Privatization: Providing Better Services With Lower Taxes

by Robert Poole, Jr. All around the world, government services and enterprises are being shifted into the private sector via a phenomenon known as privatization. In Britain, nationalized industries such as British Airways and Jaguar have been returned to investor-ownership via stock offerings. Similarly, in Chile, hundreds of firms nationalized by the Allende government have been returned to private ownership. But privatization goes further than simply re-turning once-private firms to the business sector. Margaret Thatcher’s government privatized over 1.5 million council houses – public housing units which were created by the public sector. It also privatized the major airports, the gas utility, and the telephone system – all of which had always been in the public sector. Likewise, the Japanese government is privatizing Nippon Telephone and Japan National Railways, which have been fixtures of the public sector. So in a very real sense, privatization is actually dismantling big government, not merely correcting the excesses of socialist regimes. The Move Toward Privatization Privatization was first identified as a phenomenon in the mid-1970s in the United States when the trend of municipal governments to purchase service from private firms under contract was discussed in Reason magazine. This ultimately led to the creation of the Local Government Center by Mark Frazier and Robert Poole in 1976 – the first think-tank devoted to researching privatization. In the late 1970s, LGC’s materials came to the attention of Ronald Reagan’s speech-writers, several of whom went on to hold White House domestic policy positions and promote privatization within his administration. Also in 1977-79, LGC privatization materials began being used by British local council members John Blundell and Michael Forsythe. This lead to a wave of local-service contracting-out which began at Wandsworth. Inspired by these developments, Eamonn Butler and Madsen Pirie set up the Adam Smith Institute in …

The Labor Theory of Value (an analysis)

by Donald C. Ernsberger edited by Jarret Wollstein At the heart of economic theory is the concept of value. What gives an article value? Is it something inherent in an object, or is it some other factor? Does value derive from human effort, or something else? The two major and fundamentally opposite economic systems – capitalism and Marxism – give completely different answers. The Labor Theory Karl Marx’s labor theory of value asserts that the value of an object is solely a result of the labor expended to produce it. According to this theory, the more labor or labor time that goes into an object, the more it is worth. Marx defined value as “consumed labor time”, and stated that “all goods, considered economically, are only the product of labor and cost nothing except labor”. The labor theory of value is the fundamental premise of Marx’s economics and the basis of his analysis of the free market. If it is correct, then much of Marx’s critique of capitalism is also correct. But if it is false, virtually all of Marx’s economic theory is wrong. Here is an example of how the labor theory of value works: A worker in a factory is given $30 worth of material, and after working 3 hours producing a good, and using $10 worth of fuel to run a machine, he creates a product which is sold for $100. According the Marx, the labor and only the labor of the worker increased the value of the natural materials to $100. The worker is thus justly entitled to a $60 payment, or $20 per hour. If the worker is employed by a factory owner who pays him only $15 per hour, according to Marx the $5 per hour the factory owner receives is simply a ripoff. …