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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

#381

Post by njs12345 »

fmajid wrote: post #371
EdwardDiego wrote: post #205

Earlier quoted context omitted.

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!

A better question is, where do they keep finding such gullible lenders? That The Economist , the City of London's answer to Pravda , published this article at all is telling.

The lenders will come out alright. Even if the utilities end up being renationalised their debt will be converted into government bonds. The mugs here are the public, which end up paying to service the debt that has been used to issue dividends.

Re: Privatisation has been a costly failure in Britain

#382

Post by 0xDEF »

Gareth321 wrote: post #310
Puts wrote: post #287

Earlier quoted context omitted.

No there is a middle ground called socialism.

Do you mean socialism or democratic socialism? They're very different and people tend to use the terms interchangeably. Socialism is an authoritarian system of social control which requires that the means of production, distribution, and exchange be owned or regulated by the community as a whole. Democratic socialism is, in effect, restrictions on free markets and democratic control over tax redistribution. Most West…

Democratic socialism is socialism.

My country (Denmark) is social democratic which has nothing to do with socialism. Tired of Americans calling this place "socialist" like we are Cuba.

Re: Privatisation has been a costly failure in Britain

#383

Post by kaashif »

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…

Yeah, rail privatisation in the UK doesn't really allow operators to compete with each other. Since competition is the only thing that motivates good service, low prices, etc, that means those have been on the decline.

Not even the free market diehards can point out the competition in rail travel.

Re: Privatisation has been a costly failure in Britain

#384

Post by etrautmann »

lotsofpulp wrote: post #295
EdwardDiego wrote: post #205

Earlier quoted context omitted.

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 th…

This is highly specific to the period of time with rapidly rising interest rates - not generally true. It does sting though as someone still looking to buy a house.

Re: Privatisation has been a costly failure in Britain

#385

Post by Puts »

Gareth321 wrote: post #310
Puts wrote: post #287

Earlier quoted context omitted.

No there is a middle ground called socialism.

Do you mean socialism or democratic socialism? They're very different and people tend to use the terms interchangeably. Socialism is an authoritarian system of social control which requires that the means of production, distribution, and exchange be owned or regulated by the community as a whole. Democratic socialism is, in effect, restrictions on free markets and democratic control over tax redistribution. Most West…

I think to Europeans – especially Germany, France, Scandinavia… socialism refers to what you call Democratic socialism. Wheres the far ends of the spectrum are Communism vs Capitalism. I think this actually used to be a very natural distinction although the Neo-liberal movement have done a good job to paint out any form of socialism to be equal to Communism.

Re: Privatisation has been a costly failure in Britain

#386

Post by robertlagrant »

yread wrote: post #309
lotsofpulp wrote: post #292

Earlier quoted context omitted.

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

That would be actually a nice policy: only allow buybacks using taxed profits. Unfortunately, it's not there yet

Why would that be a good idea?

Re: Privatisation has been a costly failure in Britain

#387

Post by xbmcuser »

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…

Singapore is doing something like this as they move to free market electricity. the network is owned by a government controlled company but everything else like maintaining the network etc as well electric suppliers are private. They all are charged a fix amount for network use. They tried it first with fiber internet and after successful implementation are not doing it slowly with electricity.

Re: Privatisation has been a costly failure in Britain

#388

Post by kaashif »

mnd999 wrote: post #31
krona wrote: post #26

Earlier quoted context omitted.

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.

But is the most economically efficient number of deaths on trains really zero?

If a million people get to work a few minutes faster every day for 40 years, is that worth one life?

No, but I have actually heard this argument before and regard it as unhinged.

Re: Privatisation has been a costly failure in Britain

#389

Post by robertlagrant »

danparsonson wrote: post #242
Kiro wrote: post #164

Earlier quoted context omitted.

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'…

> Isn't that the whole point of privatisation? By introducing a profit maximisation goal you (supposedly) create a more efficient operation. Right, but efficient at what? The answer is almost invariably 'efficient at making money' - that's the whole point; competition normally forces alignment of incentives, wherein 'better' service (for some value of 'better') results in higher income. Thus a business that provides…

> The answer is almost invariably 'efficient at making money'

That's because it's a more general category, not because it's a better category. Going the other way: privatisation can for example invest money up front to make operations cheaper.

That example does result in "better at making money" but that money can then be used to lower prices / increase quality / pay shareholders dividends / pay employees higher wages.

Re: Privatisation has been a costly failure in Britain

#390

Post by Yoric »

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'…

Anecdata: I used to work for public academia. I got out after a burnout due to massive overwork. I've worked in a couple of start-ups, among others, and found them all much more relaxing.

Sure, there's lots of pressure, but, at least for someone with my profile, it's limited by the fact that it's easier to walk away.

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