National Sovereignty vs. Economic Globalization

[Xantar]

Let me just start out with two statements:

1. In the grand scheme of things, this is a pretty minor deal that's not even worth a whole lot of money. Therefore, the President would not be personally involved in negotiating it. It may seem a bit disconcerting to have Bush say that he didn't know anything about this deal, but if the running of these ports had been sold back in 1996, Clinton wouldn't have known about it either.

2. Dubai Ports World won't be running the security of the harbor. Its role from what I can tell is basically administrative. Schedule the boats coming in and the boats coming out, take note of their cargo, things like that. Other companies (also private, I believe) run the security.

My concern is not that DPW is literally owned by the Saudi Royal Family or that I think some of their employees would smuggle a nuke into our country or anything like that. My concern is that these ports are owned by a private company to begin with. DPW may not actually determine the security procedures at the ports, but it will be made aware of them. That means its employees will know what security procedures and countermeasures we use to protect our ports, and that's the kind of information we simply don't want to become a part of general knowledge. Basically, what Kurt said (damnit, did I just agree with him about something?).

One of the definitions of the government is that it has a monopoly on legitimate use of force in the name of security. The government's not great, but it's at least accountable to the citizens, and its primary motive is not profit. I don't think a British company or an American company or a company from the UAE should own our ports. They should be owned by the government just like the roads.

[Professor S]

Originally Posted by Xantar

One of the definitions of the government is that it has a monopoly on legitimate use of force in the name of security. The government's not great, but it's at least accountable to the citizens, and its primary motive is not profit. I don't think a British company or an American company or a company from the UAE should own our ports. They should be owned by the government just like the roads.

There is a minor movement for the Government to issue Port Bonds to allow US citizens to invest in our ports and buy the rights. That might be a decision that could breach the argument of Free Trade vs. Government Control.

[Xantar]

Originally Posted by Professor S

There is a minor movement for the Government to issue Port Bonds to allow US citizens to invest in our ports and buy the rights. That might be a decision that could breach the argument of Free Trade vs. Government Control.

Could you elaborate on this? I'm not sure I quite took your meaning.

Anyway, I saw your PM some time after I made my post, so I'll say a word here about economics. Basically, I don't see this as a trade issue. Maybe it is in the sense that Dubai Ports World runs the port more cheaply than the old British company did, but generally I don't think it had much to do with globalization. I think this issue is more related to the privatization movement. This is the same trend that deregulated airlines under the theory that non-regulated competition would lower prices (they probably did). It also led to the deregulation of communications which is why I find it interesting that Comcast has now basically gained a monopoly on cable in the eastern coast. It used to be that your local TV cable company had its price and services set by the government in order to avoid gouging, but now they have been released under the theory that any other company (like mayb AT&T or Microsoft or somebody) would be free to come in and try to offer their services more cheaply than Comcast. The problem is Comcast owns the actual cable lines running into your home, and they're not going to let someone else just come in and start offering content on their own property.

I'm not sure where you think Verizon has a monopoly, though. There are plenty of cell phone carriers out there. Unless you're talking about DSL in which case Comcast cable is arguably a direct competitor.

Privatization is a political as well as an economic matter, and I think you're pretty familiar with the issue already since that's basically what the health care debate is all about. It's just that in this case, instead of a for profit company selling you physician services, a for profit company is lifting crates at the harbors. The question, as always, is whether that is a service that's too valuable to be entrusted to a private corporation.

[Professor S]

Originally Posted by Xantar

I'm not sure where you think Verizon has a monopoly, though. There are plenty of cell phone carriers out there. Unless you're talking about DSL in which case Comcast cable is arguably a direct competitor.

I was referring to land lines. Verizon owen virtually alll of the land lines on the east coast and their only competition are small companies that actually re-sell Verizon services. I used to work for a company that had contracts with Verizon and it breaks down like this:

When Bell Atlantic decided it wanted to merge with other carriers basically re-create the old AT&T, the government wouldn't let them because they would monopolize the land line industry. Cell phones are not a competitor because there are laws on the books that make land line ownership manditory for a large number of Americans (any household with minors, for one). So a compromise was made that Verizon would allow smaller companies to "re-sell" Verizon services. Verizon was made to sell their services to these re-sellers (like Cavalier) at a cut price so that they could re-sell them at a price that is cheaper than Verizon's retail.

The problem is that all of the maintenance and service personnel are still Verizon, and Cavalier has no infrastructure. So if you have Cavalier instread of Verizon, your service level is absolutely pathetic because Verizon still has to fix and maintain everything even though they are taking a loss on it.

In my mind, this is not what I think "competition" is supposed to be.

Privatization is a political as well as an economic matter, and I think you're pretty familiar with the issue already since that's basically what the health care debate is all about. It's just that in this case, instead of a for profit company selling you physician services, a for profit company is lifting crates at the harbors. The question, as always, is whether that is a service that's too valuable to be entrusted to a private corporation.

Well, there are a number of differences between comparing port authority and healthcare. When it comes to the ports, there is no compromise or middle ground. Either the US owns the control or another company does. I think in healthcare an option should be given to people if they want private or public. If you want public, fine, but expect long lines and a lower standard of care (but still an acceptable and hippocratic one). If you want private, then you can expect a little better. Also, I think if the government would federalize pain and suffering caps on settlements, healthcare costs would plummet and most people would be able to afford at least a decent plan.

As for the Port Bonds, it goes some thing like this: The US issues bonds to US citizens to purchase the rights to the ports, keeping the economics of the transaction within free trade. The US then runs the ports, but the ownership is in that of American citizens and the investors reap the rewards. I think thats how it works, anyway.