Privatisation has been a costly failure in Britain • Hacker News Board

Re: Privatisation has been a costly failure in Britain

#71

Post by vidarh » Tue, Jul 11, 2023, 10:06 AM UTC

jack_riminton wrote: post #19

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…

Exactly. Fake competition in utilities and services makes no sense. The "privatisation" of the UK railways is a prime example. I use quotation marks because it's just privatising the profits and socialising the losses. "from March 2020 to February this year, the Government paid out more than £7.3 billion in operational support to private train operators" - https://bylinetimes.com/2021/05/18/7-billion-covid-bailout-f.…

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 revenue, but the return on investment looks decidedly less than modest. And so their parent companies can afford to risk outright failure of the franchise because the risk reward were tilted heavily in their favour even before the covid bailouts. The incentives for them are really perverse.

Re: Privatisation has been a costly failure in Britain

#72

Post by aloisdg » Tue, Jul 11, 2023, 10:06 AM UTC

mrfumier wrote: post #62

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.

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

You don't.

Re: Privatisation has been a costly failure in Britain

#73

Post by phatfish » Tue, Jul 11, 2023, 10:06 AM UTC

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…

Corporations want the pubic to think that governments are incapable of running services for them. Then the public service can be asset striped and run on a shoestring. When the private owners get called out for providing a bad service their veiled argument is "well at least the government isn't running it, that would be even worse!".

Obviously there are cases where the government fails and that can't be given a free pass, but this is too often assumed to be the outcome and the only solution is privatisation.

Even in the UK where there is the feeling that government is totally incompetent the NHS keeps providing at least a baseline level of medical care expected from a western country. This is despite being sabotaged at every opportunity over the last 12 years by the Tory party.

Re: Privatisation has been a costly failure in Britain

#74

Post by notahacker » Tue, Jul 11, 2023, 10:06 AM UTC

mrfumier wrote: post #62

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.

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

By raising the prices of your local monopoly to the yield-maximizing level whilst cutting overheads as much as possible.

Re: Privatisation has been a costly failure in Britain

#75

Post by avidphantasm » Tue, Jul 11, 2023, 10:07 AM UTC

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…

But what is the definition of a public good? Is it only to be limited to things that are natural monopolies/network systems (as you suggest) or should it also include practically non-excludable and non-rival goods (information)? I would argue we should go further. Some goods should be considered to be morally non-excludable goods. We should have the moral courage to assert that we cannot exclude health care to all people (interestingly the NHS is seemingly the last bastion of public goods in the UK, though the market fundamentalists have it out for it too). However, market fundamentalists usually don’t seem willing to take such moral stands and instead all moral decisions are implicitly left to the market. In the hands of such practitioners, markets are smokescreens for classism, racism, etc.

Re: Privatisation has been a costly failure in Britain

#76

Post by waldothedog » Tue, Jul 11, 2023, 10:07 AM UTC

mrfumier wrote: post #62

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.

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

Minimizing costs and competition?

Re: Privatisation has been a costly failure in Britain

#77

Post by giaour » Tue, Jul 11, 2023, 10:07 AM UTC

mrfumier wrote: post #62

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.

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

Offering shitty, expensive service. It's not like customers can use a competing rail line, so every dollar you invest in customer service is a dollar out of your pocket.

Re: Privatisation has been a costly failure in Britain

#78

Post by debok » Tue, Jul 11, 2023, 10:07 AM UTC

jamil7 wrote: post #28

brutusborn wrote: post #18

Earlier quoted context omitted.

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.

You end up pricing people out of the best possible education unless you regulate heavily, at which point you may as well have state-run education.

Or you have state-run education as another competitor. Or you can have the state sponsor promising but poor students. You can even incentivise private enterprises to give bursaries to promising but poor students.

Re: Privatisation has been a costly failure in Britain

#79

Post by edf13 » Tue, Jul 11, 2023, 10:07 AM UTC

mrfumier wrote: post #62

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.

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

By cost-cutting and offering the bare minimal of service...

Especially when the service is a necessity for many (Train to work, water to drink, electricity to keep warm and cook, etc).

Re: Privatisation has been a costly failure in Britain

#80

Post by wolframhempel » Tue, Jul 11, 2023, 10:07 AM UTC

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…

So, this might not be my strongest metaphor, but I see free markets a bit like the arena in fight club. Two people fighting, the others forming a circle that pushes the combatants back to the center.

We want the "fight" to occur. Economies are complex systems and humans have extensively proven that they're not good at running those. Free markets are the most effective way to facilitate technological progress and economic growth which indeed benefits everyone - although not in equal amounts.

However, we have to be mindful that free markets contain the seed to their own destruction. On the upper end, there's monopolies, price fixing and other anti-competitive behavior that disables the price finding mechanism. On the lower end, there is poverty which prevents people from participating and discourages entrepreneurship.

Good regulation does just enough to keep the fighters in the arena.