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Privatisation has been a costly failure in Britain

economist.com

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Re: Privatisation has been a costly failure in Britain

#291

Post by mantas »

emptyfile wrote: post #60
cmrdporcupine wrote: post #34

Earlier quoted context omitted.

Almost the entire western world did, starting in the early 90s, and those of us who tried to stop it at the time were derided as clueless naive economic illiterates (and still are.) And the west pushed this Privatize All The Things model into the former Soviet bloc, too, where mass brutal privatization of the huge portfolio of state assets created the kleptocrat economic they have there now. Nobody ever denied that t…

No, the west didn't "push" eastern European kleptocrats into stealing everything in the privatisation drives, they didn't need any outside encouraging. Its really disconcerning how many people simply assume that small nations have no agency whatsoever. It's this kind of thinking that births ideas about Russian/American zones of influence around Europe and similar very dangerous antiquated nonsense. It need to die.

Oh, we did get (and still do get) lots of „consultants“ from West advising us to privatise all the things. Some paid by West governments, some paid by private funds (= big businesses).

As for zones of influence... It is very real. That's why we jumped into NATO at first opportunity. A lot of companies were privatised looking for capital from, e.g., specifically USA, to make sure they have more interest in our survival. And any Russian investment is seen as a possible risk.

Re: Privatisation has been a costly failure in Britain

#293

Post by sanxiyn »

lushy-typeable wrote: post #70

From my standpoint its obvious privatisation has been a failure for service quality, and I am glad that major institutions are finally catching on. In spite of attempts to introduce choice (see the way British Rail was privatised into rolling stock owners/operators, since scrapped railway operators, and brands) there is no efficient way to introduce choice with fixed infrastructure. Unfortunately, this will take a lo…

I think competition driven by low-cost carriers produced enormous value by lowering fares. From my admittedly uninformed viewpoint, I am not sure why airlines market can produce competition benefiting customers and rail market can't.

Re: Privatisation has been a costly failure in Britain

#294

Post by lumb63 »

Many comments here say the key to maintaining a fair free market economy is regulation. I’m curious how that works for other countries. From a US perspective, regulation is next to useless.

The FDA and USDA are captured by Monsanto et. al. The FDA is captured by pharmaceutical companies. The FCC is run by telecom companies. The FTC is a toothless shell of itself which cannot stop any but the most blatant of anticompetitive measures (and often not even those).

What is the public to do? They can exercise choice in the market, but not when an oligopoly exists, which often only offers the illusion of choice under different brand names. The regulatory bodies have no elected positions and thus no accountability to the public. The public can elect new officials who hopefully appoint new officials to the regulatory entities, but the politicians put forth are only two flavors of the same pro-corporate regime. The media, which is deeply entangled with politicians and their will, degrades every third-party or outsider candidate at every chance they get to ensure the public never sees anything else. So even if the party at the top changes, it is still the party setting the tone, mostly, and they are funded to huge extents by all the largest corporations; and thus we have the inmates running the regulatory asylum.

Direct election of heads of regulatory bodies seems like a decent solution, but it could fall victim to the same issues as the major political parties. We could fight to get money out of politics, but with both sides benefiting from the current state of affairs, it seems impossible.

As far as I can tell, our hands are tied. I’d love for someone to tell me I’m wrong, and that it isn’t the world of multinational companies, which we just happen to live in.

Re: Privatisation has been a costly failure in Britain

#295

Post by lotsofpulp »

EdwardDiego wrote: post #205
m-i-l wrote: post #170

Earlier quoted context omitted.

> "It's even simpler than that ... their goal is to extract profits" According to the article, profit has not been the primary goal for the utilities though, because there is limited scope for extracting profits from uncompetitive essential utility services - the focus instead has been on maximising shareholder returns. So in the case of the water utilities, they "borrowed £53bn in debt while distributing £72bn to sh…

Sounds like good "modern" governance. You've got assets? Use them as collateral to take on debt so you can free up capital and give it back to the shareholders. Value!

That is inevitable with super low interest rates for a super long time, especially near zero. Your options are to acquire appreciating assets quicker than your competitor, or you get left behind.

See people who bought homes at 5% down versus people who waited to have 20% down. The people who took on more debt were rewarded nicely with huge gains, and the people, who were prudent, now decide on paying a few hundred thousand more, if they were even able to keep up with saving a larger down payment.

Re: Privatisation has been a costly failure in Britain

#296

Post by newsclues »

HWR_14 wrote: post #259
lotsofpulp wrote: post #202

Earlier quoted context omitted.

How are shareholder returns and profit different?

Profit is extracting money from customers. Shareholder returns can come from profit, or selling off assets, or taking on loans, or underfunding pensions, or probably other ways financial experts can invent.

Do we consider the government a customer?

Re: Privatisation has been a costly failure in Britain

#297

Post by scrlk »

PartiallyTyped wrote: post #225
scrlk wrote: post #23

Earlier quoted context omitted.

Cynical take: they don't want an overeducated population as that poses a mortal threat to the system.

Could you elaborate? There are at least 2 interpretations of “over-educated” people being a threat to “the system”. Overeducated as in having university degrees and being “highly skilled” which demands imports of “unskilled” workers which causes integration problems. Or overeducated as in understanding how “the system” works and are aware of the class war they were thrown in since their conception, how the system pit…

The second interpretation of my comment is what I was attempting to allude to. I am reminded of this particular quote from Orwell's 1984: "Until they become conscious they will never rebel, and until after they have rebelled they cannot become conscious."

Re: Privatisation has been a costly failure in Britain

#298

Post by giaour »

dffdsa432 wrote: post #153
giaour wrote: post #77

Earlier quoted context omitted.

Offering shitty, expensive service. It's not like customers can use a competing rail line, so every dollar you invest in customer service is a dollar out of your pocket.

The USA's rail lines are privatized and they're anything but "shitty" and "expensive" considering they're lower cost than trucking.

We're talking about passenger rail here, not cargo. Amtrak has a legally mandated monopoly, so you can only compete with them by building your own rails or using a different travel mode (e.g., bus or air).

If you find their service to be good and cheap, I can only assume you've never ridden a train in Europe.

Re: Privatisation has been a costly failure in Britain

#299

Post by youngtaff »

lotsofpulp wrote: post #277
WithinReason wrote: post #217

Earlier quoted context omitted.

"borrowed £53bn in debt while distributing £72bn to shareholders" There is the difference

No lender is going to lend a business money just so it can pay the owners. They must have used the debt to finance operations, as opposed to cutting the dividend or even putting more money in. This allowed them to continue to have profits in the short term, at the expense of higher interest costs in the long term (which probably cause higher prices for customers in the long term).

In the case of the UK water companies the parent fund was often involved in getting or making the loan e.g.

Water company does a debt bond issue, parent owning fund takes a % of the issue (enough so that the bond issue is a success at a good price), parent fund extracts all the funds raised as a dividend, and sells the % of the issue it own too

All while extracting management fees etc too

Re: Privatisation has been a costly failure in Britain

#300

Post by arethuza »

kranke155 wrote: post #257
Lockyy wrote: post #14

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…

Is Scotland benefitting from it somehow? Truly astonishing that nothing like the Norway model was done. Those oil reserves could’ve transformed the country, surely?

The North East of Scotland around Aberdeen certainly did benefit from the oil and gas industries. However, I doubt if this made up for the collapse in heavy industries elsewhere in Scotland.
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