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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

#541

Post by AndreasHae »

ClumsyPilot wrote: post #537
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…

> am a deep believer in free markets There are more people proffesing their beliefs in this thread, than in most discussions about the Catholic church. In this entire thread noone considered - "let us have a look, which country has best railways" and maybe learn from Spain and China. In public discourse, ecomomy is treated like a religion.

You're implying that putting capital towards having the "best" railway is the most optimal use of that capital. I think it's much more complicated than that, and coincidentally, market mechanics are one way of crowdsourcing the decision of how capital is put to best use.

I'm not saying it's always the best solution and free markets going unchecked can for sure cause more harm than good, but I think you're making it out much simpler than it really is.

Re: Privatisation has been a costly failure in Britain

#542

Post by Jochim »

Roark66 wrote: post #188
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…

Exactly. It seems pretty obvious, so the real question is, why aren't all privatisation efforts do it like that (keep public control of the infrastrukture, privatise service providers running on it). I believe it's not done like that, because there is little opportunity to make huge profit on such privatisation. Would you rather own the entire rail network, or buy some trains and have to pay rent for rail access? No…

> Restructure and run those service companies until they're profitable. Finally sell them, or better yet over the span of the years get the employees to get a sizable ownership share, give local go another sizable share, sell the rest on the stock market.

What benefit is there to the public/state of selling off a company that they wholly own and is subsidising their transport through it's profitability?

The only possible outcome is that the service declines and/or prices rise as money that once went to the benefit of customers is now extracted via dividends and share buybacks.

Re: Privatisation has been a costly failure in Britain

#543

Post by flanked-evergl »

LastTrain wrote: post #395
flanked-evergl wrote: post #249

Earlier quoted context omitted.

I once worked for a co-operative, and it was by far the most poorly run company I have ever worked for or with. The control of the company was so far removed from shareholder control that the management was basically only accountable to their creditors (i.e. banks). The company had every corporate pathology you could imagine and then some. It was orders of magnitude worse than a Fortune 500 dinosaur I also worked for…

So you shared your experience with one co-op, do you think they are inherently worse than other types of business organizations? If so, why?

I definitely don't think they are inherently better. I'm sure some of them are good, but the real problem I see, as I already pointed out, is that shareholders have less ability to hold management to account than in more traditional business structures.

Re: Privatisation has been a costly failure in Britain

#544

Post by jarek83 »

One good thing is that homeowners, don't really have to pay for water in the UK - it is not possible to cut off a non-paying customers. Also, once your water bill debt grows, the debt is sold to a collector company, that have little power in the UK, so you just need to ignore threatening mail and you'll be good. I've practiced it for 5 years, I'm not too proud of it, but the water bills were a crime in the other direction.

Re: Privatisation has been a costly failure in Britain

#545

Post by happymellon »

robertlagrant wrote: post #523
happymellon wrote: post #481

Earlier quoted context omitted.

Because buybacks in any other fashion only increase debt. It's the shareholders cashing out, so rather than a failed business with shares of $0 value, they have money and the loans are someone else's problem.

> Because buybacks in any other fashion only increase debt. What about using revenue to buy it? You don't have to use (or have) debt to buy something with revenue.

Because revenue is pure income without taking costs into account.

So you could still be giving away money to cash out that is owed to someone else? If your revenue is based upon fictional income then these privatised public services will become tax payer problems because they can't be shut down.

Re: Privatisation has been a costly failure in Britain

#546

Post by moritzwarhier »

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…

Isn't the efficiency of free markets supposed to be self-evident, thus making it weird to call oneself a "deep believer" in it?

"Distributing goods and services" also sounds as if these were inherently available in infinite quantities.

Problem is, they use finite resources. Such as oil, gas, soil, people.

So you are probably right and your belief is not a belief but a fact, but I strongly disagree with the implicit statement that this would maximize human wellbeing, present and future.

What is the empirical evidence for the efficiency of "free" markets (free from "externalities" too?), and what do they minimize, what do they maximize?

Re: Privatisation has been a costly failure in Britain

#547

Post by Jochim »

efields wrote: post #428

Just browsing the comments on this one, it struck me how users of this website, an incubator for new technologies and ostensibly private businesses, seems to not believe in the capacity of private businesses to provide the most socially-useful goods and services. My basic woke laymen POV is that the in last 150+/- years, we figured out 100% of how to sustain humanity at scale and even offer some perks like efficientl…

> Just browsing the comments on this one, it struck me how users of this website, an incubator for new technologies and ostensibly private businesses, seems to not believe in the capacity of private businesses to provide the most socially-useful goods and services.

I've spent my entire life watching private shareholders rape companies sold off by successive Conservative governments.

I've grown up hearing of workers buying homes on minimum wage and that the majority of families could support themselves on a single income. Yet despite huge advancements in automation, computing, and productivity I do not live in such a world.

I've seen the ways in which private business treats people who have no other choice: with no regard for their wellbeing, their humanity, or the law.

Private business serves as a useful means of parallelising and (somewhat) decentralising decision making, but unless brutally controlled it ravages society.

Re: Privatisation has been a costly failure in Britain

#548

Post by moritzwarhier »

moritzwarhier wrote: post #546
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…

Isn't the efficiency of free markets supposed to be self-evident, thus making it weird to call oneself a "deep believer" in it? "Distributing goods and services" also sounds as if these were inherently available in infinite quantities. Problem is, they use finite resources. Such as oil, gas, soil, people. So you are probably right and your belief is not a belief but a fact, but I strongly disagree with the implicit s…

Clarifying, I'd agree with the implicit statement if all externalities were priced in. I just wonder if that's even possible.

For distribution of finite resources, I think free markets (without the scare quotes) are efficient.

But for something like public welfare, I don't think so, and I dislike that much is being swept under the rug regarding were the "value creation" takes place. I agree with GPs closing thoughts.

Re: Privatisation has been a costly failure in Britain

#549

Post by Jochim »

ehnto wrote: post #341

I always use train infrastructure as examples of infra that should remain public, as it's so essential for modern day cities. Privatisation seems to inevitably lead to service degradation and reduced utility, even corruption. But my favourite example of trains done right is Japan, and to my surprise, their expansive rail network is dozens of private companies. It turned a lot of my assumptions upside down. I still do…

> But my favourite example of trains done right is Japan, and to my surprise, their expansive rail network is dozens of private companies. It turned a lot of my assumptions upside down.

My impression is that in Japan, there are social repercussions for people who work for a company that acts against society. Which is why we see public apologies from executives when things go wrong.

On the other hand, your ability to fuck over wider society seems to be a point of pride in many western countries. See the various scandals in the UK over COVID contracts, or PPP fraud in the US.

I'd like to see proper consequences for those people, of the kind that gave us the term Boycott at the very least.

Re: Privatisation has been a costly failure in Britain

#550

Post by fmajid »

blowski wrote: post #404
fmajid wrote: post #371

Earlier quoted context omitted.

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?

I mean that it usually parrots the party line (in hte case of Pravda, literally). Criticizing privatization is for them heresy of the highest order.
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