Competition

For what?

Yesterday I wrote about monopolies, ie one supplier only. Or stranglers as I prefer to call them. Because of their preference for grabbing their customers around the neck rather than serving them. And squeezing hard. Exploiting the fact that those customers have nowhere else to go. While all the while smiling sweetly at them and assuring them with forked tongue that customers are their first concern.

And about oligopolies, as they are called, ie more than one but still not many suppliers. Or strangling gangs, as I suggested we might call them.

The received notion is that, as what you might call a matter of public policy, stranglers are not good. So having a gang of stranglers instead must be better. Then they can compete with each other. That must be better for the public, they say.

Why exactly gang members would compete with each other, when they can far more easily just gang up together, as gangs do, to strangle consumers in unison, never seems to be addressed. Nor is why the public might prefer to be pursued by a gang of stranglers jumping out at them from every direction, rather than just the one.

The context of this was the utility companies. Gas water electricity etc. They are what you might call natural stranglers.

You cannot realistically have lots of water companies competing with each other in any meaningful way. After all, its the same water falling from the sky. And we don’t want lots of little water companies all digging up the roads whenever they feel like it to lay their own separate pipe networks. That would be very inconvenient, if not downright chaotic. And even one water network costs a fortune, without all this duplication added in.

The same goes for gas, electricity and so on. Utilities are what they call a natural monopoly. There just aren’t that many firms that are big enough to get into that marketplace. Or ever could be. And even if there were, it would be utterly chaotic.

So the notion was that the government should step in and run the utilities. No competition. But not strangling the public either. Just public servants selflessly serving the population.

Sadly though, history seems to show that this was not a great success either. Experience showed, it was contended, that a strangler was still a strangler even if the government owned it. The hope that it would, by virtue of its public ownership, carry on trying to do the best for the consumer was just that. A hope.

The reality was perceived that a strangler, public or private, has a natural tendency to strangle. Because it has no effective competition. And, because civil servants in Whitehall were no substitute for competitors trying to grab the business, they weren’t even very good at it anyway.

Of course you might say that the answer to that might be to get better civil servants. But we never went there. Instead the utilities were put back in the private sector.

Were we therefore back to square one, as it were? Well not quite.

The idea was that the industry would not be put back in the private sector as one company, but as several of them. So they could compete. Theoretically at least. Instead of one strangler we would have a gang of stranglers. Except for water, which remains a regionalised strangler.

Thus we end up in the modern system, in which there are a gang of strangling gas companies, for example, all supposedly competing for our business. The problem is however that it is hard to see in what way they are actually competing for our benefit as consumers, rather than just competing to strangle us.

After all, the gas is the same gas whichever strangler you buy it from. It comes from the same wells. It flows to you through the same pipes. No competition there then.

So what exactly is this competition of which they speak? It is hard to resist the conclusion that it is in fact the exact opposite of what competition should be.

Remember competition is about giving the customer good service at a fair price. But these utility companies neither supply nor control the actual stuff they are selling. So what exactly can they do so as to give the appearance of competition while they strangle us in unison?

The short answer is nothing.

Next time I will write about how they get away with it.