Monopolies

Our federal government wants to sell off a bunch of assets.

One rationale is to plug a budget hole.

Another is more philosophical; the argument runs that governments shouldn’t regulate a market and also compete in that market because it would be unfair (when did that ever stop them?). This argument might work for Medibank Private which has competition but not so well for Australia Post, a virtual monopoly.

Lobbyists also push hard for selling assets since they tend to enrich the buyers. This is a primary motivator!

A counter argument is that public monopolies are by definition break even or cash flow positive. Why sell something that has no risk of not generating profits forever? When valuing these assets there is no need to discount the cash flow.

Also the benefit to the public can be simplicity. When Australia Post is sold our postage options are going to get as complex as our phone bills. As are our energy bills.

What value can we place on the simplicity that government monopolies provide?