WORLD MARKETS IN UPROAR OVER NEW UTILITY CHARGES
Re-introduction of interest rates considered by central banks
We’ve become used to basic amenities being free. Free phone calls, free internet, free electricity and free banking. Now that’s all set to change, as regional regulators in North America, China and Europe want to start charging for utilities. They are even talking about bringing back interest on central bank loans!
Google started the idea of making everything free to the consumer decades ago. They were smart enough to know there are other ways to make money on the back of free services. Then it was picked up by smart governments in the UK and United States – because they saw how you could re-ignite the economy with technology innovation. And everything digital gets cheaper all the time.
So free broadband costs the taxpayer next to nothing, when it’s universal. And smart energy means we even get basic electricity for free. Obviously the corporations and factories have to pay for theirs – they make a profit out of it anyway.
The same goes for financial services, which are all digital.
But now there’s a new revolution. Suddenly the free honeymoon is over, and ‘they’ want to start charging individual consumers for telecoms and power. Next thing you know, they’ll want to charge us for the privilege of taking our money!
The markets think this is a return to the dark days of ultra-capitalism, where the fatcats fleece the weak – because they can. Trying to skim the cream off the new economic boom could be the worst mistake government can make.
ANALYSIS >> SYNTHESIS: How this scenario came to be
When ‘everything’ is free
In an interview with the BBC, Chris Anderson said: “Ultimately the product that can be made free will become free. And this is why every industry is either going to have to become free or compete with free one way or another. Now there’s lots of ways to compete with free and there’s lots of ways to make money from free, but ultimately free is going to be part of the strategy for everybody.”
In the aftermath of the Credit Crunch of 2008, the burning need globally was to re-ignite the economy. So government took a leaf out of Google’s book, and made basic services free for citizens. Free local calls were followed by free broadband. Internet services like Skype meant that international communications became virtually free as well.
Basic banking was the next service to go free. With government controlling most of the major banks – almost owning them in many cases – they had no choice but to stop charging for ordinary accounts. Most personal banking is transacted over the internet or cellular networks in any case, and corporate banking and investments are the real money-spinners for large financial institutions. Besides which, central bank repo rates were virtually zero in all the developed economies.
Communications and banking were viewed as part of basic human rights. And the increased tax burden was insignificant; government’s economies of scale proved unbeatable in the market.
Next to be tackled by enthusiasts of the ‘free economy’ was electricity. It’s long been recognized that electricity is the most efficient form of energy for general purpose use, even powering cars and aircraft these days. Since fusion power and desert solar energy came on stream, only government sponsored projects could hope to attain the low cost-per-watt of these hugely capital-intensive installations.
First Britain, then the United States and the EU, announced a free ration of power for all their citizens. China and India were forced to follow suit to get access to the fusion technology.
All this ‘free stuff’ helped send the global economy back into a solid growth phase. Now the fatcats are licking their lips, ready to skim off the cream.
Warning: Hazardous thinking at work
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