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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

#311

Post by libealistand »

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…

The irony here is that the massive water price hikes must surely have contributed in less waste of water resources.

Re: Privatisation has been a costly failure in Britain

#313

Post by FrustratedMonky »

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…

It also doesn't work for any product with inelastic demand.

People that need insulin need it regardless of price, so a 'free' market has the property that the price increases until the 'customer' is broke and then dead. It creates corporate structures that are based more around a 'leech' model. There is no incentive to create better or more efficient products.

Re: Privatisation has been a costly failure in Britain

#314

Post by xmcqdpt2 »

dazc wrote: post #68
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.

Public utility companies were operating very inefficiently at the time, the motives behind privation obviously had a political element but there was some good intention behind it. In hindsight, much stricter regulation regarding reinvestment of profits would have been a good idea.

The thing is, by the time you have made the regulation strict enough to avoid any and all tricks Goldman-Sachs and friends can come up with, you've basically nationalized the companies.

Re: Privatisation has been a costly failure in Britain

#316

Post by jmye »

dffdsa432 wrote: post #265
cycomanic wrote: post #240

Earlier quoted context omitted.

The USPS is "loosing" money because it was told to prefund it's Healthcare having to set aside $100 billion in 10 years (unlike any other company) . Moreover, it's much more a service than a business, e.g. it can not really set its own prices. https://www.barrons.com/articles/usps-louis-dejoy-post-offic...

I don't get it. The USPS has lost billions due to government policies and can't enforce prices due to government policies. They are forced to deliver to unprofitable routes and have prices set to inflation due to government policies. Private delivery services like Amazon and Fedex are generally profitable and don't have these issues. Why is a government alternative better?

Is it your opinion that some people simply shouldn’t get their mail, or that people who live in rural areas should pay exponentially more to get their mail delivered? Why is either of those things desirable?

USPS is not a business, and it’s a fundamental mistake to pretend it is, solely for the sake of slandering it.

Re: Privatisation has been a costly failure in Britain

#317

Post by youngtaff »

dffdsa432 wrote: post #203
arethuza wrote: post #194

Earlier quoted context omitted.

CEOs of corporations of the same size quite often have to find and retain customers in competitive markets - which is hardly the case with Thames Water?

What is your point? $1.5 million is used to attract a CEO who can manage a large corporation. That is less than many players on second tier English clubs who are riding the pine. That is a rounding error when considering $233 billion paid to unions.

As you were asked before where are the unions paid $233bn?

If the RMT had that amount of money I’ve no doubt Mick Lynch would be using it to buy the railways

Re: Privatisation has been a costly failure in Britain

#318

Post by resolutebat »

lebski88 wrote: post #61
rob74 wrote: post #5

The Economist, publishing an article (even just an opinion piece by a guest author) about privatisation being a failure? Wow...

They had an article by Michael Howard last week about it being a success: https://www.economist.com/by-invitation/2023/07/06/thames-wa... Although they went quite far to be clear it wasn't written by them. That said I've not found the economist to be dogmatic when it comes to privatisation. They typically come across as quite practical to me.

This piece directly references Howard's article (complete with link) and debunks it.

The case for privatisation rested on two claims, reiterated by Michael Howard, writing recently for The Economist. First, the bracing force of competition would improve utility management and hence overall outcomes. Second, it would unlock access to private capital to fund much-needed investment that would otherwise be held back by short-termism and scarcity—supposedly endemic to public ownership.

Neither claim stands up to scrutiny. Private management and weak regulation have delivered a crisis-ridden sector and chronic underinvestment. Water companies have made clear that investment will be funded mainly by increased bills, undermining the idea that private capital is essential for investment.

Re: Privatisation has been a costly failure in Britain

#319

Post by DharmaPolice »

dffdsa432 wrote: post #203
arethuza wrote: post #194

Earlier quoted context omitted.

CEOs of corporations of the same size quite often have to find and retain customers in competitive markets - which is hardly the case with Thames Water?

What is your point? $1.5 million is used to attract a CEO who can manage a large corporation. That is less than many players on second tier English clubs who are riding the pine. That is a rounding error when considering $233 billion paid to unions.

"Paid to unions"? Do you mean paid to staff who might be members of unions? And if so why you are comparing money paid to a specific company to money paid to union members across the entire public sector?

Re: Privatisation has been a costly failure in Britain

#320

Post by skissane »

lotsofpulp wrote: post #292
yread wrote: post #288

Earlier quoted context omitted.

You can for example buy back shares

The money to buy back shares has to come from profits.

> The money to buy back shares has to come from profits.

There's this thing called a "leveraged buyback" where a company borrows money from lenders and uses that money to buy back shares.

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