Privatisation

Peddle Up!

We've had over thirty years of it, so what's the verdict? :?

spen666

Privatisation of what?



go on, give us a clue what you are referring to

tiredofwhiners

Curates Egg - good in parts. Not good enough in others.

At least its reduced the public sector liability for providing inflation proof pensions to the less capable, who only pay about one quarter of the amount of money needed to fund their pension. On the downside, too little competition now to be really effective but no reason to nationalise as nationalising anything has never improved anything as its the same muppets doing the work.

Even if you want to nationalise, who would draw up any agreements - the public sector - who have a less than sterling reputation for doing anything.

dynamicbrick

Mixed bag really.

Telecoms/BT = good thing, the fibre and cable networks competing with BT wouldn't have happened otherwise

Railways = worst of both worlds I think. BR was crap. Post privatisation it became crap and expensive. Now with the soaring passenger numbers it is crap, expensive, overcrowded, and lacking any centralised coherent strategy

Gas = difficult to say, but the foreign ownership can't be a good thing

Leccy = doesn't seem to have really made any difference

BA = success, in as much as the P&L is someone else's problem.

Qinetiq/DERA = the stupidest thing ever to happen.

VTech

Privatisation is the best thing for any society, where it falls down is with government intervention.
Check out Singapore, they have a rule of 15% government intervention and things just get done, if companies dont get the work done they pay for it, in the UK there are no real penalties and we have around 80% interference.

tiredofwhiners

dynamicbrick wrote:

Qinetiq/DERA = the stupidest thing ever to happen.

Completely disagree - it was the only solution to the interminable problem of civil servants with absolutely no idea of the value of work, being paid to do stuff that nobody wanted (or is likely ever to want) all because a few deaces ago they came up with a couple of good ideas.

I should add that I know the place intimately, and they didn't move nearly fast enough to cut out the dead wood that never served a valuable purpose.

The only stupid bit was paying the 'leadership' any incentives as not one of them deserved a penny for their contribution.

AchillesLeftKnee

I've no problems with the principle, and there have been some obvious genuine successes in there, but I can't say I'm any great fan of the way gas, electricity, and rail have been handled, either at the time or by subsequent governments.

Gas and electricity are still a consumer minefield in which suppliers appear to compete on the basis of price obfuscation alone.

Rail just makes my brain hurt by virtue of being nothing more than a brutal and unimaginative attempt to headbutt market forces and the limitations of geography into submission. Chuck in the continued subsidies and numerous local monopolies and the whole thing is a total farce. Crap before, still crap now.

verylonglegs

Electricity, taking one utility as an example, is not something that entirely makes sense to me as don't we now have several companies in between the consumer and the wholesale price supposedly providing a competitive market? But are we just footing the bill for duplicate marketing, processing and call centre departments in this way that aren't really needed. Or have I not really understood how it works?

rodgers73

dynamicbrick wrote:

Leccy = doesn't seem to have really made any difference

Bit of a balls-up on the investment front though. We've been having power cuts round here quite often over the last few years and I think London has had some pretty spectacular ones too. Never had them here since my childhood, so looks as though the system is creaking a bit.

declan1

dynamicbrick wrote:

Railways

Worst thing they ever did to the railways was introduce DMUs/EMUs/DEMUs. Bring back the awesome old 37s, Deltics, 50s etc.

Pross

Water hasn't made much sense. There was little point in privatising it when there is no choice for consumers and therefore no competition. It was probably a good time for the liabilities to be off loaded by Goverment though as we seem to either be having drought where leakage gets criticised or floods where drainage infrastructure is not up to the changing climate patterns.

dynamicbrick

declan1 wrote:

dynamicbrick wrote:

Railways

Worst thing they ever did to the railways was introduce DMUs/EMUs/DEMUs. Bring back the awesome old 37s, Deltics, 50s etc.

In truth, the rail network has been a balls up from day one due to the total lack of Government policy during the expansive Victorian phase. Low infrastructure investment since the 30s, and then more or less nothing since the 60s save for some high-speed baubles, means it's utterly hopeless now.

I live in Hove. The Brighton mainline (an odd term, given it's only bloody line) is at absolute capacity, has been for several years now. Average journey time from Vic-Btn in 1912 was 56mph... now it's 52mph. Any breakdowns anywhere South of Gatwick and the whole thing just snarls up as it is still only a two-track route through Sussex - this is despite Brighton and Haywards Heath being six times the size they were when the line was laid, and Burgess Hill having gone from a tiny village to a medium sized town.

Yet, the option exists to effectively double capacity by reopening the disused Brighton-Uckfield line. But it has no support - the TOCs don't want it, as they'd need to provide more trains to ship the same number of people, ergo less profit. Network Rail has no say in the matter. Southern would need to upgrade and extend the stations along the Tunbridge bit to take the 12 car trains, so they won't support. FCC aren't interested as it makes no odds to the Brighton-Bedford service. Meanwhile, we all get to play sardines because nobody in Westminster can understand that instead of HS2, the money should have been spent on upgrading existing infrastructure, rather than turning the Chilterns upside down to make a well served express route a bit quicker.

That's the real issue with privatisation - we've gone from three party interest of BR, passenger, Govt. to (on Brighton line) seven party interest of Southern, FCC, Network Rail, their respective parent firms, Passenger, Government, Shareholders... no wonder the whole thing has stood still.

d87francis

VTech wrote:

Privatisation is the best thing for any society, where it falls down is with government intervention.
Check out Singapore, they have a rule of 15% government intervention and things just get done, if companies dont get the work done they pay for it, in the UK there are no real penalties and we have around 80% interference.

Singapore is also one of the most unequal cities on the planet. Depends on what you value in society, the rich getting richer, or providing for all in society.

Privatisation is essentially the adoption of neo-liberal economic policies by the likes of Thatcher and Reagan onward heavily influenced by Friedman and Hayek. It has become the dominant economic orthodox for the last 30 years with a mainstream cultural and academic hegemony that fails to recognise economic alternatives. From the first experiments with neo-liberalism in Chile when Pinochet was instilled in power alongside Friedman's 'Chicago Boys' it has failed spectacularly. Neo-liberal ideologies of privatisation, de-regulation and cutting back of the state have vastly widened income inequality within countries and has generally just benefitted the rich and big business.

Sadly public discourse around economics fails to recognise other economic systems, with both mainstream political parties supporting neo-liberal austerity and further privatisation, offering no democratic alternative. That being said the IMF, World Bank and many senior economists are starting to entertain different ideologies to those of privatisation in the face of such robust empirical data on it's negative effects on society.

If you are interested in privatisation's effects on society I would recommend looking at Joseph Stiglitz, David Harvey, Alex Callinicos, Naomi Klein or Slavoj Zizeck's work.

VTech

I know there are pros and cons but it does work. The issues we have us government interference which has always had a history of costing us millions. If you have set contracts you keep people in work, you stick to set schedules and work just gets done.
I work a lot in Singapore and I've yet to see any work sit there without being done. Power is always on and the place is spotless.

finchy

Singapore is a city state with a completely different mentality and set of traditions to the UK. There is absolutely no way of comparing the two countries, it's chalk and cheese.

We really need to be comparing ourselves to our European neighbours - quite high population density, similar demographics and Western traditions.

VTech

Its not that that is the issue, the question related to Privatisation and if it worked, the simple answer is that when governments get over involved it doesnt work, when they dont and instead set limits and restrictions it works, im not making anything of this, its just fact.

Imagine a building contractor or your architect setting restrictions on your builders, if they go over they have to pay, they set aside a retainer and on the whole it works very well, you never see a "homes from hell" programme where a retainer was in place !

The government should instead have departments for contract control with strict guidelines and a proper team (I would farm this out to the likes of Deloitte who would manage the contracts.
Work would get done, you wouldnt get 5 years of motorway disruptions with no work being done, you wouldnt have issues with projects over running etc etc etc.

As I said earlier in a different thread, the governments number one aim is to keep people in order, to stop people getting too rich so they will never have an incentive to get work done and to stop wastage.

Frank the tank

Certainly utilities and transport, health and social services, education,prisons,police,railways should be public services.

Pretty much everything else private enterprise, however I don't feel any govenment should stand by and watch any valuble industry go to the wall.

spen666

Frank the tank wrote:

Certainly utilities and transport, health and social services, education,prisons,police,railways should be public services.

Pretty much everything else private enterprise, however I don't feel any govenment should stand by and watch any valuble industry go to the wall.

How do you define valuable?

If an industry is going to the wall, then by definition enough people do not think it is valuable

Jez mon

spen666 wrote:

Frank the tank wrote:

Certainly utilities and transport, health and social services, education,prisons,police,railways should be public services.

Pretty much everything else private enterprise, however I don't feel any govenment should stand by and watch any valuble industry go to the wall.

How do you define valuable?

If an industry is going to the wall, then by definition enough people do not think it is valuable

Or an individual company operating in an industry has been poorly managed/over ambitious. Rolls-Royce for example went into so much debt designing the RB211 that it had to be rescued by the tax payer, the engine transformed Rolls to a global player in the engine market, and it's now a rather successful company.

Of course, a true capitalist would say that Rolls should have gone bankrupt, another company would have been able to fill the gap left by them, and buy any IP related to the new engine so no real net loss. All that is true, (but I'm guessing) that other company would probably have been GE or Pratt and Whitney, which is rubbish news for the UK.

Garry H

Frank the tank wrote:

Certainly utilities and transport, health and social services, education,prisons,police,railways should be public services.

Pretty much everything else private enterprise, however I don't feel any govenment should stand by and watch any valuble industry go to the wall.

Agree with that in general, but if the industry has any value, it will not go to the wall and the market should decide. What govt should do here is assist workers in the transitionary stages, not let it sink like the Titanic, like "that fookin Thatcher" did with the coal industry.

Frank the tank

Jez mon wrote:

spen666 wrote:

Frank the tank wrote:

Certainly utilities and transport, health and social services, education,prisons,police,railways should be public services.

Pretty much everything else private enterprise, however I don't feel any govenment should stand by and watch any valuble industry go to the wall.

How do you define valuable?

If an industry is going to the wall, then by definition enough people do not think it is valuable

Or an individual company operating in an industry has been poorly managed/over ambitious. Rolls-Royce for example went into so much debt designing the RB211 that it had to be rescued by the tax payer, the engine transformed Rolls to a global player in the engine market, and it's now a rather successful company.

Of course, a true capitalist would say that Rolls should have gone bankrupt, another company would have been able to fill the gap left by them, and buy any IP related to the new engine so no real net loss. All that is true, (but I'm guessing) that other company would probably have been GE or Pratt and Whitney, which is rubbish news for the UK.

That is the oustanding example to which I was alluding.

Garry H

Jez mon wrote:

Or an individual company operating in an industry has been poorly managed/over ambitious. Rolls-Royce for example went into so much debt designing the RB211 that it had to be rescued by the tax payer, the engine transformed Rolls to a global player in the engine market, and it's now a rather successful company.

Of course, a true capitalist would say that Rolls should have gone bankrupt, another company would have been able to fill the gap left by them, and buy any IP related to the new engine so no real net loss. All that is true, (but I'm guessing) that other company would probably have been GE or Pratt and Whitney, which is rubbish news for the UK.

But the culprit here is the culture of conservatism that would have let RR go to the wall in the first place. I very much doubt that the same thing would have happened had RR been an US company, working in a US culture. I would wager that private financiers would have being queing at their door.

DesB3rd

RR in the 1970s didn’t seem to have much to offer commercially, it had potential was to be, after years and many more cash injections, a viable player in the commercial, big engine market, albeit as a confirmed 3rd runner in a 3 horse race.

Fair enough if a govt has non-commercial strategic concerns regarding a part of the industrial base, but bailing out troubled “might make some money, someday” entities probably isn’t a first rate industrial policy.

For those who see the RR bail-out as an example of the state having the long-termist vision to give a final-push to a protracted but promising development programme (as opposed to a need to see RoI quickly) , understand that in 1971 the govt had no idea that the RB-211s innovations would provide a relatively cheap, far-reaching development platform for a market-leading range of future engines. RR certainly didn’t; Ralph Robins, RR Civil Engines Director in 1984 – “to develop the RB-211 up to the size range [60,000lb+] would have effectively required designers to start with a clean sheet of paper” - with development costs upward of £1.5bn (read: "which we can't afford")

Frank the tank

RR now have a very large range of power units and are market leaders in some areas, second in others and third elsewhwere. They'll never overhaull GE as they're a massive and very diverse corporation.

d87francis

VTech wrote:

Its not that that is the issue, the question related to Privatisation and if it worked, the simple answer is that when governments get over involved it doesnt work, when they dont and instead set limits and restrictions it works, im not making anything of this, its just fact.

Imagine a building contractor or your architect setting restrictions on your builders, if they go over they have to pay, they set aside a retainer and on the whole it works very well, you never see a "homes from hell" programme where a retainer was in place !

The government should instead have departments for contract control with strict guidelines and a proper team (I would farm this out to the likes of Deloitte who would manage the contracts.
Work would get done, you wouldnt get 5 years of motorway disruptions with no work being done, you wouldnt have issues with projects over running etc etc etc.

As I said earlier in a different thread, the governments number one aim is to keep people in order, to stop people getting too rich so they will never have an incentive to get work done and to stop wastage.

Perhaps you could quantify what you mean by "it works"?

I've just found a useful summary of neo-liberal economics of privatisation and why it's models are presented as fact. I shall paste the introduction:

Neoliberalism is the defining political economic paradigm of our time - it refers to the policies and processes whereby a relative handful of private interests are permitted to control as much as possible of social life in order to maximize their personal profit. Associated initially with Reagan and Thatcher, neoliberalism has for the past two decades been the dominant global political economic trend adopted by political parties of the center, much of the traditional left, and the right. These parties and the policies they enact represent the immediate interests of extremely wealthy investors and less than one thousand large corporations.

Aside from some academics and members of the business community, the term neoliberalism is largely unknown and unused by the public at large, especially in the United States. There, to the contrary, neoliberal initiatives are characterized as free market policies that encourage private enterprise and consumer choice, reward personal responsibility and entrepreneurial initiative, and undermine the dead hand of the incompetent, bureaucratic, and parasitic government, which can never do good (even when well intentioned, which it rarely is). A generation of corporate-financed public relations efforts has given these terms and ideas a near-sacred aura. As a result, these phrases and the claims they imply rarely require empirical defense, and are invoked to rationalize anything from lowering taxes on the wealthy and scrapping environmental regulations to dismantling public education and social welfare programs. Indeed, any activity that might interfere with corporate domination of society is automatically suspect because it would impede the workings of the free market, which is advanced as the only rational, fair, and democratic allocator of goods and services. At their most eloquent, proponents of neoliberalism sound as if they are doing poor people, the environment, and everybody else a tremendous service as they enact policies on behalf of the wealthy few.

The economic consequences of these policies have been the same just about everywhere, and exactly what one would expect: a massive increase in social and economic inequality, a marked increase in severe deprivation for the poorest nations and peoples of the world, a disastrous global environment, an unstable global economy, and an unprecedented bonanza for the wealthy. Confronted with these facts, defenders of the neoliberal order claim that the spoils of the good life will invariably spread to the broad mass of the population - as long as the neoliberal policies that exacerbated these problems are not interfered with by anyone!

In the end, proponents of neoliberalism cannot and do not offer an empirical defense for the world they are making. To the contrary, they offer - no, demand - a religious faith in the infallibility of the unregulated market, drawing upon nineteenth century theories that have little connection to the actual world. The ultimate trump card for the defenders of neoliberalism, however, is that there is no alternative. Communist societies, social democracies, and even modest social welfare states like the United States have all failed, the neoliberals proclaim, and their citizens have accepted neoliberalism as the only feasible course. It may well be imperfect, but it is the only economic system possible.

"Noam Chomsky and the Struggle Against Neoliberalism", Robert W. McChesney, Monthly Review, April 1, 1999.

Garry H

d87francis wrote:

Perhaps you could quantify what you mean by "it works"?

I've just found a useful summary of neo-liberal economics of privatisation and why it's models are presented as fact. I shall paste the introduction:

Neoliberalism is the defining political economic paradigm of our time - it refers to the policies and processes whereby a relative handful of private interests are permitted to control as much as possible of social life in order to maximize their personal profit. Associated initially with Reagan and Thatcher, neoliberalism has for the past two decades been the dominant global political economic trend adopted by political parties of the center, much of the traditional left, and the right. These parties and the policies they enact represent the immediate interests of extremely wealthy investors and less than one thousand large corporations.

Aside from some academics and members of the business community, the term neoliberalism is largely unknown and unused by the public at large, especially in the United States. There, to the contrary, neoliberal initiatives are characterized as free market policies that encourage private enterprise and consumer choice, reward personal responsibility and entrepreneurial initiative, and undermine the dead hand of the incompetent, bureaucratic, and parasitic government, which can never do good (even when well intentioned, which it rarely is). A generation of corporate-financed public relations efforts has given these terms and ideas a near-sacred aura. As a result, these phrases and the claims they imply rarely require empirical defense, and are invoked to rationalize anything from lowering taxes on the wealthy and scrapping environmental regulations to dismantling public education and social welfare programs. Indeed, any activity that might interfere with corporate domination of society is automatically suspect because it would impede the workings of the free market, which is advanced as the only rational, fair, and democratic allocator of goods and services. At their most eloquent, proponents of neoliberalism sound as if they are doing poor people, the environment, and everybody else a tremendous service as they enact policies on behalf of the wealthy few.

The economic consequences of these policies have been the same just about everywhere, and exactly what one would expect: a massive increase in social and economic inequality, a marked increase in severe deprivation for the poorest nations and peoples of the world, a disastrous global environment, an unstable global economy, and an unprecedented bonanza for the wealthy. Confronted with these facts, defenders of the neoliberal order claim that the spoils of the good life will invariably spread to the broad mass of the population - as long as the neoliberal policies that exacerbated these problems are not interfered with by anyone!

In the end, proponents of neoliberalism cannot and do not offer an empirical defense for the world they are making. To the contrary, they offer - no, demand - a religious faith in the infallibility of the unregulated market, drawing upon nineteenth century theories that have little connection to the actual world. The ultimate trump card for the defenders of neoliberalism, however, is that there is no alternative. Communist societies, social democracies, and even modest social welfare states like the United States have all failed, the neoliberals proclaim, and their citizens have accepted neoliberalism as the only feasible course. It may well be imperfect, but it is the only economic system possible.

"Noam Chomsky and the Struggle Against Neoliberalism", Robert W. McChesney, Monthly Review, April 1, 1999.

But what do you think?

d87francis

Well I posted it because I heavily agree with it. I think in terms of why neo-liberal pro-privatisation mantra is so widely adopted and allowed to spread unquestioned or purported as fact, has a lot to do with a Gramscian cultural hegemony instilled through the media and much of academia. Certainly a lack of public discourse around economic alternatives or an othering of more radical economics that could at least shift discourse back to including a keynesian or social democratic model feeds into it. False oppositions in parliamentary politics also play into it. Many think that because both labour and the tories support neo-liberalism that there is no alternative.

It's generally the wealthy elite who benefit from privatisation whilst the rest of society fall by the way side. Despite what they tell you on the whole the wealth doesn't trickle down, and the wealthy are not the job creators, quite the opposite they are more than happy to cut employment through further outsourcing, replacing workers with technology and shifting production abroad with ease because of 'free trade'. What's worse is that free trade enables corporations to use the threat of relocation to bully states into further lowering of taxes and duties by the threat of relocation. On the whole it's rare for corporations to relocate entirely, especially in more service based economies.

Furthermore, Neo-liberalism is a pretty hypocritical ideology. There's no such thing as a free market; even if you completely abolished the state, which most, other than complete nut jobs, disagree with. Neo-liberals fail to recognise the power and influence large corporations exert over 'free markets'.

VTech

I've no idea why you posted that, I wasn't suggesting that was the way.

VTech

Garry H wrote:

Frank the tank wrote:

Certainly utilities and transport, health and social services, education,prisons,police,railways should be public services.

Pretty much everything else private enterprise, however I don't feel any govenment should stand by and watch any valuble industry go to the wall.

Agree with that in general, but if the industry has any value, it will not go to the wall and the market should decide. What govt should do here is assist workers in the transitionary stages, not let it sink like the Titanic, like "that fookin Thatcher" did with the coal industry.

There is a conspiracy theory that it was meant to happen to divert to gas. There was a programme years ago that suggested that AS was the puppet leading the lemmings over a cliff whilst gas was pumped into almost every house in the UK.
Striking for such a long time was doom for the coal industry, thatcher didnt back down, maybe she controlled the puppet ?

Garry H

VTech wrote:

There is a conspiracy theory that it was meant to happen to divert to gas. There was a programme years ago that suggested that AS was the puppet leading the lemmings over a cliff whilst gas was pumped into almost every house in the UK.
Striking for such a long time was doom for the coal industry, thatcher didnt back down, maybe she controlled the puppet ?

Do you mean a conspiracy involving Scargill and that Thatcher? Seems unlikely to me. Couldn't have done much harm to gas privatisation though; "If you see Sid, keep schtum!". However, I still don't have gas in my home

My main bone is that Thatcher had a duty for all those miners and their communities. Instead she let them become "collateral damage" in her personal battle with that tw@t Scargill. That the coal industry was facing a major decline I believe is without question, but the way she went about it was utterly without compassion.

tiredofwhiners

d87francis wrote:

Neoliberalism is the defining political economic paradigm of our time -

No, its a word that the Guardian readership use to blame everyone except themselves for the mess the country is in. The only papers that even use the expression are the left wing ones, looking to blame the current crisis on those who were not in power when Labour destroyed the balance of the economy.

Its interesting that the quote is from 1999 which was long before anyone complained about what was going on. All the supportive whoops from Monbiot and Toynbee at the time about how wonderful Labour was as a socialist government, and how it was restructuring society in away they supported, was immediately dismissed as soon as someone had to pay the bill. Your whole claim that trickle down not working is true up to a point, but what is 100% certain is that trickle up and state creation of industries doesn't work either. State institutions are almost by definition, incompetent and too high a cost. They only work as a 'last resort' provider such as the NHS or military. There is literally nothing else that cannot be done better or more efficiently by the private sector.

Thatchers responsibility was to the country as a whole, not just the miners and as the miners had publicly stated it was their intent to bring down the elected government, they deserved 100% of what they got. They were not collateral damage but were the target - a self-interest group looking to keep themselves living beyond their means at the expanse of everyone else. Just the same as British Leyland but without the violence.

A bit like the housing crisis in the 80's we will live and learn through this crisis. What we will learn is that giving the government an ever increasing amount of our earned money does not give you much in return, so people will want low taxation, and unless you get an education, get a job and work hard, the state is not going to be able to keep you. If you're 18, no qualifications and a bad attitude, then there will be no job for you at all and you'll have to learn to live in poverty or go and get an education.