Private Monopoly vs. Public Monopoly - the Case of Meralco

Although I believe in the concept of capitalism, private property, and market economy, the statement of Senator Joker Arroyo, "only the Lopezes now how to run Meralco" embodies the dismal situation of the Philippine economy, which only comprise of certain few families that drives the capitalist economic order.

Make no mistake, I have no complaints, merely disappointed. Although I agree that capitalism must be preserved as the primary means of resource allocation in society, a shift from the system's oligarhic tendencies ought to take place - which means small to medium businesses as driving the engines of the economy.

But enough of daydreaming. The question that lies before us is whether economic sectors where monopoly is arguably jusitified i.e., natural monopoly, should be taken over by public institutions to lower the average utility costs of consumers.

I believe the answer lies in considering internal and external factors.

First of all, is Meralco electricity rates higher than foreign electricity rates (preferrably compared to the average eletricity rates of other countries with similar economic conditions to the Philippines) ? One needs to compare utility costs around the region and based upon such comparison, in addition to the economic capacity of consumers, determine the most efficient utility cost.

As a natural monopoly, government intervention is necessary in an economic sector where market competition does not exist. Senator Arroyo himself said that "we shall allow matters... to be decided by the private sector based on good corporate management practices" and if and only "if the result for the consumer is significantly higher rates, then we just have to step in."

The problem now lies on what formula would be used to calculate whether Meralco is charging consumers more than it ought to. Although I recognize the necessity of the interference by public institutions, the two Arroyos must agree as to whether the utility company is charging excessive prices when it can charge consumers lower utility costs without sacrificing its potential for making profits.