I'll be the first one to admit that anecdotal evidence is meaningless in the broader scheme of things, I was just giving an example that I encountered (which also happens to be the norm). The water company increased the price by 25% because the city allowed them to. The city allows them to continually increase their rates because they want the water company to secure funds and increase coverage to areas that aren't a good return on their investment, even though the government already heavily subsidizes them for building new pipe lines. Before being bought, the city government was already in the process of extending coverage, but they did so at less of a cost than the private company.
Other phenomen we have in this type of situation is that fact that political contributions have an affect on operations, namely the government allowing the private company to increase rates. There wont be much of an political uproar if rates increase by a small percentage, so people in charge of government would happily let the water company raise their rates in exchange for contributions to their campaign. This is a common occurence, and it cuts into efficiency. And to be honest, this isn't look down upon that much.
A politican raising rates on water and pocketing the money is a crime and a political career ender, but a politician allowing a private company to raise rates on water and recieving a large contribution from the company is just politics.
Again, we have a monopoly with owners and investors looking for a profit, the government telling the company what price to charge and what quality the product must be, and we have the government giving them money and letting them increase rates so that increasing coverage areas will become profitable enough for the private company to desire to do so. This is not efficient, and the government is still making all the decisions.
It would be like hiring a maid and still cleaning the house yourself.
Please respond to my 'Main Point,' its a pretty basic idea that is well understood in economics. What reasons do you think makes the free market better than the government in some areas?
