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Student ID No: 1439528Programme of study: International Relations with EconomicsModule title: Introduction to American PoliticsModule banner code: 08 23898 Word Count* 2199Module leader: Robert Watt Seminar Teacher Anthony HopkinsSubmission date:Assignment title: Assignment 1Extension: No date approved: N/AExtension approved by: N/A new date: N/AI do wish my assignment to be considered for including as an exemplar in the School Bank of Assessed Work

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Does ‘equality’ and ‘individualism’ in US political culture represent an ideal

type to inspire its citizens or a cynical exercise in the third face of power?

Introduction

Americanism is a form of “neoliberal economic orthodoxy associated with the United States” (Leonard, 2011, p. 208) and it offers an alternative to socialism. Americanism, protected by the founding fathers, emerged through US citizens’ inherent fear of the state; this fear was nursed during British occupation pre-independence and now acts as a pillar supporting modern US equality and individualism. As a result, Americanism is characterised by policies such as hollowing out the state, privatisation, deregulation and a move towards laissez-faire markets. In US political culture individualism is equated to individual negative liberty, where “freedom from” (Levin, 1984, p.87) others and the state is of the upmost priority. Ellis, as a social scientist, notes egalitarian equality cannot co-exist with US individualism as “the competitive individualist definition of equality, conceives of equality in terms of process” (Ellis, 1993, p. LiV). US Equality co-exists with individualism as a process, rather than the egalitarian equality of results, this is achieved through citizens’ equal status in law. According to the prominent political and social theorist Lukes, the third face of power assumes one ideologically influences people’s thoughts and wishes, even making individuals or parties act willingly against their own self-interest by “securing the consent to domination of willing subjects” (Lukes, 2005, p. 109). Burnham (2001) notes “Depoliticisation as a governing strategy is the process of placing at one remove the political character of decision-making” (Burnham, 2001, p.127).

My research topic will be framed within the context of privatised US water supplies between the 1990s and the early 21st century. Within this framework my essay links Lukes’ (2005) third face of power to Burnham’s (1999, 2001 & 2011) depoliticisation to critique the exceptional US interpretation of equality and individualism. My analysis aims to expose, within the context of privatised

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water supplies, neoliberal US equality and individualism as a cynical exercise used to legitimise the political elite, rather than an ideal to inspire its citizens. Emphasis will be exerted on the failure for the ‘willing’ consumer (households) and taxpayer, while the political elite are legitimised.

Literature Review

Water privatisation in the US is not widely supported among academics, despite the US’ affinity with neoliberalism, process equality and negative liberty. Lobina (2014) is critical of US water privatisation, he argues water systems are, “by their nature, local monopolies” (Lobina, 2014, p. 3), produced by high barriers to entry and exit. Hayes (2003) adds water firms commanding monopoly power “may represent a predominately private interest” (Hayes, 2003, p. 3). Jacobs and Howe (2005) produce an insightful balanced overview of the benefits and costs associated with US water privatisation. Water privatisation advocates argue privatisation is a way of “dealing with…deteriorating water infrastructures and growing shortfalls in government funding” (Christen, 2003, p. 11A). Little (2012) supports US water privatisation on the grounds that water users pay below market rates under public water and therefore do not generate enough revenue to maintain required water infrastructure. Little’s (2012) argument can be rejected because it falsely assumes, without consideration, that private companies ensure revenues from water users are invested in the water network. Furthermore, private companies’ investment into water infrastructure is a lower priority compared to the “need for private companies to turn a profit” (Christen, 2003, p. 11A); Mansell (2013) states it is widely accepted that “maximisation of financial value for shareholders is the ultimate goal of [a] business corporation” (Mansell, 2013, p. 583).

The purpose of this essay is to critique US equality and individualism, with respect to privatised water supplies, so it will only consider Ellis’ (1993) and Levin’s (1984) interpretation, as their versions of equality and individualism

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are dominant in the US. Lukes (2005) is the main author on the three dimensions of power. Weber is a notable author on capitalism and religion’s role in various forms of power, but this essay shall only consider Lukes’ view of power. Finally, Burnham (1999, 2001 & 2011) as a Marxist, produces a class based version of depolarisation as a form of statecraft. Hay (1997 & 2004) offers a constructivist alternative to Burnham (1999, 2001 & 2011), however the essay’s focus remains on Burnham’s depoliticisation as the class based analysis can be appropriately applied to US private water supplies.

Failure for the ‘willing’ consumer

US water consumers are ‘willing’ despite having no direct choice in who provides their water (public or private) because they elect government at the state and federal level to manage water for them. An argument against US water privatisation is the effect it has on water rates (prices) for consumers. Even Little (2012), an advocate of US water privatisation, implies that privatisation increases water rates. Further to Little (2012), Food & Water Watch (2009) researched the difference in prices that the consumer paid for public water compared to private water in the same states – their data can be observed in Figure 1. During the time of the study in Figure 1 water bills were on average, for the data available, 33% more expensive for private water than public water. The data in Figure 1 is compelling as the variation around the mean of 33% is relatively low. A possible criticism of the data in Figure 1 could be that it provides a static analysis of water supplies; despite the data being static, it still displays a clear trend that consumers pay more for privatised water than public water in the US. An underlying issue causing the price differences between public and private water is that “a public water system puts any revenue from ratepayers back into the system” (Lappé, 2014), whereas the private alternative seeks “profit maximization over welfare maximization” (Lobina, 2014, p. 3).

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Coupled with rate increases, private water suppliers often cause a reduction in water quality. Lobina (2004) provides a case study within the US in Atlanta to exemplify water quality issues caused by privatisation. The private water company United Water had it’s 20-year concession contract terminated 16 years early. Over the 4 years that United Water operated (1999-2003), “the corporation halved the workforce, leading to water quality declines; however, rates continued to increase each year” (Lobina, 2014, p.14). According to Lobina (2004) the water quality decline meant consumers had to boil their water as it had not been treated properly. Advocates of water privatisation, such as Little (2012), could argue that Atlanta is an isolated example and does not reflect the US in a wider sense. While there may be some argument, Atlanta does seem to reflect the wider US, especially with regard to water rates, which is supported by the Food & Water Watch (2009) report. Monopoly power allows private water firms that “represent a predominately private interest” (Hayes, 2003, p. 3) to harm the consumer with rate increases and poor water quality.

Failure for the ‘willing’ taxpayer

Equally, like the consumer, taxpayers are willing with regards to water privatisation as they elect government at the state and federal level to manage water for them. The taxpayer demands water supply efficiency and ‘value for money’ from either a privatised or public supplier. An issue arises with privatised water supplies as “once the contract is awarded, the contractor is not fully subjected to the forces of the market” (Jacobs & Howe, 2005, p. 97); if a private water firm receives reduced competition (in a local monopoly) then it will be less incentivised to be allocatively efficient. Private water firms are less allocatively efficient than those under competition as they can exploit their monopoly power to set water rates higher than under competition. Water rates can be set higher because consumers need water supplies and therefore their demand for water will be inelastic (unresponsive) to an increase in water rates. This is a failure for the taxpayer as it does not reflect the best ‘value for money’ way of providing water supplies to consumers – as private water companies

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extract large profits at the expense of consumer welfare. Where the private firm extracts large profits, the public firm “puts any revenue from ratepayers back into the system” (Lappé, 2014). Therefore, private management encourages profit maximisation at the expense of the much needed reinvestment into the water network. Advocates of water privatisation, such as Little (2012), may argue the competitive process of gaining the contract keeps private firms allocatively efficient. However, this argument assumes that firms will remain competitive throughout the full length of the contracts, which is unlikely because the private firm does not face true market competition.

Not only do private firms extract profits from the water network, they are incentivised to make productively inefficient investments. Hauter (2012) notes “investor-owned water utilities make more money when they invest in infrastructure” (Hauter, 2012). Initially, the incentive seems like a benefit to the taxpayer as it encourages private companies to invest in the needy water network that in 2005 needed “$250 billion, or greater” (Jacobs & Howe, 2005, p. 89) to be invested in it over 30 years. However, investments need to be targeted to produce productively efficient outcomes. Hauter (2012) explains that the investment incentive causes private water firms to invest in unnecessarily large or unneeded expensive systems. Poor investment decisions like these are a failure for the taxpayer as he/she does not get ‘value for money’ targeted investments – leading to a reduction in the productive efficiency of private firms.

The legitimised political elite

From my previous analysis, it is clear that US water privatisation fails both the consumer and taxpayer. This section will analyse how the political elite engineer a position where water privatisation is supported by the consumer and taxpayer despite failing them. Also, this section will inspect how the political elite legitimise themselves in the process of privatisation.

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The political elite gain the support of the consumer and taxpayer, using the Americanism (neoliberal) discourse that a minimal state is required to protect citizens’ US equality and individualism. This technique reveals the use of Lukes (2005) third face of power as the political elite dominate the willing consumer and taxpayer by exhibiting “power over” (Lukes, 2005, p. 114) them. Furthermore, this is the third face of power as the consumer and taxpayer can be seen as willing subjects to the political elite, despite the clear failure water privatisation brings these two groups. Domination of the consumer and taxpayer is achieved by the political elite through convincing both groups that privatisation is required to protect process equality and negative (individual) liberties. The situation, engineered by the political elite, that privatisation and a move towards neoliberal market based reform are required to uphold US equality and individualism – primarily by ‘protecting’ citizens from an overly powerful state grip on water supplies. It could be argued that the political elite want to minimise the size of the state for the benefit of its citizens’ US equality and individualism; however, it is clear that both the consumer and the taxpayer are failed by water privatisation – the next paragraph will discus the cynical motives of the political elite.

Water privatisation is a cynical exercise by the political elite to distance themselves from water supplies, this legitimises their governance and is done with little care of the effects on the consumer and taxpayer. “Water privatization represents a net political gain” (Jacobs & Howe, 2005, p. 91) for the political elite as they are legitimised by Burnham’s (1999, 2001 & 2011) depoliticisation distancing effect water privatisation. When water is privatised, the political elite no longer take on responsibility for the management of water. Therefore, when unpopular decisions need to be made, such as rate increase for consumers, the private firms take responsibility. Shifting responsibility to the private water firms benefits the political elite as the electorate view the political elite with a degree of competency as they are they are no longer responsible for the failures of the water network. Fitting with Burnham’s (1999, 2001 & 2011) depoliticisation, the political elite retain backdoor control over the water network through writing contracts with private water firms. The political elite’s backdoor control grants them to have the benefits of

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depoliticisation to “sustain a sufficient electoral base” (Hay, 1997, pp. 235–236) while still having influence in the water network.

Conclusion

From my analysis, it is clear that water privatisation fails the willing consumer due to rate increases and poor water quality. Water privatisation fails the willing taxpayer as it offers poor ‘value for money’ by reducing allocative efficiency due to profits being extracted rather than reinvested; Also, the taxpayer is failed as private firms are encouraged to invest in productively inefficient investments that are too large or unfit for purpose. The only winners in a move towards neoliberal market reforms of the water industry are the political elite. The political elite benefit through Burnham’s (1999, 2001 & 2011) depoliticisation when they outsource the responsibility of water while maintaining backdoor control of it through legal contracts; Reducing government’s responsibility safeguards electoral support. Reducing the responsibility of government benefits the political elite as difficult and unpopular decisions are made by private firms rather than the elite. The political elite use Luke’s (2005) third face of power as a cynical exercise to convince the willing consumer and taxpayer that water privatisation is necessary as a move towards neoliberalism to protect the US interpretation of equality and individualism.

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References

Burnham, P. (1999) The politics of economic management in the 1990s.

New Political Economy, Vol. 4, No. 1, pp. 37-54.

Burnham, P. (2001) New Labour and the politics of depoliticisation.

British Journal of Politics and International Relations, Vol. 3, No. 2, June 2001,

pp. 127-149.

Burnham, P. (2011) Depoliticising Monetary Policy: The Minimum

Lending Rate Experiment in Britain in the 1970s. New Political Economy,

Vol. 16, No. 4, pp. 463-480.

Christen, K. (2003) Can private-sector funds resolve U.S water woes?

Environmental science & technology, Vol. 37, No. 1, pp. 10A-11A

Ellis, R. (1993) American Political Cultures. New York: Oxford University

Press.

Food & Water Watch. (2009) Questions & Answers: A Cost Comparison of

Public and Private Water Utility Operation. [Online] Available from:

http://www.foodandwaterwatch.org/sites/default/files/qa_public_private_water_

fs_june_2009.pdf [Accessed: 26th February 2016]

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Hauter, W. (2012) No: The Public Won't Be Served. The Wall Street Journal.

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Hay, C. (1997) Anticipating accommodations, accommodating

anticipations: the appeasement of capital in the “modernization of the

British Labour Party, 1987–1992.” Politics and Society, Vol. 25, no. 2, pp.

235–236.

Hay, C. (2004) The normalizing role of rationalist assumptions in the

institutional embedding of neoliberalism. Economy and Society, Vol. 33,

no. 4, pp. 500-527.

Hayes, D. J. (2003) Privatization and Control of U.S Water Supplies.

Natural Resources & Environment, Vol. 18, No. 2, pp. 19-24

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98.

Leonard, R. (2011) Anti-Americanism and left-right ideology in France.

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Lappé, A. (2014) Detroit’s fight for public water is also the nation’s.

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watershutoffsunitednationsprivatization.html [Accessed: 25th February 2016]

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Lukes, S. (2005) Power: A Radical View. New York: Palgrave Macmillan.

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Mansell, S. (2013) Shareholder Theory and Kant’s ‘Duty of Beneficence’.

Journal of Business Ethics, Vol. 117, No. 3, pp. 583-599.

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Appendix

Figure 1

Source: Food & Water Watch (2009)

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