Sunday, June 3, 2012

Asset Sales and the Myth of Profit

There's something disturbingly lacking from the debate around the sale of assets.
Both Labour and the Greens have been relying on the argument that once public assets are lost, we lose the profit that comes with them. Here's an article where they both make the same point.

True enough, but why should these companies be making profit off the taxpayer anyway?
I expect this angle from Labour, who push the idea of the 'gentler' free market. They come off as the cocaine dealer to National's harder 'P' deals. It's disappointing however to see the Greens pushing the myth of 'profit for the people' from the peoples pockets.

The fact is that the taxpayer is paying too much money for electricity. This extra money lines a few rich peoples pockets and then the 'extra' goes back in to public spending. It doesn't take an economist (in fact probably the opposite) to work out this is unfair and has no benefit for the average Jane Public. A 2009 report showed that power companies had overcharged consumers by $4 billion dollars over 6 years. That's $4 billion dollars more than what even the capitalists consider a fair profit. Power prices rose 72% between 2000 and 2008 compared with a 29% rise in inflation. In laymans terms: we're getting screwed.

the National Government came up with a great solution to this pointless profiteering. they made it easier to switch power companies. Apparantly there's been a 38% increase in people switching companies. But tell me, did you also get a letter from your power company recently (like we did) saying that they were raising prices again?

Basically we are paying a tax on power. If there is excess money being paid, rather than just a user charge, and that extra money goes in to other areas of public spending, then that is a tax. Now don't get me wrong, I'm all for taxes. In fact I advocate higher taxes if we want to have good health and education and a system that benefits everyone in society. But our power tax isn't a graduated tax system which taxes the highest earners more and the lower earners less. Our power tax is a twisted logic tax where a minimum wage family could be paying more than a millionaire. To put it another way, power companies don't make profit. they take money off people in an unfair way and then give it back (with some middle men taking a cut along the way). It's a system of exploitation that hurts the poorest the worst and right now that's what the Greens and Labour are ecstatically promoting.

There's a number of solutions to the problem, but a simple place to start would be to advocate for non-profit power companies. This would at least start saving some money for those who can least afford to pay. If power companies really are the peoples assets as we are led to believe, then they shouldn't be exploiting us. It would be nice to hear this from the Greens rather than the bleating on about how much profit we stand to lose. At the moment we are already losing, let's play the game properly and start winning.


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