Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Privatisation has been a costly failure in Britain

economist.com

Post reply on HN
Print view View original

121–130 of 609 posts

Re: Privatisation has been a costly failure in Britain

#121

Post by iamacyborg »

mrfumier wrote: post #62
juujian wrote: post #25

Earlier quoted context omitted.

It's even simpler than that. All of these privatized entities are incredibly efficient... at extracting profits from the public. Of course their goal is to extract profits. And you don't extract profits from a rail line by offering the best service. Bonus points if you can convince the government to bail you out and provide some extra cash.

"And you don't extract profits from a rail line by offering the best service." So how do you extract profits then?

Extracting short term profit isn’t hard, and that’s all these investment funds that operate on short time scales are looking to do.

There was an excellent book on the subject published this year called Our Lives in their Portfolios[^1].

[^1]: https://www.ft.com/content/7da72f9c-978b-41e7-8e4b-478818f74...

Re: Privatisation has been a costly failure in Britain

#122

Post by vidarh »

anonymousDan wrote: post #46
vidarh wrote: post #24

Earlier quoted context omitted.

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…

The problem is that even if one government were able to fix the oversight issue, its hard to see how subsequent governments can be prevented from ripping up the oversight (e.g. under the rubric of 'removing red tape'). Even if you look at the most likely incoming government, they are reluctant to get rid of the water companies due to cost. Perhaps what is needed is some mechanism whereby the threat of re-nationalisat…

It is a problem largely created by granting them property rights instead of franchises or operating agreements. In a democracy we can never remove the risk of the next government messing it up, but as long as they grant time limited or restricted contracts the opportunity for reversal is there.

Which, incidentally, the cynic in me would suggest is the reason for why e.g. the water privatisation was done the way it was.

Compare to the train privatisation, where after the failure of Railtrack brought the infra itself back under government control, time limited franchises means that the government can at least regain control over time at low cost by simply ending the issuing of new franchises (and where the government have operated many franchises for various lengths of time due to outright failures of the franchise-holders to meet their obligations). You can even see it as allowing for shifting governments to change their mind without it becoming big all or nothing decisions (though the original franchise model is utterly messed up in how it aligns the incentives).

To be clear: I think the rail privatisation was also an utter disaster, but it's current incarnation is not nearly as bad with the water companies - largely, incidentally, because large early failures like with Railtrack ended up with the undoing of some of the worst parts of it. It's still shit, though.

Re: Privatisation has been a costly failure in Britain

#123

Post by andy_ppp »

wolframhempel wrote: post #9

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…

They should be publicly owned but the money ring fensed and the prices rise depending on works needed. For example I think it would cost something like £100bn to sort out the sewerage system in the UK - we should just ask people what they want (continue as is or have higher bills) and charge people based on their assets an amount over say 5-10 years that covers it. So for rich people it might be several thousand £ per year and for poorer people a lot less. These sort of taxes that are needed can never be done currently so we continue pumping sewage into our waterways and seasides.

Re: Privatisation has been a costly failure in Britain

#124

Post by lmm »

danuker wrote: post #107
jleask wrote: post #85

Earlier quoted context omitted.

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.

> load the company up with debt and pay yourself a nice dividend 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?

> Doesn't a dividend come from profits?

A dividend can be paid with money from any source, it's all money.

> And who will loan to you if your business plan is to exit scam?

Ambitious junior bankers. Or you get the government to guarantee your debt.

Re: Privatisation has been a costly failure in Britain

#125

Post by ilikerashers »

jacquesm wrote: post #53

I love the free market. But when it comes to education, health care, public transport, utilities, law enforcement + associated services I've yet to see even a single example of where the free market made things better for the public. As a rule after privatization prices go up, the service level drops and people suffer as a consequence whilst being given a fake increase in choice. This is one of the big failures of th…

Would love to see that happen but no government can stop that train now. Too much money is required and they can't just seize the assets.

Re: Privatisation has been a costly failure in Britain

#126

Post by eertami »

em500 wrote: post #65
jamil7 wrote: post #28

Earlier quoted context omitted.

You end up pricing people out of the best possible education unless you regulate heavily, at which point you may as well have state-run education.

As opposed to state run education where the best possible education is available to everybody? Is that what we see in public education?

We do see this in Switzerland, Finland, etc. But this is due to a competent Department of Education, which simply doesn't exist in the UK. Infact the UK DoE isn't even just incompetent - it is quite clearly maliciously sabotaging education, there is no other logical conclusion for the farcical policies that are in use.

Re: Privatisation has been a costly failure in Britain

#127

Post by badcppdev »

veltas wrote: post #92
mnd999 wrote: post #82

Earlier quoted context omitted.

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.

People literally died before it became Network Rail due to badly maintained infrastructure

https://en.wikipedia.org/wiki/Railtrack

https://en.wikipedia.org/wiki/Network_Rail

https://en.wikipedia.org/wiki/Southall_rail_crash

https://en.wikipedia.org/wiki/Ladbroke_Grove_rail_crash

Edit: To be 100% clear the badly maintained infrastructure was the responsibility of a for profit private company at the point where people died.

Re: Privatisation has been a costly failure in Britain

#128

Post by KaiserPro »

veltas wrote: post #92
mnd999 wrote: post #82

Earlier quoted context omitted.

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.

Which was private under railtrack, but after a number of high profile crashes and failures was taken into public ownership again.

Railtrack made a lot of money by selling off land, and other assets, under invested and generally underperformed

Re: Privatisation has been a costly failure in Britain

#129

Post by lmm »

mrfumier wrote: post #106
hsjqllzlfkf wrote: post #88

Earlier quoted context omitted.

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?

I don't understand. If it's a monopoly, it's not a free market, by definition. Seems like you are the one trolling here.

Trains are a natural monopoly, that's why lassiez-faire policies don't work.

Re: Privatisation has been a costly failure in Britain

#130

Post by sschueller »

magicalhippo wrote: post #115
jacquesm wrote: post #57

Earlier quoted context omitted.

Privatization of trash collection is already a thing in many places.

Here in Oslo they privatized trash collection. The contract period was up and the new winner had won because massively cheaper price. Turned out the winner was massively cheaper because they had massively underestimated the work required. Trash piled up for weeks while the new trash collectors worked illegal amounts of overtime trying to get rid of it. Now, this switch had happened just before local elections, which…

Why do we have to relearn this over and over and over?

It's such a waste of money which the right should be the ones complaining about.

Unregulated privatization does not work because privatization means optimize to the max which includes cutting corners in labor laws to the health the citizens.

Post reply on HN