I agree and disagree with your argument.

I agree that businessmen also are vulnerable to pragmatic, short-term thinking. Moreover, I agree that such faulty thinking is cultural, the fault of bad philosophical premises, and is not always government-imposed. However, it does not follow that such fact means that privatization or extensions of capitalism should not be attempted wherever possible.

We do not need to wait for people to hold the full philosophical premises of reason, individualism and laissez-faire capitalism in their heads before we implement elements of it wherever we can. I have two reasons. The first is historical. Man made material progress and technological advances even during the Dark Ages, although the pace of those advances accelerated materially in the Middle Ages and then exponentially as the Industrial Revolution progressed. During that time, the philosophical views of people were bad on many levels and only improved in fits and starts, with many wars and lots of misery along the way.

Historically, physical and philosophical progress occurred simultaneously, not one before the other. That is my first point.

My second point is economic. Admittedly, pragmatic thinking will affect everyone in society, both businessmen and government officials. Businessmen are certainly capable of acting altruistically and in a destructive, short-term manner.

However, the following is the big difference between businessmen and government. Businessmen are every day rewarded for making good decisions and punished for making bad decisions. This reward/punishment mechanism affects them every minute of the day through the capital markets (people buying and selling their stock), the product markets they compete in, and the labor markets in which they must compete for workers.

None of this reinforcement mechanism for good behavior is present in government. Government is not without incentives, but the incentives occur infrequently, whenever there are elections or wherever there are opportunities for positive or negative publicity (e.g., observe how senators love to hold hearings so that they can be seen on camera, or how they love to be present at ribbon cuttings).

Moreover, for institutional reasons governments must operate under a welter of bureacratic rules. Ludwig von Mises in his book "Bureacracy" argues that governments by their nature must be heavily rule-bound and ossified, unlike private organizations. Private organizations are by necessity managed to be much more adaptable to deal with changing market conditions; their owners are heavily incentivized by the profit motive to actively manage the organization.

So, my second point is that the forces of the market reward good business behavior and punish bad business behavior in a much more immediate and effective manner than government officials are motivated by political incentives.

Both of my observations -- historical and economic -- mean that even in a culture steeped in bad philosophy, such as pragmatism, everything that can be put into private hands should be.

That is not the same thing as saying that everything should be "privatized". What is privatization? Is it putting a government function in private hands in-name-only, where the government still controls the entity through regulation? If so, that is not true privatization and is a straw-man argument against putting property in private hands.

Observe that even in the famous Enron example, the California electricity market where the trading scandals occurred was characterized by wholesale and retail price controls and a welter of mind-numbingly complex regulations. It was hardly a free market.

As for the financial fraud that Enron perpetrated, the market punished that company and its shareholders severely, taking the company out of business within a few months. The market worked damn fast to punish those who behaved in an irrational short-term manner. If only there was a market to take the Ponzi scheme of Social Security or Medicare out of its misery in months. That is the beauty of the free market, and the decades-long pain of government management.

I say privatize (truly, not in name only) wherever and however we can. That means the roads, bridges, you name it. At the same time, we must be mindful for phony privatization and call it out if that is what is really happening.

We do not have to wait for the philosophical revolution to fight to keep and preserve our physical freedom, nor to expand private ownership if the opportunity presents itself.

GB:

You're right that there may be a mistaken implication in my post. It is not the case that people should be free only if they're going to make the right decisions with that freedom. To say otherwise would be paternalism. So I do not mean to imply that only under the condition that businessmen give up their pragmatism would they deserve to own more infrastructure.

So what was I trying to say? Mainly, I think, that it is not rhetorically effective to point to examples of infrastructure decay and blame it on government ownership, as if a different type of ownership alone would make a difference in the quality of services provided. If infrastructure really is decaying, it's because of government ownership but more broadly because of pragmatism in politics.

Incidentally, even though I wouldn't say that businessmen don't deserve some freedom just because they're not perfect, there are reasons besides this for permitting certain extensions of property rights only in incremental stages. Just as we wouldn't abolish all taxes or eliminate all welfare benefits overnight because of economic infeasibility, we also wouldn't be able to extend private property rights to everything at once.

The clearest example is the extension of property rights to lakes and rivers, etc. It would be great if we could figure out a way for them to be privately owned, so that tragedies of the commons could be avoided. But we would need a revolution in legal theory (if not also in physical science) before we can figure out how to define property rights in this domain.

Physical infrastructure is somewhere in between natural resources and everything else. It would probably be fairly easy to sell off airports. But it would be particularly difficult to figure out how to privatize the city streets, for example (campus Objectivist clubs have spent hours and hours debating this). Highways and bridges fall somewhere in between. The challenges involved in all of these make it all the more important that businessmen be able to raise large sums of capital and make long-term investments, which would not be possible until years after other free-market reforms are put in place.

NS

With proper privatization, anything can and should be privatized. By proper, I mean that the owner retains full, or nearly full, rights of ownership, including: the ability to charge whatever price he wants, the ability to sell all or part of what he owns, and the ability to raise debt and equity to finance his purchase.

Anything significantly short of that should not be called "privatization". Instead, there is a good term that identifies where government delegates a portion of its authority over an asset to a private operator. That term is concession. Many of today's so-called privatizations are really concession transactions.

For example, if a school is "privatized" but the government pays all the bills, that is not private property. Rather, it is a concession operated by a private individual. Or, a road that is "privatized" but the government retains the right to set tolls, approve any subsequent "owner", and even revoke the agreement under certain circumstances, is not private property. It is a concession.

With that distinction in mind, in nearly every instance, private *ownership* of formerly government-operated property would result in better operation of that property. The private owner would have every incentive to properly maintain the property so that he could maximize his profit. The only exceptions would be incompetence/malfeasance or where the economically optimal level of maintenance was less than the level provided by the government (that will be a rare instance, indeed). As for incompetence and malfeasance, I already cited how market forces minimize that under private ownership, but maximize it under government management.

In sum, I simply cannot think of any instance where something should not be privatized, properly defined.

********

As for the difficulty of establishing private ownership on existing property such as rivers, lakes and roads, it is difficult. That does not mean that it should not be attempted wherever and whenever the opportunity presents itself. Even in today's environment, those opportunities sometimes do present themselves.

I suspect that implementation of property rights to rivers, lakes and roads will not occur all at once, after the theoretical issues have been worked out. Rather, it will happen piecemeal as necessity demands it and intellectual justification supports it. The legal difficulties of establishing these rights will be solved incrementally.

For example, in many states, beaches up to the high tide line are "owned" by government. This sets up conflicts with owners of beachfront property who want to enjoy "their" beach unmolested by crowds of beachgoers. One could imagine as the virtues of private property become better established, or simply in a particular jurisdiction if a judge so rules, private property being extended to encompass the entire beach, which it should.

As for lakes, it is a no-brainer to extend ownership of a lake bed to a property owner who owns all of the surrounding property. I can foresee that happening at some point. Then the property owner may subdivide his lake front property. When that happens, his property sales contract, as interpreted by the courts, will establish how the various owners of the lakefront property own chunks of the lake or all of the lake jointly.

The same principle applies to rivers. Here, doctrines of first use apply. For example, if fishermen enjoy fishing a river, and they used it first, their right to fish that river would trump a zinc smelter's desire to dump waste into the river. As an example, similar fishing rights are well-established on English rivers and streams, with the result that abundant trout can be found within an hour's drive from London. In the United States, all trout streams near urban areas are fished out because all streams are in the commons.

Ownership of flows of water already has been established in the West. Farmers who receive quantities of water known as acre-feet can sell those water quantities to municipal water systems. The water flows of the Colorado River, which supplies much of the drinking water in the Southwest is already allocated among various users. Some of this water is already being sold and re-sold to various parties.

The principles of private ownership of lakes, rivers and roads (witness the rise of toll roads) are being established step-by-step. There is no need to say that we should wait to privatize these things. Rather, we should encourage their privatization, while rooting out false privatization or "concessionization" which gives privatization a bad name.

It is entirely likely that other, "easier" parts of the economy will be privatized first, but that does not preclude the privatization of seemingly difficult-to-privatize property such as lakes, rivers and roads. I suspect that as the intellectual justification for private property generally becomes better established, we will all be surprised at just how quickly these things can be privatized.

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