money for their shareholders.
The 'bad guys' here are those who accepted bribes to ignore their responsibilities. Paying bribes in Africa is just SOP.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
But don't conservatives preach how gub'ment just needs to get out of the way of the great, mighty, and benevolent corporations, and that the free market will regulate itself?
Seems conservatives might want to rethink this... along with all the other absolute crap they believe.
Yeah, you can blame SBC for taking maximal advantage of a market, but that's what they do. Everyone knows that. The government there let the fox into the hen house. The hen house didn't get left open by accident, rather the government invited the foxes in.
Now, one can get all pissed that the fox ate the hens, but the government has the responsibility to look after the best interests of whatever its supposed to be looking after. Not only did the government fail in this case, they failed to such a degree it seems intentional.
A modern day witchhunt.
Corporate greed has always existed in one form or another since the dawn of the human race. Greed is human nature. The utter utter stupidity is not to take it into account, and that's where free markets come in.
You pit one greedy bastard against a dozen other greedy bastards. Everyone benefits from the hard work of the group of greedy bastards.
The fault lies with the either utterly stupidity or corrupt politicians who granted the monopoly. It has nothing to do with libertarian ideology and everything to do with understanding human beings.
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Parent is terrorist!!!
oh, because there was no competition, and government controlled monopolies... err... yeah...
.. 3 or 4 companies running the entire planet... hey, thats competition, right?
thank god we dont have communism anymore.
just
Corporate greed has always existed in one form or another since the dawn of the human race. Greed is human nature. The utter utter stupidity is not to take it into account, and that's where free markets come in.
You pit one greedy bastard against a dozen other greedy bastards. Everyone benefits from the hard work of the group of greedy bastards.
The fault lies with the either utterly stupidity or corrupt politicians who granted the monopoly. It has nothing to do with libertarian ideology and everything to do with understanding human beings. Oh don't be naive.
Your general premise is "People will do bad things, thus they aren't at fault for their badness if they are allowed to do it."
So if people are part of the government, and they allowed this bad thing, they aren't at fault for their badness too, since the people allowed them to?
So, it's back to the people who didn't intervene against these politicians who are at fault -- but they did a bad thing by doing that, and who allowed them to be passive?
You see where this is going?
I think I've got the more coherent point that both the government and the corporation were complicit and both were wrong.
But alas, you're a libertarian ideological fundamentalist, so if the corporation did something bad, they didn't do anything "actually" bad.
Whatever.
However, most of these companies were also involved in making military stuff that propped up the apartheid regime. Likely they were "punished", to the detrament of all.
Engineering is the art of compromise.
Is this the same AT+T that Apple/iPhone uses?
Pillaged is such a harsh word. I prefer the phrases "shareholder value" and "market economy".
In a place like South Africa, only a government regulated monopoly would be interested in providing telecom to a lot of very poor people with very poor credit rating. Free market companies would just walk away from that because it makes no business sense.
Engineering is the art of compromise.
... I have to say that Telkom is absolutely terrible. Have a look here for more info.
Telkom have consistently been a stumbling block to technological progress in the country, especially with regards to internet access. Telkom owns all the international links to the rest of the world from SA, and most of the bandwidth and international calls have to be routed through them. In fact, the price of ADSL has been so prohibitive that many individuals have pursued cellular alternatives, paying per MB, for light browsing instead.
While it's easy to criticise the private companies who have been managing it, Telkom is a parastatal, and not wholly private; roughly 39% is still owned by the South African government, so I'm fairly certain they weren't too unhappy about the affair. There has been evidence of cronyism at the company, too, most likely as a direct result of this: in 2004 a government pension fund was used "to buy telecoms shares for a group of former government officials". This was part of the government's Black Economic Empowerment (BEE) requirements that firms need to be 1/4 black owned before 2010, and falls within a pattern shown, by 2004 government surveys, that "68 percent of BEE deals went to just 6 black-owned businesses, all of which were owned by top members of the ANC party."
The whole thing stinks, and Saffas get screwed, as usual.
'If Christ had tweeted the sermon on the mount, it might have lasted until nightfall.' - John Perry Barlow
The purpose of a government is to govern for the benefit of it's people. Not to make money for corporations. The fault therefore lies with the government (whether corrupt or stupid) for allowing the monopoly situation. The corporation did exactly as it was supposed to. The corporation did a good thing, not a bad thing, for it's shareholders. It fulfilled it's purpose admirably.
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Greed simply is.
Greed within healthy competition produces very good results. The other guys greed acts as a check on mine, and vice versa.
Wishing greed away is the fundamental flaw in socialist thought.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
What do you expect would happen when the government jails anyone who tries to compete? Yes, it is the government's fault.
Leftests use the term to mean whatever they want it to mean. Always ignoring Fascisms Socialist core (Mussolini etc).
Fascism like many other forms of Socialism involves the government owning industry and running it as it sees fit.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
the "government granted monopoly" bit. Shouldn't South Africa try blaming itself, first?
Big companies acting in a predatory manner, you can always be assured that a country will be subverted into a position that they cannot get out of without gutting their economy. Take a look at AUS, NZ, and now SA.
Take a look at our own telecom infrastructure. You can see where communities are in various stages to set up their own broadband structure and the telecoms are not liking it one bit. Several towns have been pretty much abandoned by their ILECs to rot on their old copper, or worse.
Gov't MUST keep a firm hand in matters to keep these companies under control or we'll never hear the end of it!
First rule of holes; When in one, stop digging.
So a company that had to build a bunch of new infrastructure to places likely to have a low volume of subscribers to subsidize said infrastructure has high prices. How is this surprising exactly?
That said, I have no doubt there was some ripping off done; I've never experienced an honest telco. But giving them a monopoly was just begging for gouging.
Sometimes at night I imagine the darkness is filled with horrible things with too many teeth, like Julia Roberts.
the bulk of the blame goes to the South African government, in particular
the department of communications, its minister and former director general. This doesn't mean that SBC is blameless, but they merely made the exploitation more efficient.
There would have been any number of competing communications networks if it only were permissible to build them. Instead Telkom has been shielded from competition by the government. Recently a second telecoms provider has been licensened. Wow. Only about a decade after it should have. And wow, only one. And regulations still favour Telkom. What should have happened about 15 years ago is that anybody should have been able to set up wireless networks. But the department mumbled something about not damanging the market - cough, telkom - yeah, good one, protect the predator.
Put simply, the stuffup in the telecommunications industry ranks among the worst policy failures of the current South African government.
OK, on one hand, monopolies almost always abuse their power. Some actually run OK and are good for a society (public utilities like electric and gas are good examples.) I'm actually a proponent of the old-style Bell system for local phone access -- you deal with a single company who sets all the standards and keeps the network running well. The trade-off, of course, is innovation. Or so people claim.
The other side of the coin is also prevalent in telecom and other industries -- companies with a psycho executive board that has no concept of the time beyond next quarter. Too often, we hear stories of executives laying off a percentage of the workforce just to make the numbers that year. Or outsourcing things like IT or customer service because some MBA told them that these aren't "core competencies.' Try getting broadband service out of the telecom companies if you live out in the middle of nowhere, for example...it's not easy. No profit-oriented company wants to support it. This was part of the reason the phone monopoly existed, and why you still pay universal service fees on common-carrier service.
So, monopoly = bad. Unchecked competition = bad. Now what?? I would argue that #2 is better in a perfect world as long as we can reduce the focus on short-term gains. However, now that absolutely everyone is counting on the stock market/casino for their retirement, I can't see that happening. Because of that, #1 is still sometimes the best choice in our imperfect, corrupt world.
That's where we seem to truly differ in opinion. You directly imply that restraint of government is the only method we have for constraining corporations. I think we actually have other methods, for example: a culture of not violating laws, even if you could, a consumerist culture that shunned corporations that exploited government loopholes, etc. You seem to disagree with that (though I'll let you change your mind, if you would like). In the second case, greed that's not controlled by government may actually be a negative influence upon the corporation's returns, which you might say makes your point, but you'd definitely not agree with corporations having a general culture of lawfulness. You'll likely argue that if one corporation doesn't do it, the other corporations will do it, thus destroying the market. But note that in the first case, the second case might eventually develop anyways, and the corporation would have to repair its public image.
Since there does exist a minority, though large one, of people who do believe in promoting a culture of corporate responsibility, then I think even today, corporations are required to weigh the costs of benefits of unethical behavior.
It's a lot more complex than you simplify by just defining greed to be ethical with very limited constraints. If you have a more nuanced approach, like I do, you can actually think these ramifications through, instead of blindly following the path of fundamentalist libertarianism. Even if I were a greedy corporation, I'd be wary of having somebody like you lead the company because of your inability to think deeply about the social problems.
is the same thing. That's how Carlos Slim, the company's owner, became richer than Bill Gates. The guy owns the 8% of mexican economy; we pay montly US$50 for a crappy 2Mb-download/128k upload "broadband" connection. The bastard owns the president, the Congress and the worthless mexican Supreme Court.
But America sould not worry. George W. Bush is the first mexican president of USA, so I'm sure that USA will become like Mexico in 20 years if the neocons get their way.
Mexico: 100% conservative's America now!
Explained this monopoly best.
Incidentally, any true monopoly must be government granted. Without the government's force to keep competition away, it's merely a really effective competitor in an open market, like Wal-Mart.
Monopolies can easily stay in power and keep competition away without government aid. All they need to do is to make the cost of entry high enough and keep prices low enough so that it's not worthwhile for competitors to enter, and to buy up any competitor that tries to enter. When they do that, they still can charge way above for their goods and services than what they could in an efficient market.
You might call a company that manipulates the market such as to raise the cost of entry into the market very high a "really effective competitor", but they are certainly not operating in a way in which a company should operate in a free market.
is SBC/AT&T the most unscrupulous business ever? I've long thought so, but now I may have proof -- the same SMS spam touting a ridiculous stock was sent to BOTH of the phones on my account this weekend -- at my fscking expense.
Far too coincidental for comfort.
The two numbers have never been given out simultaneously, they are for completely different uses and their only connection is via my bill. The phone numbers even have different area codes!
I live in California, where we have somewhat stronger privacy protections than the rest of the country. Alas, IANAL. Has anyone dealt with SMS spam effectively, as if so, how?
Free communications for everyone? That would be an interesting start.
There is plenty of free information for those that care to pay attention. You seem to be assuming that if only everyone could get together and share information, the populace would reclaim the middle ground and take away the excess of power from overbearing corporations. But unfortunately, most people don't seem to be concerned at all. Take away their political rights, as long as you let them watch TV and buy lots of expensive toys they'll never be able to pay off.
The nations of the developed world are quite well-off, but in most of them, nobody really cares all that much about the big, complex issues. It's easier to watch MTV Cribs and take a spin in the brand new Dodge Ram 3500 pick'em-up-truck than it is to actually engage in political activity of any kind.
I don't think cell phones or the 'Net are the answer. I think radical education reform is the only way. Unless we start teaching our children how to be critical thinkers, instead of merely giving them social indoctrination, we'll keep heading down the path to Morlock City.
Read the EFF's Fair Use FAQ
You pit? I pit? Who pits?
Thats the point.
Who is the one not being greedy?
Why is the government at fault for expressing what you say is 'human nature'?
They're stupid for being greedy? Or they're stupid for not being greedy, but thinking SBC would not be greedy?
Dipshits like you run the gamut from the frycook to the CEO; for some reason, you think its the referees fault when hes smacked over the head with a baseball bat.
"Old man yells at systemd"
"Corporate greed has always existed in one form or the other since the dawn of the human race"
Funny how corporate greed existing long before coprorations did.
(And, no, corporations are not human beings. Resulting in corporate greed that is much more pathological than a typical human's greed.)
The invisible hand makes sure everything works out for the greater good! Can't you see it? It's right over...
Damn, where did that thing go?
Find environmentally and socially responsible products on http://buy-right.net
Maybe this is what Miss Teen South Carolina was talking about?
If a job's not worth doing, it's not worth doing right.
If I were in the government of South Africa, I would be looking for a venue to sue SBC and Telkom for non-performance.
But, considering the exploding gear in Texas, I'd insist on my money back rather than attempt to enforce performance.
This is the same company that couldn't transfer my phone number across the street from one apartment to another. When it was time for them to switch my service they managed to cut off my old number, forward it to the wrong new number, and not even connect my new number at my new apartment. I guess to their credit I later found out that they couldn't connect my new number because the previous tennants had never disconnected their old number, but those same people had also not paid their bill for nearly 6 months according to the rep I had talked to (which it was probably illegal to disclose to me, but whatever). 2 weeks later when 6 months had elapsed they did then finally disconnect their number and hook mine up.
I just spent some time working in the disadvantaged areas of South Africa, and so I've formed a bit of affection for the nation and its people. While on the face of it I think anyone messing with these developing nations as they try to get their footing is about a pure definition of evil as can be had, I'm not aware how much this one matters. I mean, fsck SBC -- of all the people I met in South Africa, not a one of the blacks had a home phone line. But on the other hand they did all have cell phones. Vodacom and MTN were the major players, and had achieved amazing penetration -- on par with US cell phone penetration, but in an area where people still live 3 generations in a tiny 2 bedroom home.
:)
The only serious downside to having no landlines was a lack of internet connectivity -- nothing fills the early internet dialup niche: there's no flat-fee land line plans, and cell phone internet access is fairly expensive (though cheaper than in the US, I believe). So very few people are connected to the internet if they're lucky enough to have a computer. That is unfortunate. But in the end the people I met are not seriously hampered by the situation. They're amazingly adaptable, cheerful, and texting like crazy
Anyways; good luck to SA. I hope to go again some day.
"It's right up there with the ahhrms dealers..."
Perhaps you ought to think about it next time (your analogy sucks BTW since the referee never was in danger). What probably happened was that SBC and Telekom Malaysia probably bribed or conned enough politicians and special interest groups to get the monopoly and did the expected for five years. The point is that it should have been obvious to those who were conned what was going on. I think there was probably a lot of stupidity here. The bribed parties were probably bribed cheaply. And the conned parties should have known better.
Your general premise is "People will do bad things, thus they aren't at fault for their badness if they are allowed to do it."
Consider it this way. Suppose you needed to pay me money for a service. Do you say "Oh khallow, just pull the $50 out of my bank account. Here's my account info so you can do that." Or do you write a check or pay in cash? My bet is that unless you are seriously mentally ill, you don't let me, a stranger have access to your money. What's happened here is that South Africa did something similar with the SBC/Telekom Malaysia partnership. Everybody should have known already what SBC's moral fiber is like. They're greedy bastards. Now you know. The smart, ethical approach would have been to start with that assumption. That's one of the things about capitalism. They don't make foolish assumptions about another party's morality.
So the premise is more like "South Africa gave their bank account to a stranger and was unpleasantly surprised when things didn't work out." But yes, let's instead whine about the corrupt corporations rather than the fools in power and their actions that generously reward these corproations for being bad.Back in the day I had a great one for SBC - "Satanic Bastard Company"
It took me a while to come up with one for AT&T - but I did
Just look at their logo and think - "Death Star"
---- "Logoff! That cookie shit makes me nervous!" - A. Soprano
My point is that greed that goes into illegality _isn't_ within the confines of government, even if it's due to lack of government enforcement of their own laws.
It's not much of a point. In a country like South Africa, maybe SBC's actions were illegal, maybe they weren't. Depends on who's in power, not on what the laws superficially say is illegal (which SBC's actions may or may not have violated). From the State of Massachusetts' Constitution: If you don't have such a government, then it doesn't make sense to talk of legality. In SBC's case, it appears they were given the keys to the store and no illegal activity occured. But if SBC or its employees does get charged with a crime, is it because they did something wrong, or because they fell out of favor with the government?What do you expect would happen when the government jails anyone who tries to compete? Yes, it is the government's fault. That's an interesting point, but it doesn't really change the sentence that you're quoting, and I would take it a step further and make the point that Russ Beaton (econ professor at Willamette University) once made: "The best economies have no monopolies but the goal of every good enterprise is monopoly; therein lies the contradiction of unlimited capitalism.". The free-market libertarians in this thread are telling me that it's not SBC's fault that it bribed government officials and/or made back-room monopoly deals, just as Russ pointed out.
Why? The government-granted monopoly was bought by a free market of greed and corruption. I'm being told that it's just the government's fault for being anti-consumer. The corporation being anti-consumer is just part of the formula for being pro-consumer. This contradiction runs to the core of their doublespeak.
I've been trying to make your exact point that free market libertarianism is incompatible with monopoly business structures as being unethical, but that's not the message the libertarians are telling me. It's just always the government's fault to them when the libertarian formula breaks down (as it often does). Even though it's the predicted end of unrestrained capitalism, it's the government's fault it was not restrained. I just want to know from the libertarians just what is allowed to be limited by the government. I know the philosophy is to limit "harm", but how is lack of communication (as in this case) truly a harm in their ideology? Are we allowed as a democracy to weigh it based on the situation? Are de-facto monopolies outlawable? To most FML's, the answer I get is often no. Maybe not with these guys, I don't know yet. Perhaps one of them will want to espouse a consistent philosophy in a comment.
And oddly enough, to the "free-market" libertarians, I'm "stupid" for thinking differently than they do. When I call an insult that I'm stupid as "naive", I'm then moderated as flamebait. Where are the mods on the clearly insulting posts? If the FML's had a point, they'd stick to the discussion and not try to attack my intelligence with petty insults. Since responding to the insults is worth down-modding, I'll probably not bother responding to posts with petty insults anymore.
"They are "supposed" to do (whatever that means) whatever is in my and everybody else's best interests."
No, they are supposed to maximize return on capital to their investors. By law that is what they are chartered to do, and the board and management can be held criminally and civilly liable for failing to do so. As long as they are breaking no laws (or at least aren't currently under indictment), ethics don't enter into the picture. Only profit.
SBC..behaved "as a tax on industry and a drag on economic growth."
Are you sure they aren't talking about Telstra in Australia? The behaviour of Telstra domestically sure fits that quote.
Hey, wait a minute, did't the current CEO of Telstra also once also head up SBC?....
It seems to me one has to look at a larger scope of problems. We can't *blame* anyone for the systems that are in place, as the culture dictates behaviour as much as our innate selfishness creates the culture. What's missing in Aus, the US and almost everywhere is responsible oversight, which is the role of government. In addition, such oversight and regulation must be constantly matched against the expectations of society at large - what do we, as a whole, expect as proper behaviour in both commerce and policy? This then feeds back into our interaction as consumers with business... it's a circle, it seems to me, but in the world right now we have real issues around protectionism... everyone trying to build little empires, and never the twain shall meet. No wonder we're in such a misanthropic mess. There should be a *LIMIT* on the size any one business can grow to. Shocking I know.. who could think such a thing?
No, they are supposed to maximize return on capital to their investors.
Including dealing with the fact that their return will be reduced if they are perceived by the market and potential customers as being unethical.
By law that is what they are chartered to do,
Not precisely correct, it all depends on how the company is chartered. Some are non-profit and/or have mission statements that don't even mention profit. Most companies at least claim to be ethical though admittedly this is sometimes just talk. As some have said companies are sociopaths.
and the board and management can be held criminally and civilly liable for failing to do so.
Not really, they have enormous latitude due to the multi-year lag time sometimes needed when investing for future profit. Only if they do something completely stupid are they going to be held liable. The whole point of a company, as compared to a partnership, is limited liability. Company officers that claim ethical behavior is optional will quickly make lots of enemies and I've never heard of a company officer ever being held legally liable because they acted ethically. Have you?
As long as they are breaking no laws (or at least aren't currently under indictment), ethics don't enter into the picture. Only profit.
But profit is dependent on ethics and perception thereof. Unethical people and companies try to pretend ethics are irrelevant but for most people they're core and a company making enemies of potential customers is going to have trouble.
A company is just a group of people working together. As we expect individuals to act ethically we expect groups to act ethically also. Labelling that group a "company" doesn't change that expectation. When unethical behaviour gets too extreme we make a law to stop it, that applies to both individuals and companies, but the law is a very blunt instrument and sometimes social/market coercion works better.
---
Monopolies = Industrial feudalism
Its funny to read all these comments from Americans, who dont know shit about whats going on here, regarding Telecomms. Telkom is an evil bastard. The quicker they die, the better it will be for South Africa.
I hear a lot of "Ooooh! Those, rotten, gosh-darned, varmint-ridden capitalists!" (in your best Yosemite Sam impression), but I have three questions.
#1) Who in the SA government granted a monopoly over their telecommunications to AT&T of all people?
#2) Why was the monopoly granted to an American company, instead of a local company?
#3) When a government grants a monopoly, isn't it supposed to simultaneously oversee and regulate it, so that rampant price-gouging and public disservice such as this does not take place?
This whole fiasco just reeks of cronyism, or bribery, or profit-taking on the behalf of the politicians and bureaucrats who owned stock in AT&T, or all of the above. I suppose if they used a local company then the likelihood of racism could have been thrown in for good measure, but the way AT&T sacked the country purely to fatten its war chest is ridiculous. The playbook on granting government monopolies is well known, and this sort of thing really shouldn't have happened.
"No problem. I have the capacity to do infinite work so long as you don't mind that my quality approaches zero."-Dilbert
Actually, since you mention Adam Smith, the funny thing is that this is a case where he wouldn't have advised laissez-faire capitalism in the first place. In fact, the only change there to make it fully Adam Smith compliant would have been to make it a public institution, or I suppose regulate it to the point of being effectively one.
The funny thing about Adam Smith is that he may well be the most mis-understood and mis-quoted author. People seem to assume him to be the shining beacon of laissez-faire market-solves-all-by-itself proponent, especially when they themselves subscribe to that kind of a view.
He actually proposed a _lot_ of government involvement in infrastructure. Ok, so what he said is public works and institutions (remember the institutions part too), with emphasis on public works that would facilitate commerce in general. He sees it as the government's duty to provide and maintain good road, bridges, navigable canals, harbours, etc, in other words: infrastructure.
That's actually a lot of taxation and public spending to maintain that, with Britain's economy at the time when Adam Smith wrote that.
(It's funny how so many of those discussing why the industrial revolution in Britain miss the factor that their canal network was a precursor to railroads that served the same purpose: getting raw materials from here to there in large quantities and cheaply.)
At any rate, blimey, telephone is infrastructure.
If I'm allowed to go into an OT detour into his public institutions views too, he also was for public schooling (above and beyond what any country does nowadays, as it would involve a school in every parish), public health (to "prevent leprosy or any other loathsome and offensive disease"), and generally wasn't too much for a lean and cheap government the way I see it, since he has nothing against expense for "supporting the Dignity of the Sovereign". He also didn't seem too bothered by government co-ownership in some (heavily-regulated) corporations, either.
So basically, it's funny to see him quoted as some beacon of ol' school conservative laissez-faire, either by the proponents or detractors of it, when really that's not what he proposed at all.
To get back to his invisible hand, basically all he says there is what we nowadays call supply and demand. If there's a demand for product X and a profit to be made in fulfilling that demand, someone will start making more of it. You don't need the crown to tell someone to start producing X, someone will start it anyway, "led by an invisible hand." He's not horribly wrong, either: as long as the market has a certain structure, we already know that it works.
The only problem is that the ideal(istic) capitalist free market is not the perversion it tends to become when left unregulated. The assumption that the free market solves everything is based on a structure where there are many producers for each good, the different brands of goods are perfectly interchangeable (e.g., you could drop an AMD CPU into your Intel mobo if you don't like Intel any more, or could switch between Windows and BSD or Solaris without noticing any difference in what you can do with that computer), the buyers are perfectly informed, etc.
That was the only kind of market you could possibly get in the 18'th century, but nowadays it's possible to subvert it massively. And the incentive is there too. That ideal market is a commodity market, and there's not much money to be gained in it. As they say, the only way to make a small fortune in the commodity market is to start with a big fortune. The big money is in making your product non-interchangeable (e.g., by making other stuff work with only your brand of it, see: Microsoft), keeping the number of competitors low (e.g., by raising artificial trade barriers), and keeping the public as uninformed or even mis-informed as possible (e.g., marketing, PR and FUD.) So that's what the perverted direction the market tends to take by itself: if it's more profitable to do that, the succ
A polar bear is a cartesian bear after a coordinate transform.
What? Where does this end. Repeat after me. Europe is not socialist. Europe is not in the state of socialism. Europe is not going to be socialist.
I'm sorry that I have to make this comment again, but I feel it's very important to point that Europe is not an example of socialism in action. The reason for this is that marking Europe as an example of socialism waters down the bad connotations associated to socialism and make it seem like that socialism really is an good alternative to market driven capitalism. No! Absolutely no. The Europe today, prosper and free, being one the power houses of global economy and politics wasn't build on socialism, it was build in foundation of democracy, market economy and social responsibility. Note! Being socially responsible doesn't equate to socialism.
If you want to see real socialism in action you go to North-Korea or get a time machine and jump back to eighties and visit Eastern Bloc countries and Soviet Union. They were socialist countries with socialist economies. If you had the opportunity, like I did, as an child to visit Soviet Union, all thought in the end of the eighties, you would see the real results of socialism: economy in ruins, rampant poverty and misery.
No. Please don't use Europe as an example of socialism, because it isn't an example of it. Capitalism with checks and balances isn't socialism.
---To comment the debate about SBC (AT&T) on their part with Telekom, I would say that is an perfect example on government having a bad effect to markets by making an bad decision. It should be noted however that I can understand the logic here, even in the US AT&T had a government mandated monopoly to long distance calls, and some have stated that without it, it wouldn't have been possible for US to build nation wide fiber optic network in the seventies to serve the whole nation.
Thought in the US there was adequate technology, capital and most importantly paying customers available, so it could have been probable that the US would had the nation wide fiber optic network even without AT&T doing the work. In South Africa it seems that there just weren't either enough paying customers to make it lucrative to build a nation wide network instead on engaging to monopolist practices geared towards profit optimization.
Also as in the same time the rest of the world, Europe including, were facing off government monopolies in telecommunication, the government decision to give an monopoly to a one company can be seen as a very very bad decision.
Survey research tool for commercial and scientific use
I was a telecommunications journalist in South Africa during SBCs tenure, and I have to say things are a bit more nuanced than they may seem. SBC wasn't all bad.
;-)
In fact, it did South Africa a couple of favours. When it took up shareholding Telkom was a bureaucratic nightmare. Its technology was 18th century. I grew up with manual exchange telephones - the type where you wind a handle to reach an operator. And this up to the mid-90s.
Today we have a sophisticated ATM network with multiple national redundancy. Telkom has mature product offerings. The intelligent network initiated under SBC managers is a thing of beauty. Also, the company has a fantastic legal department
Oh, there are many things wrong, and I have called for the heads of government ministers (and Jim Meyers, funnily enough) myself. The last mile is a mess, because Telkom wouldn't spend on it.
But SBC did some good. Did South Africa overpay for that? Absolutely. But it's not like we received nothing in return.
Listen kids, there is something that you have to understand. If you want to roll out telecom to everyone in a nation, there are places where you are going to have to spend $500k to cover 10 customers, especially in places like rural South Africa where there might be one or two people living in a given square mile. That is expensive, and you can't charge them $10/mo for service because you'll never recoup the investment. That's just the way it is. Get over it.
Fortunately, I don't need to: I've observed that the only people who use exaggered rhetoric and vilification do so to support a weak position. (Godwin's Law) They would know. I take them at their word.
SA Government was the major shareholder in all this, so telecoms in SA were actually heavily 'taxed'.
threadeds blog
In fact, corruption and monopolies are seemingly everywhere these days. Big business has come to mean big evil.
It seems clear that the real problem is our acceptance of it.
Yet another ANC victory, brought to you by the same people who brought you the highest murder rate in the world, nearly halved lifespans of black citizens in less than a decade, and reduced the GDP of South Africa by more than half... They've even managed to enact policies which have reduced gold & diamond mining production.
What?!? You seriously expected telecommunications to be any different from every other outcome measure in the country since ANC rule? 15 more years of ANC rule & S. Africa is headed from a place that started with the highest GDP in all of Africa and first world infrastructure -- all of the way to Zimbabweville.
Freedom is merely privilege extended unless enjoyed by one and all.
http://www.petitiononline.com/BanATT/petition.html ;-)
Mercantilism is mostly about trade policy, not domestic regulation policy. I think you are right that mercantilism is alive and well but the usual terms today are more like "managed trade" "managed capitalism" "industrial policy" "sovereign democracy" than "business friendly". Mercantilism can be a rational policy where public policy tries to maximize goals of the state including military power and national influence rather than the wealth of the citizens of the country. China and the Soviet Union are two top mercantilist powers of the 21st century. Where the goal is maximizing the wealth of a nation, mercantilism is bad policy. The issue in TFA is just bad domestic regulation. Good domestic regulation of monopolies is hard to achieve because the regulated monopolist has incentives and channels to influence the regulator. It's called "rent seeking" in economics. There is a profit opportunity from influencing the government, it is worth spending some part of that profit opportunity to buy influence. Mercantalist policy creates "rent seeking" opportunities in foreign trade, so like regulated monopolies, mercantilism often leads to bad policy and corruption. Ralph
I've been looking at grad school in RSA, but their telecom infrastructure is so craptacular I can't figure out how anyone teaches or learns IS there. There's some quality schools, they just have to deal with a hundred years of screwed up priorities. Different ideology, same rent seeking bullshit.
They are "supposed" to do (whatever that means) whatever is in my and everybody else's best interests.
Wrong. Wrong. Wrong. Wrong as in, totally 100% incorrect.
They are supposed to do whatever is best for the shareholder's interests. Period. Nobody else matters. If the shareholders want to disband and liquidate the company, then they can. Corporations are created for - and only for - the shareholders. Jeez...where did you go to school? This is middle school economics stuff and is backed by historical record, not opinion.
That is all they are supposed to do. Anything else is nothing more than a means to that goal. (philanthropy, community endeavors, etc) It all culminates in the company bringing a product to market and hopefully, making money. But that isn't even required. There are plenty of non-profit corporations and guess what? They also answer to their shareholders.
There are, of course, indirect connections. ie: shareholders want companies to remain in business so they want the companies to do what is right for customers and the community. Therefore, companies answer to customers and the community. But this connection is indirect in nature and is only a result of it being a means to an end (ie: the end = shareholders goals). All else, besides the shareholders, is secondary. And yes, I mean ALL else. Even legal penalties become part of the shareholder equation.
That's how business is done there. Don't take my word for it.
South Africa is a declared socialist state. Paying bribes is a rule: You shall bribe all the 'right' people.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
Besides I bet the bribes were paid by the South African company that wasn't even majority owned by SBC.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
You equate rape with a regulated monopoly doing what regulated monoploies always do? (Give one counter example: they always inflate their costs, deliver minimum acceptable results, take few risks, use what ever means available to manipulate/own regulators).
What they did in South Africa is the same kind of thing they do anywhere. Do you feel raped by your electric utility.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
SBC is in the telco business.
They're not a bunch of virgins. They made a cynical decision that they could make money by getting in bed with the South African national telco. Knowing they'd get up with fleas, that the system would work better for their involvement and that they had a decent chance to make a return on investment.
That is all.
I bet they would have preferred to come in and setup SBC SA as a competitor to the national telco. That was not an option available to them.
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'