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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

#31

Post by mnd999 »

krona wrote: post #26
jack_riminton wrote: post #19

Earlier quoted context omitted.

Exactly. Fake competition in utilities and services makes no sense. The "privatisation" of the UK railways is a prime example. I use quotation marks because it's just privatising the profits and socialising the losses. "from March 2020 to February this year, the Government paid out more than £7.3 billion in operational support to private train operators" - https://bylinetimes.com/2021/05/18/7-billion-covid-bailout-f.…

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.

Re: Privatisation has been a costly failure in Britain

#33

Post by Wildgoose »

It's actually even worse than this - in the case of Water, the original water companies were built by local government providing clean water to their own residents and paid for by long-term loans. First, the Labour Party nationalised the local water companies with no recompense to repay the local government debts. Then, the Conservative Party sold off the "nationalised" water companies, but kept the money raised rather than handing it back to local government.

In many cases it can't even be described as "privatisation" because the resulting industries have been bought by other people's governments. It is literally the worst of all worlds.

Re: Privatisation has been a costly failure in Britain

#34

Post by cmrdporcupine »

pharmakom wrote: post #17

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.

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 the free market is efficient. The question is: efficient at what?

Re: Privatisation has been a costly failure in Britain

#35

Post by perlgeek »

narven wrote: post #16

There's been only a couple of "privatisations" in entire world, that actually resulted in some benefits. Privatisation means, "you that don't give a fc... take care of that problem for me"

From my user's perspective, it seems that privatization of Germany's phone and Internet market has worked pretty well, and lowered prices all around.

Though I don't know if that was because there was a huge boom of Internet access around that time, and telephony prices would have dropped anyway, or if that was one of the examples where it did work, inherently.

Re: Privatisation has been a costly failure in Britain

#36

Post by bell-cot »

pharmakom wrote: post #17

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.

Re: Privatisation has been a costly failure in Britain

#37

Post by scrlk »

vidarh wrote: post #24
tnel77 wrote: post #3

When profit becomes the main motivator, quality of services always seem to drop. I get that the government can be annoying, but I feel like there are many services that we should aim to provide as a society where profit isn’t the goal. For example, you don’t need to price gouge people for electricity, but charging enough to cover expenses and future infrastructure upgrades is fine and to be expected. No costly CEO or…

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…

Dieter Helm recently wrote an article about scrapping the current water privatisation model, without re-nationalisation: https://dieterhelm.co.uk/regulation-utilities-infrastructure...

Re: Privatisation has been a costly failure in Britain

#38

Post by SilverBirch »

I think it's kind of a mistake to focus too much on the principles of this story than on the execution. Sure, we can make arguments about how it should be more efficient to run water privately because of a profit motive, or how it's a natural monopoly. But if you look at the details the claim is very simple - that the water companies charged high prices, didn't invest and paid out huge dividends. Well there's a simple answer to that: we have a regulator who can control that. It's very simple. The government didn't go "Here private enterprise, have a monopoly! Off you go!". The key here is that whilst private enterprise might be more efficient at acheiving it's goals than government enterprise, but that becomes a problem when it's goal is finding ways to screw money out of people despite the regulator.

If you look around at the British state it's very clear to see, the issue isn't whether X Y Z is private, the issue is the state spent 2010-2020 systematically ensuring the state was incapable of acheiving anything. And then decided in 2016 that they were going to repatriate a tonne of regulatory power from the EU. The result is a state that's got a lot to do, and no way of actually doing any of it.

Re: Privatisation has been a costly failure in Britain

#39

Post by ciconia »

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…

Free markets don't magically solve the problems of capitalism. You still have to deal with monopolies, entrenched market leaders, mergers leading to less competition, backroom non-competition agreements, lobbying for prefential treatment, revolving doors between regulators and market players, or just plain corruption and bribery.

What I see everywhere, not just in Britain, is the same old story over and over again: privatizing the profits, nationalizing the losses.

Re: Privatisation has been a costly failure in Britain

#40

Post by quickthrower2 »

boomskats wrote: post #29
spiralpolitik wrote: post #13

The intention of privatization in the UK was never to improve service. It was to transfer wealth from the public to the private sector. From this perspective it's been successful. From the perspective of the British public it's been a complete disaster.

Fortunately, largely owing to our free press, the British public has now learned their lesson and such unfortunate situations will almost certainly be avoided in future. Especially when it comes to our healthcare system.

I can’t make out the implied /s because it is too big to fit on my 4k monitor
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