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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

#491

Post by sdfghswe »

iamflimflam1 wrote: post #460
asdajksah2123 wrote: post #459

Privatization can, and has, worked well in several monopoly utilities, where the privatization is structured appropriately. Forced percentages to be set out for infrastructure improvements, profits capped by regulation, debt cannot be piled on willy nilly but has to be approved by a regulatory body, and finally common access allowing for competition. Even then it can be a challenge to structure this correctly, but if…

Privatization can, and has, worked well in several monopoly utilities, where the privatization is structured appropriately. Forced percentages to be set out for infrastructure improvements, profits capped by regulation, debt cannot be piled on willy nilly but has to be approved by a regulatory body, and finally common access allowing for competition. Can you give some examples?

I'm also very keen on this.

Re: Privatisation has been a costly failure in Britain

#492

Post by ModernMech »

VoodooJuJu wrote: post #407
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…

> Nobody is going to vote for the government to ban the cheaper but more harmful beef farm.

What do you think the FDA is, but people having voted for more expensive but healthier beef? Like, as bad as you think it is now, imagine how much worse it would be without food safety regulations.

Re: Privatisation has been a costly failure in Britain

#494

Post by mrguyorama »

dffdsa432 wrote: post #192
lozenge wrote: post #169

Earlier quoted context omitted.

Employees of private companies.. can also join unions! Gasp!

Yes, and? Unions of both sectors try to maximize their profits. Which do not?

As we saw with the recent US rail strike threats, unions do not maximize member profit, but rather member satisfaction. They didn't want more money

Re: Privatisation has been a costly failure in Britain

#495

Post by twic »

hgomersall wrote: post #458
gnfargbl wrote: post #117

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. 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…

One thing that can be done for all these services is to allow any private company to offer the customer facing front end (payment, bundling, support etc) which plug into a common wholesale backend.

Or the other way round - have a thin public service to interact with users, subcontracting all the heavy lifting to competitive bidders working to a rigid specification. You set up a monopsony rather than a monopoly, letting the public rinse the companies for once. This is how Transport for London provides bus and Docklands Light Railway services, and it works very well.

Re: Privatisation has been a costly failure in Britain

#496

Post by banannaise »

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…

> This is wrong twice over! First of all, they are effectively monopolies, they have no competitors in their industry. The only thing they are competing against is which company can extract money the fastest (at the expense of the company and English citizens).

I think that's what the poster above was trying to say - they're not competing for customers, they're competing for investors. Effectively their only products are ROI and share value.

And when I say it out loud, I get a little shock, as I realize how much all industries are trending that way. No matter how consumer-facing your business is, the real competition is for capital investment. Consumers had better hope that capital investment depends on their happiness, because if it doesn't, their happiness is going to slide far down the priority ladder.

Re: Privatisation has been a costly failure in Britain

#497

Post by makomk »

captainbland wrote: post #447
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.

Yeah exactly. In fact anyone who believes in markets should laugh in the face of private natural monopolies as an obviously terrible idea. The UK structures water provision as regional monopolies. This should be a hilarious joke but it's the reality. You can't change water company without living in a different region. There is no effective market competition for water provision in the UK. We already rely on price cap…

No, that's not it. They make sense as investments for things like pension funds because what those pension funds need is basically the other side of what's needed to have infrastructure like water and sewage treatment: the pension funds have a bunch of up-front money that they need to turn into a reliable income stream, whereas providing water and treating sewage has a bunch of up-front cost to buy/build/upgrade the infrastructure but only receives money slowly over time from people using that infrastructure. The British media has been obfuscating this because for partisan political reasons they want to convince people that having to pay for things that they directly use and benefit from is somehow stealing from them, and that the fair solution is for Canadian teachers' retirement money to be used to deal with their literal shit for nothing in return. So far it's been working astoundingly well.

Re: Privatisation has been a costly failure in Britain

#499

Post by andyjohnson0 »

iso1631 wrote: post #150
andyjohnson0 wrote: post #111

Earlier quoted context omitted.

> Unfortunately, none of these apply to the privatization of inherently public commodities that run on top of an underlying network infrastructure. We tried this with the railways in the UK. In the mid 90s the tracks and signalling and most of the stations were transferred to a publicly owned and regulated company (Railtrack), while private businesses competed for franchises to offer train services. But within a few…

Other way round. Railtrack was a private company on the FTSE. It killed people. Network Rail then took the rail infrastructure back in house.

Railtrack was created as a publicly owned company in 1994 and operated as such until it was privatised in 1996. It was forced into administration in 2001 (after Hatfield) and in 2002 Network Rail was created to buy its assets.

Re: Privatisation has been a costly failure in Britain

#500

Post by arethuza »

darkclouds wrote: post #487
rightbyte wrote: post #241

Earlier quoted context omitted.

CEOs have almost no competitive pressure. They are mostly recruited within the upper class. Paying more won't net you a better one.

>CEOs have almost no competitive pressure. Yes they do, from rival businesses, superior and new technology, just look at Chat-GPT potentially putting programmers out of work, or telegrams being made redundant by pagers, and text messages and email. @arethuza >CEOs of corporations of the same size quite often have to find and retain customers in competitive markets - which is hardly the case with Thames Water? Water c…

I'm in Scotland so I have perfectly pleasant tasting water from the state-owned Scottish Water whose CEO get paid a small fraction of what the Thames Water CEO gets paid (~£295K plus bonus).

https://www.scottishwater.co.uk/About-Us/News-and-Views/2022...

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