31 October 2013

Human rights or market competition?

The bad old days...
In a recent paper, some academics conclude that "system operators, utilities, and management boards remain largely unaffected by the changing public policy landscape for human rights realization."

That's what I said (long short) when I argued for property rights as a more efficient means of getting water service to people. Why is that? Companies pay attention to the people with money. In most poor countries, water utilities pay more attention to those providing the subsidies (from government or aid organizations) to cover operating and capital spending (if any).

Those utilities then do what they please, as monopolies can, when it comes to serving poor people in slums.

How can we break that paradigm? We can borrow from history and our experiences of how phone service improved when traditional phone monopolies were disrupted by competition from long distance (remember when MCI "insulted" AT&T with their low rates?) and mobile phone providers.

Are mobile phone providers charitable? Do they have unique insights into our needs? No, neither. They serve customers because they will fail if they do not, when others take those customers away.

Bottom Line: Competition will deliver water to people faster than regulation or charity. Competition will arrive when (1) monopolies lose their control over the service area (in LDCs this happens when kiosks are allowed to sell water) and (2) when people lacking water have money. Most of them can find their own money (e.g., the poor in Phnom Penh), but others may need help from the State (Chile) or money in their pockets (my rights proposal above or via direct aid).

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