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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

#351

Post by rob74 »

resolutebat wrote: post #318
lebski88 wrote: post #61

Earlier quoted context omitted.

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 s…

So it's the old adage about privatizing profits and socializing losses (or in this case, needed investments) all over again...

Re: Privatisation has been a costly failure in Britain

#352

Post by spacebanana7 »

sweezyjeezy wrote: post #244
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…

> I believe the best way to make this work is by keeping the network itself in public hands and then having a competition of contributors to the network Even then it doesn't always work out - UK rail services have that system - the infrastructure is maintained by a public body [1], but the operators are private. UK rail is quite expensive, and mediocre in quality compared to our EU counterparts. One of the issues is…

> One of the issues is that it's basically impossible to have competition on a single rail journey joining two large cities

Exactly, we just end up with a large number of micro-monopolies.

Re: Privatisation has been a costly failure in Britain

#353

Post by ClumsyPilot »

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'…

> By introducing a profit maximisation goal you

You never invest in infrastructure - in 30 years since privatisation, water companies in Britain haven’t built a single reservoir, lose 30% of water to leaks and dump raw sewage on the beach where children swim

Re: Privatisation has been a costly failure in Britain

#355

Post by ClumsyPilot »

dffdsa432 wrote: post #216
bluescrn wrote: post #114

Earlier quoted context omitted.

"Privatise the profits, Nationalise the losses!"

What about losses from federally funded corporations like USPS and Amtrak that are bailed out every year? Amtrak loses over $1 billion/yr and they are still "nationalized." USPS loses multi billions per year.

They are not bailed out, is the highway maintenance service ‘bailedout’? They don’t build themselves you know

Re: Privatisation has been a costly failure in Britain

#356

Post by ClumsyPilot »

Karunamon wrote: post #335
cartoonworld wrote: post #286

Earlier quoted context omitted.

None of the competitors offer a similar service to USPS. Among other core competencies, USPS has nationwide daily coverage of the entire United States and centuries(?) of experience interoperating the the respective mail services of every country in the world and then some. Amazon wont even take MY package one town over.

None of the competitors are allowed to offer a similar service to USPS. That said, the service provided by the USPS nowadays is primarily delivery of paper waste into a receptacle I am obligated to empty because very occasionally they also use the same box for packages.

Is fedex forbidden from delivering to a lonely hut in Alaska for the same price as USPS?

Re: Privatisation has been a costly failure in Britain

#357

Post by twobitshifter »

m-i-l wrote: post #170
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.

> "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…

It sounds just like the utilities went through a PE buyout experience.

Re: Privatisation has been a costly failure in Britain

#358

Post by ClumsyPilot »

dffdsa432 wrote: post #168
timmb wrote: post #100

Earlier quoted context omitted.

By stripping and selling off as many assets as you can and borrowing as much as possible leveraged on the income from future fares. There is no incentive to spend this on long term investment or contingency planning. The railways are an essential service so the government will always have to step in when the private company reaches breaking point, so no money is saved by the state in the end. It’s just disguised debt…

Amtrak, a public rail company gets over a $1 billion in public funding. Private rail lines do not. Amtrak has operated at a loss for decades unlike private rails.

So? In 2014, a total of $416 billion was spent on highway and water infrastructure

Re: Privatisation has been a costly failure in Britain

#359

Post by spacebanana7 »

111111IIIIIII wrote: post #347
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…

Karl Marx showed us 150 years ago why your vision is impossible, and that is why we aren't taught about him in grade school despite him being the most famous intellectual in the world. Under capitalism, private capital predominates; it decides the laws and the commons. If you think you've found a way around this, it's only a matter of time. We call it capitalism for a reason.

What's the alternative? State capital - controlled by politicians, media and swing voter/military segments - decide the laws and the commons in socialism/communism/fascism.

Re: Privatisation has been a costly failure in Britain

#360

Post by twobitshifter »

lotsofpulp wrote: post #202
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…

How are shareholder returns and profit different?

You can return value to shareholders that doesn’t come out of profits. For example, selling off your assets doesn’t make you profit, but gives you cash on hand. If that money is returned to shareholders, you’ve changed your balance sheet, but haven’t made any profit. An even simpler example is just selling the company to someone else. The shareholders get whatever the agreed on price was to take it private.
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