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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

#401

Post by bandrami »

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'…

It's funny how "efficiency" isn't actually defined in economics, but people keep using it.

Re: Privatisation has been a costly failure in Britain

#402

Post by ch4s3 »

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…

Rail is different I think. Private companies successfully operate rail networks all over the world. The NYC subway system was built privately and only fell apart due to urban flight. Most of Japan rail network is private I believe, and more than a dozen companies. I think Stockholm's subway and regional rail systems are privately run and have been for ~30 years.

Re: Privatisation has been a costly failure in Britain

#403

Post by UncleMeat »

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.

We need to rearrange our brains. USPS provides a valuable service to the country. It does not need to make a profit. It should be evaluated based on the value it generates for the people. Why does something like the mail system get treated differently than something like road development, which is not expected to bring in any revenue at all let along a profit?

Re: Privatisation has been a costly failure in Britain

#404

Post by blowski »

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.

> That The Economist, the City of London's answer to Pravda, published this article at all is telling.

Do you mean it's extremely left wing? Or pro-authoritarian capitalist? Or the most left-wing publication you can find in an otherwise capitalist group?

Re: Privatisation has been a costly failure in Britain

#405

Post by drsnow »

carlosjobim wrote: post #369
danparsonson wrote: post #242

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. 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…

> Right, but efficient at what? The answer is almost invariably 'efficient at making money' They don't make any money unless they give the customers what they want, that's the whole point. It's so basic even animals have an instinct for it. That's why government and private business shouldn't be mixed.

Animals have the instinct to shit in front of you and not feel the slightest discomfort doing so too. Should we all start shitting in front of each other to more closely align our behavior to animal instincts?

Re: Privatisation has been a costly failure in Britain

#406

Post by solardev »

jleask wrote: post #85
mrfumier wrote: post #62

Earlier quoted context omitted.

"And you don't extract profits from a rail line by offering the best service." So how do you extract profits then?

Cutting corners and costs e.g. shutting ticket offices, doing just enough to barely offer the service. It's not like your passengers have any sensible alternative. If that doesn't do it then you can also load the company up with debt and pay yourself a nice dividend until rates rise.

Sounds like Amtrak... the zombie of a train service, constantly revived by new cash injections from Congress whenever it does poorly (which is always)

Re: Privatisation has been a costly failure in Britain

#407

Post by VoodooJuJu »

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…

Cuts both ways - people in general are largely motivated by profit, not just corporations and their executives.

Do people prefer to buy the package of ground beef that's $9/lb or the one that's $5/lb? When faced with a choice, most people want the cheaper one, disregarding the harmful externalities that make the lower price possible. Nevermind that the more expensive one is better for their bodies and the environment. Most people and corporations are married by the same motivation: to make and save as much money as possible with no regard for the harmful effects.

If profit-seeking consumers shift their motivations, profit-seeking corporations will naturally starve, and something higher than profits will prevail. But people won't change. Nobody is going to vote for the government to ban the cheaper but more harmful beef farm.

Re: Privatisation has been a costly failure in Britain

#408

Post by jmyeet »

Privatisation and everything that goes along with that (eg deregulation, "small government") is nothing more than a scheme to extract money from government to private corporations. There is a revolving door of politicians and civil servants who go from overseeing and enabling privatization to the industries they privatize. It's why Ajit Pai, former FCC Commissioner, now works for Verizon.

Privatization for key services (eg public transit, health care, power generation, housing) has been an unmitigated disaster, almost without exception. It's mystifying why anyone still supports it for any reason other than self-interest.

Re: Privatisation has been a costly failure in Britain

#409

Post by lotsofpulp »

BoiledCabbage wrote: post #397
lotsofpulp wrote: post #295

Earlier quoted context omitted.

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 a very naive reading of the situation - it almost comes across as twisting in knots to avoid placing the blame on the responsible party: the company and its owners who were responsible for this. > Your options are to acquire appreciating assets quicker than your competitor, or you get left behind. This is wrong twice over! First of all, they are effectively monopolies, they have no competitors in their indust…

I am not claiming it is a good thing for society.

>The only thing they are competing against is which company can extract money the fastest (at the expense of the company and English citizens). Second of all, from the article, they aren't spending the raised money on capital investments.

The owners of the company are competing with others in society to buy land/houses/cars/services/etc.

Re: Privatisation has been a costly failure in Britain

#410

Post by tnel77 »

waihtis wrote: post #370
HWR_14 wrote: post #274

Earlier quoted context omitted.

As opposed to the unaccountable board of a non-profit raking in significant income? Where they can pay themselves a nice bonus if they make more money for the non-profit?

[flagged]

It doesn’t feel like they are trolling. They gave a legitimate response and you don’t like it. It’s a valid concern that I feel you should address.
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