Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Privatisation has been a costly failure in Britain

economist.com

Post reply on HN
Print view View original

511–520 of 609 posts

Re: Privatisation has been a costly failure in Britain

#511

Post by kergonath »

ciconia wrote: post #39
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…

Free markets don't magically solve the problems of capitalism. You still have to deal with monopolies, entrenched market leaders, mergers leading to less competition, backroom non-competition agreements, lobbying for prefential treatment, revolving doors between regulators and market players, or just plain corruption and bribery. What I see everywhere, not just in Britain, is the same old story over and over again: p…

> What I see everywhere, not just in Britain, is the same old story over and over again: privatizing the profits, nationalizing the losses.

But hey, they are very efficient at doing that.

Re: Privatisation has been a costly failure in Britain

#512

Post by kergonath »

libealistand wrote: post #311
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…

The irony here is that the massive water price hikes must surely have contributed in less waste of water resources.

It’s not going to plug leaks, though. The amount of water that goes straight into London’s ground is astounding.

Re: Privatisation has been a costly failure in Britain

#513

Post by jraph »

Yoric wrote: post #391
Kiro wrote: post #193

Earlier quoted context omitted.

Absolutely. My experience is completely anecdotal, and even if it's true that you get less bang for the buck in the public sector I still think it's ideologically sound and worth it. My country has a huge public sector but I think it's good. What's normally the driving motivator in public companies to be efficient?

Professional pride?

I'd also add a sense of wanting to be useful, and not letting people (you serve) down (which can be emotionally draining).

Re: Privatisation has been a costly failure in Britain

#514

Post by robertlagrant »

phatskat wrote: post #486
robertlagrant wrote: post #389

Earlier quoted context omitted.

> 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 wage…

> 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. Out of these, we often just see > can then be used to…pay shareholders dividends During the welfare capitalism of the early 20th century, we did see lower prices, higher quality products, and higher wages. Then Jack Welch and his ilk disco…

> Out of these, we often just see

"Often" seems like weasel words? Look at e.g. tech worker salaries rocketing up. Or the year on year improvements in key items such as cars and phones.

What you're saying doesn't jibe with my understanding of the 20th and 21st centuries' explosion of innovation and quality of life improvements.

If you think Fords and VWs are no better than Ladas, or SpaceX rockets aren't better than Soyuz rockets, or people flock to countries run by "the commies" vs, say, the US, due to the better products and wages in said "commie" countries, then we might just have a fundamental disagreement on the state of reality. But my understanding is the opposite is true.

> why not sell 10s of the cheap one over and over?

Companies can do that, but in a decent economic environment a competitor or twelve can spring up and offer products at different prices and levels of quality. E.g. not every restaurant is McDonald's. Why is that?

Re: Privatisation has been a costly failure in Britain

#515

Post by triceratops »

Karunamon wrote: post #373
ClumsyPilot wrote: post #356

Earlier quoted context omitted.

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

Quite literally yes when we are talking about letters. Even if they did it for cheaper. https://en.wikipedia.org/wiki/Private_Express_Statutes

Ah yes letters, the backbone of revenue for any delivery service.

Re: Privatisation has been a costly failure in Britain

#516

Post by tnel77 »

waihtis wrote: post #472
tnel77 wrote: post #423

Earlier quoted context omitted.

They deleted their comment about you being a troll for this response, but I agree with you. I’d like to know what their response is.

I didn't delete anything, people flagged my reply

Fair enough. Do you plan on replying to them anyways? I’m interested in what your answer would be.

Re: Privatisation has been a costly failure in Britain

#517

Post by sarchertech »

panick21_ wrote: post #342
sarchertech wrote: post #333

Earlier quoted context omitted.

Freight rail also has priority over Amtrak, which causes all kinds of problems with scheduling and adds insane delays.

I mean sure, we can talk for hours about issues with Amtrak. However that doesn't change what I said so I'm not sure why you are bringing it up. Amtrak most likely wouldn't be profitable if they had priority.

I think you may have conditioned by HN to assume that any comment is a refutation. I brought it up because it’s an additional piece of the explanation for why amtrack can’t support itself on ticket prices alone.

Re: Privatisation has been a costly failure in Britain

#518

Post by twobitshifter »

inconceivable wrote: post #504
twobitshifter wrote: post #360

Earlier quoted context omitted.

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.

> For example, selling off your assets doesn’t make you profit if it's on the balance sheet and you sell it for more than it cost you, then you have to book it as non-operating income, i.e. capital gains, i.e. profit.

Ok, so you make X percent profit but the proceeds are more, and you distribute the proceeds to shareholders. You can also sell at a loss and still make distributions to shareholders. This is Private Equity 101.

Re: Privatisation has been a costly failure in Britain

#519

Post by vidarh »

toyg wrote: post #465
vidarh wrote: post #122

Earlier quoted context omitted.

It is a problem largely created by granting them property rights instead of franchises or operating agreements. In a democracy we can never remove the risk of the next government messing it up, but as long as they grant time limited or restricted contracts the opportunity for reversal is there. Which, incidentally, the cynic in me would suggest is the reason for why e.g. the water privatisation was done the way it wa…

They are both ridiculous propositions. There cannot be any meaningful competition where 99% of the involved activity is effectively fixed (water pipes and plants, rail tracks, rolling stock, even the ticketing system now). It's all an ideological play supported by big money.

Indeed, but the water privatisation is as things currently stands (but only because Railtrack crashed and burned so we're already rid of that abomination) worse in the sense that there's no automatic exit mechanism because the water companies own the infrastructure. The rail franchises at least expire so the "cheap" out is to just let them run their course.

But when the best you can say about one over the other is that it's cheaper to get out of it, not getting into it in the first place would've been preferable.

Re: Privatisation has been a costly failure in Britain

#520

Post by lotsofpulp »

banannaise wrote: post #496
BoiledCabbage wrote: post #397

Earlier quoted context omitted.

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…

Thanks, you explained it better than I did.

The irony is we might all be complicit in supporting this dynamic by choosing to invest in whichever 401k/pension fund option offers the highest returns and lowest expense ratios.

Post reply on HN