Privatisation has been a costly failure in Britain • Hacker News Board

Re: Privatisation has been a costly failure in Britain

#321

Post by youngtaff » Tue, Jul 11, 2023, 12:20 PM UTC

avidphantasm wrote: post #75

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…

But what is the definition of a public good? Is it only to be limited to things that are natural monopolies/network systems (as you suggest) or should it also include practically non-excludable and non-rival goods (information)? I would argue we should go further. Some goods should be considered to be morally non-excludable goods. We should have the moral courage to assert that we cannot exclude health care to all pe…

Leaving it to the market is a moral stance

Re: Privatisation has been a costly failure in Britain

#322

Post by deepvibrations » Tue, Jul 11, 2023, 12:21 PM UTC

iso1631 wrote: post #245

samwillis wrote: post #167

Earlier quoted context omitted.

You've cherry picked two routes Birmingham/Manchester to London where there is choice, but for the majority of the country there isn't. From my town there is one train company that has exclusive use of the route, and its motivator is profit extraction, not quality of service and encouraging more people off the roads on to the trains. Also comparing trains to cars and busses as a positive competition is missing the po…

> and its motivator is profit extraction, not quality of service and encouraging more people off the roads on to the trains Which station? Or which TOC? > Also comparing trains to cars and busses as a positive competition is missing the point that our roads are over capacity Which roads? I had no problems driving the kids to school this morning, never are. Well that time fro about 2 weeks a year that the cows cross t…

I do feel you are using your own experience very anecdotally, I can tell you that a lot of the routes in wales are just one operator.

And also, your commute may be fine, but believe me, many cities in the UK are not... Edinburgh’s 41 per cent congestion level means a 30-minute journey will take 41 per cent longer than usual and I can tell you from personal experience that a lot of cities in the west-country are over capacity.

Re: Privatisation has been a costly failure in Britain

#323

Post by smcl » Tue, Jul 11, 2023, 12:21 PM UTC

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?

Well parts of Scotland are. As arethuza said, in the North East of Scotland saw some local benefit. A few people became very wealthy, and many people hopped up one or two social classes through the jobs that were created (and bought nice cars + homes, sent their kids to nice schools). But it wasn't anywhere near the sort of multi-generational wealth that Norway built up.

Shetland managed to do a little bit better and built up a pretty sizeable fund (something like GBP20k/resident), but I'm not super familiar and don't know what they do with it.

Re: Privatisation has been a costly failure in Britain

#324

Post by zouhair » Tue, Jul 11, 2023, 12:22 PM UTC

Privatization is a costly failure everywhere.

Re: Privatisation has been a costly failure in Britain

#325

Post by katbyte » Tue, Jul 11, 2023, 12:22 PM UTC

Kiro wrote: post #164

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.

Isn't that the whole point of privatisation? By introducing a profit maximisation goal you (supposedly) create a more efficient operation. I've worked in both the public and the private sector and can definitely understand the argument. In my government job it was way easier to slack off and no-one really cared about the results. There was no actual pressure from above to hit targets. You had your budget and it didn'…

Public infrastructure doesn’t need to make a profit, that should never be the goal. It should be to deliver good reliable service/results at a consistent price.

That is often at odds with “making profit” either from over hiring so there’s always fallback people on call to overbuilding so in 50 years your still under capacity.

The goals are entirely different and so should the incentives

Re: Privatisation has been a costly failure in Britain

#326

Post by HWR_14 » Tue, Jul 11, 2023, 12:22 PM UTC

lotsofpulp wrote: post #289

HWR_14 wrote: post #259

Earlier quoted context omitted.

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.

The financing agreements surely require business assets and equity as collateral. At the end of the day, any cash flow that goes to the owners has to come from long term profits from the business, which comes from extracting money from customers. Maybe not today or this year or next year, but everyone is always going to want a return on the money they put in, whether it be owner or lender.

Unless I sell off assets. Or take loans now, give the proceeds to the shareholders and get a bonus for it, and leave before the company declares bankruptcy. Or leave a unfunded pension obligation.

Or run a nationally important service into the ground and then need emergency government money to keep providing it.

Re: Privatisation has been a costly failure in Britain

#327

Post by HWR_14 » Tue, Jul 11, 2023, 12:23 PM UTC

newsclues wrote: post #296

HWR_14 wrote: post #259

Earlier quoted context omitted.

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?

If it's buying goods and services. I would not treat it as a customer, and instead one of the unenumerated other ways of generating shareholder dividends, if it paid money to keep a nationally vital industry from imploding under the weight of its bad choices.

Re: Privatisation has been a costly failure in Britain

#328

Post by odiroot » Tue, Jul 11, 2023, 12:24 PM UTC

mnd999 wrote: post #54

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…

Thames water has to be allowed to go bust, and the shareholders need to lose their shirts, because that’s what has to happen when a company is so badly run. Otherwise the abuse will continue. However, I would like to keep my water supply so somebody has to sort this situation out quickly.

Sadly, as a customer of Thames Water, I can say there's 0% chance the gov will them fail. It'll either end up with tax money being pumped in, or a shocking increase of the prices.

Re: Privatisation has been a costly failure in Britain

#329

Post by katbyte » Tue, Jul 11, 2023, 12:24 PM UTC

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?

Deferring maintenance, focusing on how to make the most per dollar spent, making your workers lives terrible, ignoring safety.

Here is how that works in American railways: https://m.youtube.com/watch?v=jNkYNjADoZg

And why they are on a road in implosion.

Re: Privatisation has been a costly failure in Britain

#330

Post by FrustratedMonky » Tue, Jul 11, 2023, 12:25 PM UTC

Kiro wrote: post #164

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.

Isn't that the whole point of privatisation? By introducing a profit maximisation goal you (supposedly) create a more efficient operation. I've worked in both the public and the private sector and can definitely understand the argument. In my government job it was way easier to slack off and no-one really cared about the results. There was no actual pressure from above to hit targets. You had your budget and it didn'…

NO > " create a more efficient operation."

This doesn't happen.

When the government is the customer, and the private company is maximizing profit, the company's effort goes towards figuring out how to 'raise' rates.

This might sound like free market, I'm just trying to increase prices while reducing my overhead (efficiency). But in practice you end up paying a lot for a little. So instead of government workers slacking off, you have even less well payed people slacking off, with managers making a lot of money.

If you ever had to go to a 'privatized' DMV you can see it. Just awful everything, because of cutting corners. Yet the company gets paid a lot. The money goes to the company leadership, it doesn't 'trickle' down to operations to do a better job.