101–110 of 609 posts
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The railway infra is run by a Non-departmental public body; it's not privatised. Its customers are rail companies which run the trains.
It was, rail track was a private company. They had to roll that one back because trains kept crashing.
A good example is when people say "look how bad private healthcare is in the US!". Yeah, it's horrible because of the framework the government put around it. If you look at things like vision correction or plastic surgery, you have none of the problem you have in typical private health coverage - surprise billing, inflated costs, etc, etc.
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While I agree with you entirely, I'll propose an adjustment to the reason for this problem in the case of the UK: When the government is ideologically opposed to ensuring sufficient public oversight , quality of services drops. The problem in the UK is not merely privatisation, but privatisation in a way that privatises profits, often socialises losses, and that substitutes dealing with crises after the fact over str…
Weak oversight with nationalisation is even more disastrous. With a profit motive, the utility is at least incentivised to deliver the service so that they can get paid. If you have government-owned utlity with weak oversight, there is no incentive to even deliver the service. Look at what is happening with South Africa's power utility (and other State Owned Enterprises like their post office and national airline) as…
Privatisation makes this harder because you run into all kinds of issues with taking them over without paying market rates that acts as a massive barrier. E.g. this was a major factor in the arguments against Labour's 2017 and 2019 election manifestos in the UK, because the costs of buying out the private providers vs. the drastic risk to the economy of sending the signal that UK companies are at risk of uncompensated takeovers by the government were both used to hammer them with.
But yes, you need strong oversight either way.
> With a profit motive, the utility is at least incentivised to deliver the service so that they can get paid.
I don't really agree with this. Semi-monopolised privatised providers only care to deliver service to the level where they maximise their return on investment. This is why we've seen multiple train operating companies collapse in the UK, because they were low capital to set up and bid on terms designed to let their owners extract as much as possible, without care for whether or not they'd remain viable, because until Virgin and Stagecoach faced outright bans on participating in bids for some new franchises there appeared to be no consequence. Worst case you'd just start a new one.
It's also why we're seeing Thames Water fail to address a network of pipes that leaks an astonishing proportion of the supply because while you're right in as much as they've had to deliver service to consumer, they've not been incentivised to deliver the service to society as a whole that they were tasked with, which is broader than delivering water to consumers and includes stewardship of the capacity. A pure profit motive for a monopoly resource can often descend into looking for ways to extract maximal margins that are in the long run wildly detrimental both to customers and to society as a whole.
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Minimise investment to maximise profits, which you take, whilst running the minimum service required to avoid contract penalties or publicity so adverse you lose your contract. Then threaten to go bust and get bailed out by the government when the infrastructure starts to break a few years later. At least that’s they playbook they’re all using.
The infrastructure isn't privatised though, it's maintained by Network Rail.
https://www.channel4.com/programmes/ben-elton-the-great-rail...
I am a deep believer in free markets as the most efficient mechanism for distributing goods and services, creating better offerings and lower prices through competition and encapsulating risk in innovation. Unfortunately, none of these apply to the privatization of inherently public commodities that run on top of an underlying network infrastructure. This can be streets, railway tracks or water pipes - whenever there…
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"And you don't extract profits from a rail line by offering the best service." So how do you extract profits then?
Cut costs. And if youre in a monopoly position, you can in addition prices. I mean, do you really not understand how earnings are calculated, or are you trolling?
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"And you don't extract profits from a rail line by offering the best service." So how do you extract profits then?
Cutting corners and costs e.g. shutting ticket offices, doing just enough to barely offer the service. It's not like your passengers have any sensible alternative. If that doesn't do it then you can also load the company up with debt and pay yourself a nice dividend until rates rise.
I am new to this. Doesn't a dividend come from profits? What profits are there if you need debt? And who will loan to you if your business plan is to exit scam?
Is this surprising? People have been crying out about the effects of privatisation for years. When basic services mandatory for modern human life like water, ISPs and energy are privatised you end up with funds that could end up going towards investment or towards funding other public services are instead funnelled out towards shareholders. The generational wealth the UK had in the form of North Sea oil passed off to…
ISPs are not mandatory for human life.
The majority of UK government services now push you to self service via the internet.
At this point life in the UK without an internet connection would be very difficult and in some cases fatal.
Choice is a necessary condition for free markets. There is little to no choice in water, roads, phone lines, rail transport, etc. I still don't understand why the UK went down this path.
> I still don't understand... https://en.wikipedia.org/wiki/Thatcherism Or talk to a few older folks about Britain in the 1970's and 1980's.
I am a deep believer in free markets as the most efficient mechanism for distributing goods and services, creating better offerings and lower prices through competition and encapsulating risk in innovation. Unfortunately, none of these apply to the privatization of inherently public commodities that run on top of an underlying network infrastructure. This can be streets, railway tracks or water pipes - whenever there…
This was obvious since the first wave of privatizations were kicked off in the 80s but somehow they still managed to build a cult around it. Now the investor cult is crumbling, but we're still supposed to acknowledge that there was a core of a good idea there and they just made a few mistakes and took it too far. That's absurdly generous. Even some of the supposed privatization successes really werent (e.g. British S…