DOWN TO THE DOCTOR’S: Tall-poppy Telecom slashed by government weed-eater
Libertarianz leader Dr Richard McGrath invites you down to his clinic for an inoculation against this week’s stories and headlines on issues affecting our freedom.
This week: The ongoing public dismembering of what was once NZ’s largest company.
- NZ HERALD: “Telecom faces $12m penalty for high prices” – Telecom has been hit with a $12 million penalty - the highest in New Zealand history- for breaching the Commerce Act…
THE DOCTOR SAYS: In other words, Telecom is whacked wit the largest fine in NZ history for acting in commercial self-defence—breaching an act that is commercially, and morally, corrupt.
At least the Herald reported correctly that Telecom had a “dominant market position” rather than the often misused term “monopoly” - the latter situation applies only where a government uses its coercive power to protect a business from competition.
However the High Court has, in my humble opinion as a Telecom customer, got this one wrong. Drastically, savagely and unjustifiably wrong.
After being forced to give competitors access to its network—in effect being punished for the size of its assets—Telecom acted to protect its market share by charging its rivals an appropriately high fee for the use of its facilities.
The High Court however, steped in abject ignorance about even basic economics, ruled that Telecom had charged “disproportionately” high prices—ignorant of the lesson demonstrated by central planners over centuries that the “right price” is nothing more than the price people are willing to pay. In this case, Telecom’s competitors paid the high fees, preferring to do so rather than not make use of its network system. In any case, because of government interference in the telecommunications sector and a mission from Minister Cunliffe on to dismember NZ’s biggest company, Telecom has always been on a hiding to nothing.
So if ever you find yourself about to flatulently opine that businesses run governments, just think of the case of Telecom—where at present the score is around 15-o in the government’s favour.
We assemble parliaments and councils, to have the benefit of their collected wisdom; but we necessarily have, at the same time, the inconvenience of their collected assions, prejudices, and private interests. By the help of these, artful men overpower their wisdom, and dupe its possessors; and if we may judge by the acts, arrets, and edicts, all the world over, for regulating commerce, an assembly of great men is the greatest fool upon earth.
- Benjamin Franklin