Privatization Bogeyman Reappears in Manitoba Election La La Land

The basic lesson remains the following. If you want to expand a crown corporation, create more jobs and economic spin-offs, have a larger tax pie then you should privatize.
Published on June 29, 2011

There will be an election in Manitoba later this year.  Predictably, the strawman issue of privatization is being trotted out by the interest groups that dominate Manitoba’s old style public sector.  In particular, we hear that various government unions are preparing to spend large sums to warn the public that a defeat of the present government could mean the privatization of Manitoba Hydro.

It won’t happen for a long time and shouldn’t until the public fully understands the benefits possible from such a development.   Interestingly, the privatization of MTS is held out as a warning to the folks out there.   In 2007 Frontier’s David Seymour compared the performance of SaskTel, the only crown corporation telecom company left in North America, with MTS, which was wisely privatized in 1996 by the Filmon Conservatives.   This paper, which is summarized in a Frontier Charticle here, showed that after privatization in 2007:

  • MTS earned twice the revenue of SaskTel.
  • MTS had 3 times the assets.
  • MTS was more profitable, on the basis of revenue, assets and equity.
  • MTS had 20% more jobs

Pretty scary stuff.

The basic lesson remains the following.  If you want to expand a crown corporation, create more jobs and economic spin-offs, and create a much larger tax pie then you should privatize.     This is scary stuff for the chattering union classes in Manitoba.   La la land as usual.

I can see someday Hydro freed of the parochial interference of small time politicians (witness the Bipole 3 fiasco). It has access to private capital and grows by buying up power assets in Minnesota and North Dakota, including the transmission lines that allow Hydro to be held hostage by American interests.   The company can build dams without any risk to taxpayers.  The headquarters operation in Winnipeg is 2 or 3 times its present size.   These are high value jobs that pay lots of tax revenues.    The company dominates the mid North America power markets.  All Manitobans get richer.

Naw, horrible stuff according to the usual suspects who have a stake in keeping us all in a “have not” province time warp.   Please keep sending us transfer payments so we can keep Manitoba small.

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