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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

#411

Post by sidewndr46 »

mrcartmeneses wrote: post #95
vidarh wrote: post #71

Earlier quoted context omitted.

The train operating companies are a particularly bad failure because like e.g. the water companies they get to channel the revenue but unlike the water companies they don't own the capital intensive bits but bid on how much they'll return during the franchise period. As a result, the capital need to start a train operating company is tiny in proportion the revenue flow, and their returns look modest related to revenu…

And one of the worst ironies is that some of our franchises are run by the state rail companies of other countries. Meaning we are subsidising rail travel in foreign countries.

You guys should hold a referendum to see if you could break off relations with those other countries, so you don't have to subsidize them any longer!

Re: Privatisation has been a costly failure in Britain

#412

Post by Asooka »

gnfargbl wrote: post #117
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 - e.g. electricity providers that add energy to the grid. One area -- in fact, the only area that I can think of -- where privatisation has mostly worked in the UK is the telecommunications market. Here the networks are in private hands, but the providers are forced…

The main reason I think for why the telecom market succeeds under a fully free market model is the fact that you're buying network access, not a concrete product. To compare it with electricity - every house comes with access to the electrical network for free and the network is maintained by the government; what I pay for is for someone to put voltage on these wires. Whereas when I pay an ISP, I pay for the right to access to the wires themselves. The data is either free (e.g. this site), or paid (e.g. Netflix), but the ISP itself doesn't enter the equation, they are just paid to maintain the network.

This suggests that you could privatise both the electric grid and the electric supply, but only if you enforce strict separation of the entities owning the one and the other. I'm saying this just as a thought experiment, there seems to be zero benefit to privatising the electrical network. The main problems with a government run service boil down to possible inefficiencies raising the price above what a hypothetical lean business would do; the fact that changes at the government level happen slowly; and lack of consequence for doing the job poorly. For an old, established technology like electrical wiring, these are mostly theoretical criticisms - it is extremely unlikely for a revolutionary change in electricity delivery to happen any time soon.

Re: Privatisation has been a costly failure in Britain

#413

Post by pyrale »

ClumsyPilot wrote: post #372
pyrale wrote: post #282

Earlier quoted context omitted.

> 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 - e.g. electricity providers that add energy to the grid. Even in that configuration, companies often have trouble fronting the money required to build a sizeable power production infrastructure. It can be seen in renewables, where investors build a lot of renewables…

> at this point, the real value is the regulator's planification Exactly, in many of these markets a small team of public ally employed engineers could design a reasonable strategy in a week. Now you need a massive team of lawyers just to draft a contract with a private company that isn’t full of loopholes they are gonna abuse. Managing them is more work than doing the job directly. And government can always access c…

> And government can always access cheaper loans

I'm assuming the main issue with government is that people keep electing politicians uninterested in statesmanship or running an administration, and with personal incentives to privatize.

I still don't understand how voters can choose to entrust public service to people that claim public service is inefficient: they can run it in the ground and claim "see, I told you!"...

Re: Privatisation has been a costly failure in Britain

#415

Post by tnel77 »

0xy wrote: post #363
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…

The entire premise of your comment is false, since energy retailer margins are sub 5%. Considering the UK government has directly been engaged in numerous schemes which have dramatically increased the wholesale price of energy, a 5% cost saving won't even help anyone. Prices are rising by 4x that yearly with the money printers and war machine turned up to 11.

I can’t speak to the UK directly since I live in the USA, but all of my experiences with privatization of services has been awful. I lived in one city that handled trash and recycling as a part of your property taxes. It was a good service. No complaints. Where I live now, you have to find your own trash and recycling service. Prices are higher and the service is far worse.

Re: Privatisation has been a costly failure in Britain

#416

Post by kingaillas »

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 (supposedly) create a more efficient operation.

Yes but one way that happens is by ignoring unprofitable customers. That's great if you are a car dealership and sell higher end cars to wealthier people or run a botique grocery store with fancy all-organic produce, but terrible if you are (for example) trying to provide healthcare or education and decide that the profit margins aren't high enough for you to serve various segments of the population.

Re: Privatisation has been a costly failure in Britain

#417

Post by tnel77 »

brutusborn wrote: post #18
PartiallyTyped wrote: post #6

Earlier quoted context omitted.

Add education to that too. It should be pretty obvious to everyone that quality education is a matter of national security but here we are, with people proudly uneducated, who - in their wilful ignorance - harm others. Thank you to everyone who flagged me and now I can't respond or comment in this thread <3

I think education is actually case where the free market would solve a lot of issues. Making schools compete for students would incentivise schools to provide a more valuable education.

Who wants the “bad” students? Bad could be from a behavioral or academic standpoint? Don’t they deserve a chance at an education as well?

Re: Privatisation has been a costly failure in Britain

#418

Post by iso1631 »

ClumsyPilot wrote: post #362
iso1631 wrote: post #230

Earlier quoted context omitted.

Because ticket offices are a costly relic from the 20th century that simply are not needed, as evidenced by the collapsing usage of them.

Have you ever tried to get off the train in a wheelchair? Or find out which stations have wheelchair access?

Ticket office staff won't help you there.

Re: Privatisation has been a costly failure in Britain

#419

Post by iso1631 »

chimprich wrote: post #207
iso1631 wrote: post #137

Earlier quoted context omitted.

Railway tracks aren't privitised and haven't been for 20 years. The trains running on them were - at least until covid broke everything The problem is that the government let companies like Virgin off when they broke their contract, allowing them to bid high, take the profits, then walk away rather than fulfilling their contracted duties. Privatise the profits, socialise the losses. Nethertheless there is tons of com…

I'm unclear what your argument is here. Having rail be so expensive or badly run that people decide to use roads instead doesn't seem like a win for privatisation. Encouraging people onto roads or even flying is also a disaster for tackling climate change.

Since privatisation in 1994 to pre-covid 2019, rail usage increased from 36 billion km to 80 billion km, more than doubling.

Road increased from 666 to 741 bkm, increasing 11%.

Re: Privatisation has been a costly failure in Britain

#420

Post by carlosjobim »

drsnow wrote: post #405
carlosjobim wrote: post #369

Earlier quoted context omitted.

> 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?

Who am I to tell you what to do?
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