Monday 17 January 2011

Privatisation Doesn't Work

Few things can be more obvious than that Margaret Thatcher was wrong. Wrong about closing the coal mines and wrong about introducing the poll tax but the greatest thing that she got wrong was her policy of privatisation because it just doesn't work.
The spread of the privatisation movement is grounded in the belief that market competition in the private sector is a more efficient way to provide services provided by the Government and allows for a better deal for us.
In practice, however, it increase costs, lowers the quality of services and leads to rising unemployment because simple logic tells us it's impossible for the private sector to deliver the same service for less and make a profit as well and making a profit is the only reason they are there.
Private companies exist to make a profit for their investors even if they are providing a service to the public, and the only way to increase profit is to reduce the money they pay out (wages) or increase the money they bring in (prices), both of which comes at a huge cost, financial and personal, to the public.
Cutting jobs does not mean cutting out the work those people once did, those who remain see their workloads increase resulting in the public receiving a standard of service less than they received formerly.
We are unlucky enough to see first hand today the results of Margaret Thatcher and her Governments round of privatisations in the 1980's and 1990's when she sold off the electric, gas, water, railways, council homes and telephones services.
The sale of these industries raised £48 billion for the Government and left us with a legacy of poor service and spiralling costs. Take a look at your utilities bills and wonder why your gas and electric has gone up by 10% this winter while Centrica, which operates British Gas, published figures stating a £922 million profit and shareholders enjoying an 18% gain in the value of their holdings .
An amazing 4.5 million households are living in fuel poverty, spending over 10% of its income on heating their homes and that was before the latest round of 7%-10% price increases across the board yet gas and electric companies are making billions in profits.
Now David Cameron is picking up the Thatcher baton and is looking to privatise schools, Royal Mail, forests, motorways and the National Health Service.
We know how this will turn out and we know that there will be a Government charm offensive to convince us that this is the best thing to do for us all with the excuse being the reduction of the deficit.
We know because we have been here before and it doesn't all turn out okay, it ends up with swelling unemployment, poor service and private companies bleeding us dry to make a profit.
Balance sheets are by nature unconcerned with suffering or providing anything to anyone at a loss and that is where the Conservative Party is leading us unless we can find a way to bring this folly of a Government policy to a screeching halt.

12 comments:

Anonymous said...

Lucy,

i think yawl should go the other way. your government should also take over groceries, farming, auto manufacturing, clothing manufacturing, movie making, home construction, everything! then yawl can have as good a life as others like the cubans and north koreans.

q

Cheezy said...

Government-approved movies... (shudder, wince)... I hope I'm never one of that 'yawl'!

The fact is that although the more extreme rhetoric that you hear nowadays would have us believe that certain places and people are 'socialists', 'right wingers', 'libertarians', 'anarchists' (etc, etc, etc), when you come right down to it, these labels only refer to relative values, as most of us subscribe to the belief that a mixed economy is the best way to run a country, in which some tasks are best left to the government and some to the private sector. We may disagree - vociferously - about the correct 'split' between public and private, but at the end of the day it's all different forms of fundamentally the same thing.

(Unless, as Q notes, you think that the North Koreans have gotten it right... and very few people really do believe this... and those that do would soon change their minds if they actually went there, I would guess).

My own position is that the 'default' setting for an economy should be private i.e. any task that doesn't have solid practical reasons for being run by a government monopoly should be up for tender to be run by private interests.

But which areas would be best served by which sector can change over time of course e.g. the 'dragon economies' of the far east were only able to develop so quickly in the 1960s and 70s with a very high level of centralised planning. Once it was underway the government could strategically withdraw and let them 'sink or swim'...

Thatcher didn't get it all wrong, but she did preside over a massive decrease in the nation's manufacturing capacity and a general switch from being a country that made things, to one that only sells things (i.e. huge reliance on financial services/ City of London). And Blair/Brown did not reverse any of this.

Some of this was due to macro-economic factors (getting outcompeted by lower wage economies in the burgeoning age of globalisation), but it was also 'ideology' (even the word scares me).

Chris said...

Damn right Lucy. My gas and electric bills are outrageous while these bastards are racking up billions in profits. And then people try to defend it??? So how come you are fine with being taken for a mug by health insurers there q? Last time i looked you were way down the list of the the worlds health care systems. Remind us how much you pay for that honour again.

Lucy said...

I remember the Government safety films from my younger days q, the Green Cross Code and the Green Cross Code Man went on to be Darth Vader. That's what UK Government films are all about, crossing the road safely while you overthrow the Empire.

Cheezy - While the likes of the privatised railway and telephones irk me because they are screwing the cutomers left, right and centre, they are not must-haves but the gas and electric suppliers know that whatever they put their prices to, we HAVE to have them and that really gets my goat. We are over a barrell and they know that and a few old people dying due isn't going to stop them putting profits first. And now the NHS so how long before stories come out about people dying because they couldn't afford to visit the hospital like happens in America or health insurance becoming the norm.

Chris - coughcough - USA 37th in the WHO ranking and 1st for most expensive - coughcough.

David G. said...

It's hard to believe that there are people who still argue that capitalism is the best economic model. It's even harder to believe that Americans could hold this view given that their Government is owned by the corporations.

Surely, most have heard of the GFC which was caused by capitalist greed and unscrupulous traders. That's what happens when you allow largely unregulated private enterprise.

Capitalism has failed though it has made a handful of people very rich. It's time to set up a new economic paradigm, one that ensures that everyone shares equally in the planet's wealth and one that punishes the greedy.

Lucy said...

I'm with you on this one David Privatisation and Capitalism are the emporers new clothes, nobody in any powerful post is going to stand and say 'wait a sec, what are we doing? This whole thing is a crock'.
Q is part of the corporation so he was never going to agree, he and Cody are far too busy eating their lunches with real gold knives and forks off of diamond encrusted plates and napkins made of 20 dollar bills.

Cheezy said...

"It's time to set up a new economic paradigm, one that ensures that everyone shares equally in the planet's wealth and one that punishes the greedy."

Everyone shares 'equally'? Do you really think this is possible, David? Interested to hear your response...

Cheezy said...

"the gas and electric suppliers know that whatever they put their prices to, we HAVE to have them and that really gets my goat. We are over a barrell"

Fair point Lucy, and don't forget the cabal in charge of oil prices... Reminds me of this great quote from no less a person than Adam Smith:

"When people of the same trade meet together, even for merriment and diversion, the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."

Except these days they don't actually have to meet of course...

Anonymous said...

Good one Lucy. Everybody has something to say!

Chris says “1) My bills are outrageous while bastards rack up billions. (2) how come you are fine with being taken? (3) you way down list of health care systems. (4) Remind us how much you pay”
1. I have no interest in UK profits. If the billions are divided equally (or does equal mean pro-rated based on net worth) among people of UK what does it do? Decrease bill $50 annually?
2. health care & health insurance are different. US law requires hospitals to provide ALL Americans (+illegal aliens) emergency care. Every hospital has an emergency room and none can be denied. The cost goes to tax payers. Every city (100k+) has a hospital with health care at no charge (tax payers provide). I’m within an hour of 2 hospitals (Austin & San Antonio) where I can get treatment without pay (thanks tax payers). RECENT DATA SHOWS ONLY 40% OF AMERICANS PAY TAX – IT ANI’T THE POOR! Many Americans utilize military health care. My veteran friends say VA services are good. VA took good care of my uncles & dad. We have church systems: Methodist, Baptist, Catholic, Jewish that provide good hospitals & care (much charitable). San Antonio has Methodist, Baptist and University of Texas Health Center. Yep, universities offer subsidized care (thanks tax payers). So do private universities (Harvard). And we have unpaid volunteers. My brother-n-law gives 2 weeks a year NO-CHARGE. He gave 2 weeks in Honduras & a cousin of mine went to Haiti. It is hard to imagine that someone can’t get health care if they need it. We even get subsidized flu shots at Wal-Mart. Our system is complex. Not surprising since it began 1950 and has rapidly changed at local, state, and federal levels 60 years. That leads to cost which is why Americans support reform (including me). But not the big gov shite crammed in our throats!
3. WHO says... big deal. Who cares about WHO? I assume we could be #1 if Americans were willing to pay West Euro tax levels. "How much does it cost to be #1, is it worth it?" 4. For my family (Q, wife 2 daughters) the annual premium is $1,800. It has a $5k deductible, but we have saved (thru healthy life style & luck) a $10k health account we can use to pay the deductible (no out of our pocket cost). Annually, this is less than our federal tax (far less), social security tax (far less), medicare tax (far less), property tax, mortgage, food (far less), energy (far less), cable, clothing, and phone.

Lucy says “USA 37th in the WHO ranking and 1st expensive.” All nations have contributed to health care advances, but none approach contributions of US - DAMN greedy bastards for advancing health care! The world has benefitted from the expense occurred by the US. It wasn't the government. It was nasty corporations and doctors driving advance.

Lucy says “Q is part of the corporation so he was never going to agree...”
WRONG – I DISAGREE BECAUSE I THINK YOU’RE WRONG. I was first in my family to go to a corp. My granddads, dad, uncles & cousins all own businesses. 2 of my sisters are teachers, one sister owns a business. Our church has 12 employees and provides health ins. Teachers have health ins. City and county employees have health ins. Big corporations offer health ins. Americans that don’t have health ins are: poor who get health care without paying, and small corps (95% of Americans working in private sector work for a company with under 500 employees)

David says “Capitalism has failed...”

No argument some people are very rich. That is not limited to America or capitalism: Chinese elite are very rich. Cubans get far less than Mr. Castro. The Russian elite mafia are in their own class of wealth. The Arab world is most extreme. African nations exemplify wealthy & sub-poverty. India had extremes long before capitalism. It is easy to criticize, hard to improve. What is your solution David? What do you mean by equal? What do you mean by greedy?

Q

Nog said...

Completely unrelated to the present argument:

I was looking at your picture of Thatcher, and I am wondering has the Obama hope picture (with the four colors and the one word at the bottom) become "a thing"?



-Nog

Anonymous said...

In the US we have many government controlled services. Some seem to do well but don't have competition so it is hard to tell. some suck as proven by the private sector.

- FedEx and UPS make the US postal service stink.
- the best universities are private (harvard, yale, MIT, rice vanderbuilt,princeton, stanford)
- though some public schools are good (berkley, UCLA, texas a&m, university of texas, university of north carolina, university of virginnia, university of michigan) but none are federally managed
- public and private prisons both suck (private are cheaper)
- we have no federal ultilities (xecpt maybe the TVA), but local utilities have trouble competing with private co-ops
- roads are managed by local, state, and federal government, but the work is done by private companies.

what is wrong with the UK that the government sector is always better than the private sector?

q

Lucy said...

The UK private sector is greedy. All the things i mentioned that Thatcher privatised, the price has rocketed which as i said to Cheezy, is irksome in the case of phone lines etc but disasterous for things like gas or electric.
I stand by my claim that privatisation doesn't work or rather it does work, but only for the firm that does the taking over.