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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 com
by wolframhempel 3y ago
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’s a shared, standardized network that needs to be maintained by all market participants a lot of the mechanisms that make privatization appealing don’t apply anymore and you basically end up with the same tragedy of the commons only in private hands.
I believe the best way to make this work is by keeping the network itself in public hands and then having a competition of contributors to the network - e.g. electricity providers that add energy to the grid.
- juujian 3y agoIt'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.
- mrfumier 3y ago"And you don't extract profits from a rail line by offering the best service." So how do you extract profits then?
- aloisdg 3y agoYou don't.
- notahacker 3y agoBy raising the prices of your local monopoly to the yield-maximizing level whilst cutting overheads as much as possible.
- waldothedog 3y agoMinimizing costs and competition?
- giaour 3y agoOffering 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.
- dffdsa432 3y agoThe USA's rail lines are privatized and they're anything but "shitty" and "expensive" considering they're lower cost than trucking.
- lostlogin 3y agoUS rail has been in the news lately, with apocalyptic skies and chemical rain. Safety issues abound. What are you seeing that I don’t?
- dffdsa432 3y agoThere are 3 million rail cars moved per day that haven't produced apocalyptic skies and chemical rain. You misrepresent the overall safety of private rail lines.
- katbyte 3y agoUs rail lines are horribly mismanaged https://m.youtube.com/watch?v=jNkYNjADoZg https://m.youtube.com/watch?v=jNkYNjADoZg
- ben_w 3y agoMy experience of American railways as a tourist is having to show my passport to book a ticket from Davis to Sacramento (I assume I also did that on other trips like to SFO but don't remember), and it being expensive. My experience in the UK and Germany is show up, pay, go, and it being cheaper.
- dffdsa432 3y agoUS consumer rail way is a quasi public corporation (Amtrak) that has lost money for decades and is still funded to the tune of over $1 billion per year. You are confusing that with private US rails.
- edf13 3y agoBy 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).
- mnd999 3y agoMinimise investment to maximise profits, which you take, whilst running the minimum service required to avoid contract penalties or publicity so adverse you lose your contract. Then threaten to go bust and get bailed out by the government when the infrastructure starts to break a few years later. At least that’s they playbook they’re all using.
- veltas 3y agoThe infrastructure isn't privatised though, it's maintained by Network Rail.
- bluescrn 3y ago"Privatise the profits, Nationalise the losses!"
- dffdsa432 3y agoWhat about losses from federally funded corporations like USPS and Amtrak that are bailed out every year? Amtrak loses over $1 billion/yr and they are still "nationalized." USPS loses multi billions per year.
- ehnto 3y agoUSPS costs billions, public services don't need to be profitable they just need to be paid for. Taxpayers pay for it with their taxes. When we sell our public investments for a quick buck we complain when the real cost of the service gets priced in. The trouble is, we pay the same taxes still, they just no longer go to the service we privatised, so we feel it in the pocketbook individually. Presumably those taxes are going elsewhere now, but I was very happy with them going to core public services.
- cycomanic 3y agoThe USPS is "loosing" money because it was told to prefund it's Healthcare having to set aside $100 billion in 10 years (unlike any other company) . Moreover, it's much more a service than a business, e.g. it can not really set its own prices. https://www.barrons.com/articles/usps-louis-dejoy-post-office-pelosi-mail-in-ballots-51597687253 https://www.barrons.com/articles/usps-louis-dejoy-post-offic...
- jleask 3y agoCutting corners and costs e.g. shutting ticket offices, doing just enough to barely offer the service. It's not like your passengers have any sensible alternative. If that doesn't do it then you can also load the company up with debt and pay yourself a nice dividend until rates rise.
- danuker 3y ago> load the company up with debt and pay yourself a nice dividend I am new to this. Doesn't a dividend come from profits? What profits are there if you need debt? And who will loan to you if your business plan is to exit scam?
- lmm 3y ago> Doesn't a dividend come from profits? A dividend can be paid with money from any source, it's all money. > And who will loan to you if your business plan is to exit scam? Ambitious junior bankers. Or you get the government to guarantee your debt.
- scott_w 3y ago> What profits are there if you need debt? And who will loan to you if your business plan is to exit scam? If you’re a water company, after government bailed out the banks, chances were good you’re not going bust. What are they going to do? Let the entire population of London die of dehydration?
- toyg 3y agoAnd since a lot of investors in large utility companies are international, should the government somehow not make them whole (or worse, just expropriate), there would typically be repercussions - with international arbitration courts adjudicating reparation with processes that are typically stacked in favour of businesses. It's a sham market.
- scott_w 3y agoI just explained the thought process, I never said it was guaranteed to hold true.
- jahnu 3y agoBy competing to make the best rolling stock, online booking systems, catering, cleaning services, etc. These contracts should be put out to tender and should the promised level of service not be delivered then contracts should be lost and/penalties applied where necessary. Most important is that the target service coverage, quality, etc should be decided by government (who should be seeking to please voters), not corporations who are seeking to please shareholders.
- hsjqllzlfkf 3y agoCut costs. And if youre in a monopoly position, you can in addition prices. I mean, do you really not understand how earnings are calculated, or are you trolling?
- mrfumier 3y agoI don't understand. If it's a monopoly, it's not a free market, by definition. Seems like you are the one trolling here.
- lmm 3y agoTrains are a natural monopoly, that's why lassiez-faire policies don't work.
- hsjqllzlfkf 3y agoYou asked how profits are extracted, and I answered your question. Now you're bringing up monopoly vs free market, which has nothing to do with the question.
- cjrp 3y agoThe award of the contract to run that particular collection of routes is ostensibly free-market. Once it's awarded, they hold a monopoly for the duration of the contract though.
- HWR_14 3y agoNothing about a free market precludes a monopoly from existing. I have no idea why you would think that was the case.
- ClumsyPilot 3y ago> it's a monopoly, it's not a free market, by definition It is a free market, you are free to open your own water company and build your own water pipes or deliver water in bottles. No one is stopping you
- lifeonlars 3y ago
- juujian 3y agoBy running your lines on a shoestring budget, how else would you? The contacts have a fixed life time, keep your expenditures low and you can extract the highest profits. Long-term maintenance in particular suffers after privatization, because why would you, that doesn't align with your goals. And the risk is nill, because the government needs to provide the services so if things go awry you have little too worry about. They will have to bail the line out. Just find a way to move money from the entity to shareholders while you can and you're good, they are not clawing that back.
- oaw-bct-ar-bamf 3y ago1.) Force other competitors to go belly-up or buy them to create a Monopoy or if the authorities don‘t let you do that, try to end up in a duopoly situation where you and your competitor come to some silent agreement to not overly compete. 2.) Raise the regulatory bar to prevent startups from entering your field. Milk whatever half dead infrastructure you have and people depend on. Oh and raise prices every odd year while still not investing in the rotten infrastructure. Somehow investors need to see growth and dividend payments. Due to 1.) there is no competitor left that could offer a better service. People cannot simply switch. Die to 2.) you are not in danger of ever having to face situation 1.) again. Job of the government is to not let 1. and 2. happen.
- deleted 3y ago[deleted]
- timmb 3y agoBy stripping and selling off as many assets as you can and borrowing as much as possible leveraged on the income from future fares. There is no incentive to spend this on long term investment or contingency planning. The railways are an essential service so the government will always have to step in when the private company reaches breaking point, so no money is saved by the state in the end. It’s just disguised debt with terrible interest rates.
- dffdsa432 3y agoAmtrak, a public rail company gets over a $1 billion in public funding. Private rail lines do not. Amtrak has operated at a loss for decades unlike private rails.
- DFHippie 3y agoYou are comparing completely different services, though, right? Private freight lines versus passenger? Amtrak runs on lines owned by the freight companies. I've been on an Amtrak train that had to sit on a siding while a freight train passed. The passenger service has to have a published, predictable schedule. The freight moves when it is needed and breaks the Amtrak schedule, leaving a crap passenger service. I think the extent to which freight shoves aside passengers varies from region to region. My worst experience was going to West Virginia from DC. I find the Vermonter keeps its schedule pretty well.
- ClumsyPilot 3y agoSo? In 2014, a total of $416 billion was spent on highway and water infrastructure
- lifeonlars 3y agoA "loss" here is just a politicized framing of the fact that government pays Amtrak to do something of use to society. You might as well say that the US military makes a $1 trillion loss per year. No, they supply something which is required by the govt and which has a cost.
- deleted 3y ago[deleted]
- iamacyborg 3y agoExtracting short term profit isn’t hard, and that’s all these investment funds that operate on short time scales are looking to do. There was an excellent book on the subject published this year called Our Lives in their Portfolios[^1]. [^1]: https://www.ft.com/content/7da72f9c-978b-41e7-8e4b-478818f7456f https://www.ft.com/content/7da72f9c-978b-41e7-8e4b-478818f74...
- BiteCode_dev 3y agoYou milk the captive market.
- lostlogin 3y agoSell off assets, get subsidies, understaff, rundown and don’t maintain equipment. Provide a shit service. When bankruptcy comes up you’ll be bailed out.
- jacknews 3y agoJust like all PE; take on huge debts ostensibly to fund expansion, efficiency, etc, and then ... give the loaned cash to shareholders.
- wodenokoto 3y agoRail lines have inherent competition in form of trucks and boats (for transport of goods) and cars, busses and planes (for transport of people) and rail is often outcompeted by these as they don’t require large station in expensive real estate. So the example of rail doesn’t really apply to this branch of the discussion. However, once you’ve bought a house, it is very difficult to to but in new pipes from a different water works.
- katbyte 3y agoDeferring maintenance, focusing on how to make the most per dollar spent, making your workers lives terrible, ignoring safety. Here is how that works in American railways: https://m.youtube.com/watch?v=jNkYNjADoZg https://m.youtube.com/watch?v=jNkYNjADoZg And why they are on a road in implosion.
- ModernMech 3y agoBy making sure there’s no water fountains on the train platforms, yet plenty of kiosks and vending machines that sell water. I was just at EWR last night waiting for an arrival and there was an old man looking for water. He asks an employee where to find some and she looks at him like he has two heads. “You have to buy some. Or you can drink out of the faucet in the restroom” Can you imagine that? Telling an old man at 1am he has to drink out of a bathroom fixture to quench his thirst. In my mind, I was hoping he was flying to a more civilized country. Because that’s the system we’ve built for ourselves. In a better present, the man would have access to a drink for free. But because a profit needs to be made, the entire airport is organized around little nickel and dime scams.
- drsnow 3y agoThis is the way the world works now and anyone who disputes the justification of it just gets neatly added to the pile of "complaints" burned by elites for warmth.
- dffdsa432 3y agoDo government unions not try to maximize their profits from the public or am I missing something?
- figmert 3y agoThose in the unions are the public.
- Findeton 3y agoThere are way more customers outside the unions that inside.
- dffdsa432 3y agoUsing your faulty logic, the owners of the privatized corporations are public citizens too.
- JumpCrisscross 3y ago> Those in the unions are the public This is a nonsense delineation in systems thinking. That railroad shareholders are also the public doesn't justify ripping them off. Unions are beholden to the same impulses towards monopoly and rent-seeking as corporations. Swap members (i.e. sellers of labour) for shareholders (i.e. sellers of capital) and employers (i.e. buyers of labour) for customers (i.e. buyers of goods and services) and union management starts looking remarkably like its corporate analog, churning undifferentiated workers into a differentiated and thus premium block of labour as truly as a mill grinds forests into houses.
- arethuza 3y ago"That railroad shareholders are also the public" They are the public, just not the UK public!
- ClumsyPilot 3y ago> railroad shareholders are also the public Lets see the shareholders: * French government * Chinese government * Australian banks
- Kiro 3y agoIsn't that the whole point of privatisation? By introducing a profit maximisation goal you (supposedly) create a more efficient operation. I've worked in both the public and the private sector and can definitely understand the argument. In my government job it was way easier to slack off and no-one really cared about the results. There was no actual pressure from above to hit targets. You had your budget and it didn't really matter what you produced. Not hitting deadlines was no big deal. Compared to my normal jobs where there is a constant stress from management to be lean, efficient and hit goals. I hate it but the team spirit is much higher and I probably produce 10x in comparison.
- jraph 3y agoI've also seen many public places where people are efficient, and also stressed because of the amount of work to do. I feel like your experience is not very applicable to all situations. What's more, a private company which has monopoly does not really have special incentive to respect deadlines and everything: it is the only choice, so customers won't deal with any competitor and are stuck with this private company.
- Kiro 3y agoAbsolutely. 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?
- m-i-l 3y ago> "It's even simpler than that ... their goal is to extract profits" According to the article, profit has not been the primary goal for the utilities though, because there is limited scope for extracting profits from uncompetitive essential utility services - the focus instead has been on maximising shareholder returns. So in the case of the water utilities, they "borrowed £53bn in debt while distributing £72bn to shareholders", which of course is what the issue is now interest rates have risen significantly. The article describes this as "the tension between generating strong returns for investors in uncompetitive monopoly conditions and providing high-quality, affordable infrastructure to the public". The end result is still the same though - transfer of wealth in a socially destructive direction.
- lotsofpulp 3y agoHow are shareholder returns and profit different?
- WithinReason 3y ago"borrowed £53bn in debt while distributing £72bn to shareholders" There is the difference
- lotsofpulp 3y agoNo lender is going to lend a business money just so it can pay the owners. They must have used the debt to finance operations, as opposed to cutting the dividend or even putting more money in. This allowed them to continue to have profits in the short term, at the expense of higher interest costs in the long term (which probably cause higher prices for customers in the long term).
- WithinReason 3y agoDidn't InstantPot just go bust for the same reason? Somebody decided to lend them too.
- nip 3y agoYour reply is a cynical take on GP’s comment that was providing a clear, concrete and simple solution to the problem at hand that most countries, especially in EU, are facing. Your comment on the incentives of private companies missed his point about the competition aspect.
- hnbad 3y agoThis is a pet peeve when market maximalists talk about how public services are "inefficient". Efficiency in economics refers to profitability. If a public service isn't profitable, that actually makes it efficient in a practical sense because a public service being profitable would mean it is overfunded (i.e. it's receiving more funding than it needs to operate). In practice this often means politicians will squawk about how a given public service that is inherently a cost center is "inefficient" (which is true in the economic sense because it is designed to use its entire budget and thus doesn't extract a profit), impose austerity by cutting its "bloated" budget (which is justified by also cutting the workforce and other cost factors) and then repeating this process until the public service is inoperable and its failure is seen as a demonstration why it must deseperately be privatised and sold to the highest bidder (who can now get the monopoly position at a fraction of its potential value). Potential extra steps along the way involve creating a (government-owned) corporation to make it easier to complain about its bad business performance. On a related note, there is an independent "tax payers' association" in my country that makes a big deal about "tax waste" by highlighting (usually fairly small) public works that most often have legitimate uses/explanations but may seem absurd/wasteful at first glance but largely prefers to stay silent when it comes to business subsidies and such. They have a clear ideological bias and while the media seems to be somewhat aware of this, it's always interesting to see journalist report on inadequate welfare programs in the same breath as mentioning (and using b-roll of) the public "national debt clock"[1] installed by this association. [1] The most recent example was a segment on youth debt stemming from welfare overpayments their parents received (which under the legal system at the time was partially imposed on underage children in the same household even if they didn't have any money - the law was recently changed so they could only be held liable for the amount of money they owned at their birthday when reaching the age of maturity). Ironically this debt was the direct result of the kind of legislation to cut "tax waste" (in this case: welfare overpayments) the association generally advocates for. The hook was something like "the government can be billions in debt but for a young person a much smaller amount can be life-ruining" but the lack of reflection was astonishing.
- red-iron-pine 3y ago> This is a pet peeve when market maximalists talk about how public services are "inefficient". Efficiency in economics refers to profitability. If a public service isn't profitable, that actually makes it efficient in a practical sense because a public service being profitable would mean it is overfunded (i.e. it's receiving more funding than it needs to operate). Ehhhh... nah. There is still a cost vs. return. Postal Services, for example. $10 ships 1.1 packages on average, or they get efficient and $10 ships 1.9 packages, etc. You absolutely see this in things like Medicare where $100 worth of spending doesn't get you 90-100 generic aspirin, but more like 20 pills, and the rest of it goes to pay middle men.
- captainbland 3y agoYeah exactly. In fact anyone who believes in markets should laugh in the face of private natural monopolies as an obviously terrible idea. The UK structures water provision as regional monopolies. This should be a hilarious joke but it's the reality. You can't change water company without living in a different region. There is no effective market competition for water provision in the UK. We already rely on price caps to keep this state of affairs in check. Pretty much the only argument that almost stands up for them is that they're quite good at contributing to private pensions as a byproduct of being good stocks because people need water to not die. We gloss over where the rest of the money goes, possibly into PR management around frequent sewage dumping.
- TremendousJudge 3y agoDoesn't it go into dividends for the owners?
- captainbland 3y agoYeah to an extent, I admit that last statement was a little bit of a barb although I felt the topic of dividends was implied by the part about stocks etc.
- makomk 3y agoNo, that's not it. They make sense as investments for things like pension funds because what those pension funds need is basically the other side of what's needed to have infrastructure like water and sewage treatment: the pension funds have a bunch of up-front money that they need to turn into a reliable income stream, whereas providing water and treating sewage has a bunch of up-front cost to buy/build/upgrade the infrastructure but only receives money slowly over time from people using that infrastructure. The British media has been obfuscating this because for partisan political reasons they want to convince people that having to pay for things that they directly use and benefit from is somehow stealing from them, and that the fair solution is for Canadian teachers' retirement money to be used to deal with their literal shit for nothing in return. So far it's been working astoundingly well.
- 3y ago
- dTal 3y agoThis is one of those times where the math is so simple that it's baffling that anyone misses it. When a private company must 1) do the same job as a public service while also 2) coming up with surplus bags of cash to hand over to investors and shareholders, how can it possibly be more efficient?
- ciconia 3y agoFree 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: privatizing the profits, nationalizing the losses.
- wolframhempel 3y agoSo, 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.
- Nursie 3y ago> Free markets are the most effective way to facilitate technological progress and economic growth which indeed benefits everyone - although not in equal amounts. When employed in the right place. It's very much not clear that train networks are that place, in fact I'd say it's quite clear in the UK that train networks are not that place.
- naijaboiler 3y agoexactly. Free markets don't work in situations where there is natural monopolies.
- fy20 3y agoMy country recently (2019) privatized the electricity supply. The infrastructure is owner and operated by a government entity, but the company you buy electricity from is a private entity, and you can choose which supplier you use. Generation was already privatized a long time ago. It was advertised as being able to offer lower prices to the consumer through competition, but all it has done is provided more ways for private companies to extract money from the general population. Previously electricity prices were overseen by the government, and I don't really understand how a private company could do that any cheaper. There was already a market for the spot price that electricity was sold at by producers, so all the entity you bought it from had to do was balance the books. Any excess would have been put towards the balance for the next period, but now it goes to the owners of the company.
- avidphantasm 3y ago> but all it has done is provided more ways for private companies to extract money from the general population. Then the system is operating as it was designed to. This is the coercive law of competition in action. And regulation won’t help in the end. Ultimately, without an overarching ideological project beyond capital accumulation, the motivation to accumulate wealth dissolves all social bonds that enforce trustworthiness, so regulation is doomed to fail due to bribery and petty corruption.
- XorNot 3y ago"Laws are sometimes broken therefore why even bother having laws?" We don't make murder legal because it still happens, and the existence of corruption doesn't make regulation a bad idea - it means we need to clamp down on corruption. White collar crime has good PR representation, and that needs to stop.
- a1o 3y agoI think both of you are correct, but what this implies is a different system - we would need to put resources into figuring it out how this system would work.
- 3y ago
- pydry 3y agoThis was obvious since the first wave of privatizations were kicked off in the 80s but somehow they still managed to build a cult around it. Now the investor cult is crumbling, but we're still supposed to acknowledge that there was a core of a good idea there and they just made a few mistakes and took it too far. That's absurdly generous. Even some of the supposed privatization successes really werent (e.g. British Steel, British Telecom). Even in markets where competition is possible, if the product or service is basic enough, keeping a state run competitor helps inflict market discipline on private actors who need to be kept in check. The UK property is a clear example of where this is direly needed but the cult both prohibits it and has its greedy eyes on the NHS.
- mrfumier 3y agoI don't know in which country you live, but here in France, privatization and opening markets has been salutary. - The phone lines state monopoly was broken, it cut the cost by a factor of 10, and made possible high speed internet. - The packages delivery state monopoly was broken, which lead to a much more improved service, which delivery of fresh food or tracking minute by minute where your package is. - The internal flights state monopoly was broken, which leds to low-cost operator who devided flights tickets by factor of 20.
- pydry 3y agoOpening markets != privatization. There's absolutely nothing wrong with breaking a state monopoly if that's possible, but that's not privatization. The free market cultists pretending that these two things that are very different are equivalent is half of how we got into this mess, in fact. Whilst participants in the utilites market will often complain that it's "not fair" that they have to compete with a state actor, they're often the best way of exerting market discipline on them. This is particularly true in utilities space where private actors unhindered by state competition try to bamboozle their customers into giving them fat profit margins with stupidly complex bills. State run companies that provide a bare bones low profit service that matches what most people actually want inhibit this kind of market abuse.
- sschueller 3y agoBusiness always strives to optimize but while I stand here waiting for the bus I have to witness 5 different package carries battle it out on the tiny road where I live. Can't get more inefficient than that. What's next? Privatization of trash? I have actually seen this with recyclable trash, several companies with different colored trash bags that pick up on different days littering the street. I'm glad some towns have already banned this. Worst part is that they let people mix all recyclables in one bag and then sort at the facilities adding another huge inifficiency. This is a huge eyesore in Switzerland where people will give you the "stare" if you through shit in the wrong bin.
- jacquesm 3y agoPrivatization of trash collection is already a thing in many places.
- magicalhippo 3y agoHere in Oslo they privatized trash collection. The contract period was up and the new winner had won because massively cheaper price. Turned out the winner was massively cheaper because they had massively underestimated the work required. Trash piled up for weeks while the new trash collectors worked illegal amounts of overtime trying to get rid of it. Now, this switch had happened just before local elections, which the right-winged parties who'd been in control soundly lost. The new left-winged leadership ended up canceling the contract and bringing the service back in public hands.
- sschueller 3y agoWhy do we have to relearn this over and over and over? It's such a waste of money which the right should be the ones complaining about. Unregulated privatization does not work because privatization means optimize to the max which includes cutting corners in labor laws to the health the citizens.
- pbhjpbhj 3y ago
- mnd999 3y agoThames water has to be allowed to go bust, and the shareholders need to lose their shirts, because that’s what has to happen when a company is so badly run. Otherwise the abuse will continue. However, I would like to keep my water supply so somebody has to sort this situation out quickly.
- lostlogin 3y agoThe supply hasn’t been looked after, but less obviously, they have been pouring waste into rivers, creeks and the sea. Profit!
- odiroot 3y agoSadly, as a customer of Thames Water, I can say there's 0% chance the gov will them fail. It'll either end up with tax money being pumped in, or a shocking increase of the prices.
- madaxe_again 3y agoRegulation. Regulation regulation regulation. I too believe that free markets are the solution to a great many of the conundrums of organising a society, but I also believe that a strong and socially conscious (by which I mean its prime directive is the enhancement and improvement of living conditions for all of those under its jurisdiction) regulatory hand is necessary. The U.K. has plenty of regulations, and toothless enforcement of practically all of them, to the extent where ignoring them and the ensuing fines are just a cost of doing business. With firm regulation, a free market could operate both profitably and fairly to run public services. As long as there’s a commingling of commercial and political interests, however, this is an improbable reality. The changes would have to start in the culture of government.
- ccppurcell 3y agoMoney is power. Regulation is a fig leaf. Think of taxation: the government makes all the rules on how much tax a business should pay under this or that circumstance. How much tax do the biggest companies pay? Next to nothing, pound for pound. Because they are able to use their money to exert power. Companies will always do this, so regulations will always erode over time.
- madaxe_again 3y agoThis is a function of the form and culture of government - our current system, of professional politicians, is ruinous. I have numerous thoughts on what would be better, such as sortition, or devolution and administrative federalisation, but as long as we have party politics and elections on mass scales, we will have corruption baked into the system. What we have worked reasonably well before mass communication, but with each step of communications technology, one of the core principles of representative democracy - representation - erodes, as the battles become tribal and personality driven on vast scales, and defy ration and reason.
- ccppurcell 3y agoI think we probably agree on a lot of things! I would prefer to increase the relative power of local councils and often think about how to implement some version of sortition. You might be interested in the concept of "random ballot" (that's the Wikipedia page title) if you don't already know it.
- avidphantasm 3y agoBut 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.
- pastacacioepepe 3y ago> In the hands of such practitioners I would call them cultists at this point.
- avidphantasm 3y ago[flagged]
- arethuza 3y agoI really tire of arguments based on ideology - both from left and right. I wish we could just have a sensible grown up discussion about which services are best delivered by the private sector and which by the public sector - there are plenty of both!
- avidphantasm 3y agoAhem, the ideology of rationality and efficiency. The point is, we need stories to order our world and draw us together…
- friendzis 3y ago> But what is the definition of a public good? Whatever the populus via government decides that to be.
- markus_zhang 3y agoPrivatization of public sector has nothing to do with free market. Free market has been dead since the 19th century.
- pydry 3y agoIn the 19th century the cult of the free market was used to justify exporting all of Ireland's food while the Irish starved to death. The cult has only grown in influence since then.
- censor_me 3y ago[dead]
- ClumsyPilot 3y agoIs that roughly when we could freely trade humans and every bank could mint their own currency?
- mrcartmeneses 3y agoThere are two tests that privatisation has to pass. 1. Would it result in a monopoly, if so that’s a fail. 2. Does privatisation add value to the consumer? The evidence on that one so far is absolutely not. In general public services exist as public entities because they would otherwise necessarily be monopolies, and the only lever the public can therefore have is some kind of democratic process. In the case of UK privatisation it’s clear that the policy was merely a wealth-pump designed to extract value from a captive set of consumers.
- avidphantasm 3y ago> Does privatisation add value to the consumer? The evidence on that one so far is absolutely not. I’m sorry but it is a fiction that capitalist seizure of public goods are primarily intended to add value to “consumers”. If this does happen, it is an side effect, and I would argue a temporary one experienced while the system is coasting from the inertia of past public investments. You see the same thing with the victims of leveraged buyouts by private equity. In the end without an ideological project that transcends personal or familial accumulation of capital, all collective enterprises are doomed to failure. This is because people alienated from the motive forces of the collective endeavor at some point stop caring about the forward motion of a system that at best only marginally and diminishingly benefits them.
- spacebanana7 3y ago> In the end without an ideological project that transcends personal or familial accumulation of capital, all collective enterprises are doomed to failure. The public sector is unfortunately a terrible place to pursue ideological projects. Especially in a democracy where the ministers with leadership authority of a department change every 2-3 years and very wide groups of stakeholders need to endorse any substantial change.
- DeathArrow 3y agoFree market works because of competition. When you are privatizing utilities and public services, most often you are creating monopolies, which means no competition.
- DeathArrow 3y agoWhile free market is great, the purpose of a business is to maximize profits. The purpose of a public service like transportation, water or public healthcare is to help people with essential needs, not to maximize profits. Often the two might be incompatible.
- andyjohnson0 3y ago> Unfortunately, none of these apply to the privatization of inherently public commodities that run on top of an underlying network infrastructure. We tried this with the railways in the UK. In the mid 90s the tracks and signalling and most of the stations were transferred to a publicly owned and regulated company (Railtrack), while private businesses competed for franchises to offer train services. But within a few years the government was unable to resist the temptation to privatise Railtrack too. After that we had the inevitable phase of regulatory capture, followed by financialisation of the train operators, leading to position we had at the start of the pandemic where the operators were basically competing to offer minimal services for maximal revenue by subsidy farming. In the absence of regulatory institutions that are able to withstand commercial pressures^W greed, then this approach will always fail. In the UK, regulation of privately-delivered public services has failed due to decades of government by parties that view regulation (and public ownership) as simply undesirable.
- iso1631 3y agoOther way round. Railtrack was a private company on the FTSE. It killed people. Network Rail then took the rail infrastructure back in house.
- aembleton 3y agoAs you're being downvoted, here's more info on the history of Network Rail [1]. From memory, it was formed after the Potters Bar crash and realisation that Railtrack was trying to squeeze to much money out of the network. 1. https://en.wikipedia.org/wiki/Network_Rail https://en.wikipedia.org/wiki/Network_Rail
- arethuza 3y agoThis reminds me of the "Do not fall into the trap of anthropomorphising Larry Ellison." rant - why are people surprised the private companies find any way to squeeze every penny of profit out of the services they run, it's what they do! And in the absence of competition that will be through underinvestment and shitty services (literally).
- gnfargbl 3y ago> I believe the best way to make this work is by keeping the network itself in public hands and then having a competition of contributors to the network - e.g. electricity providers that add energy to the grid. One area -- in fact, the only area that I can think of -- where privatisation has mostly worked in the UK is the telecommunications market. Here the networks are in private hands, but the providers are forced to offer somewhat equitable access to their competitors, e.g. by sharing masts, poles and underground ducts. That, plus the relatively low cost to entry of setting up as a new player, seems to be enough to keep prices down and service levels up. This wouldn't work for transport of or on rail, road, water or gas, because there's no realistic way to force different entities to share the same infrastructure; you can't reasonably set up two parallel gas networks, or run two independent sets of rails. In those cases I agree that we have experimentally proven that socialising the infrastructure was/is the most efficient option. Now we need a government with the political chutzpah to accept that.
- darkclouds 3y ago>where privatisation has mostly worked in the UK is the telecommunications market. Here the networks are in private hands, but the providers are forced to offer somewhat equitable access to their competitors, e.g. by sharing masts, poles and underground ducts. Not strictly true, currently the Govt is subsidising infrastructure providers to the tune of £3000 to £4000 per household for every one that has fibre to the property (FTTP). So a company like this one https://countybroadband.co.uk/ https://countybroadband.co.uk/ needs to get about 30 households signed up, they have 1 year to get the cables laid to their greenbox street furniture, and then then run fibre from village to village until it ends up back in London, probably telehouse. So its costing about £90k per greenbox, and depending on where on the run you are, you might see a bit of a lag if you are at the end of the run in places like north norfolk, but if you live in a village somewhere in essex, ie closer to the main routing points in the UK, then the lags will be less noticeable. This also ignores cloudfare type data centres which cache the most popular content and locate it close to your door. But there's a govt subsidy here going to businesses, in this case infrastructure providers for home users. Now if you take this place https://en.wikipedia.org/wiki/Cwm_Dyli https://en.wikipedia.org/wiki/Cwm_Dyli its got fibre which it had to pay for and cost £200,000 a few years ago when it was strung up the poles. But its also benefited everyone in the area who didnt have to put their hand in their pocket, but the fibre is somewhat exposed on the telegraph poles imo. There is actually alot of fibre already in use in the UK, because fibre doesnt really change, so the improvements in fibre come from lower costs and improved compression ratios by detecting the traffic type and then compressing it, which requires a level of oversight on everyone's internet traffic going in and out of the country. Goonhilly has been doing some of this sort of algo compression/traffic detection testing in the past. https://thefalmouthconvention.com/record-2/field-trip-reports/field-trip-5-teleport-a-tour-of-the-lizards-landscape-of-telecommunication https://thefalmouthconvention.com/record-2/field-trip-report... Rail companies push up the costs, much of it through clever accounting, setting up leasing companies for rolling stock, separate companies for man power etc etc. You'll be surprised how many foreign companies have a slice of the british railways. If you are fed up with the state of the rail services, beat up on the foreign countries and companies that have a slice of the pie. Roads, builders all submit tenders, the unwritten rule (for all types of building work including schools, hospitals in the UK) is if you dont want the work, submit a super expensive tender, those that want the work price competitively. The main advantage of privatisation, is you get new ideas being tried out more quickly than with socially owned or governmentally owned entities. In other words it brings diversity to the table, instead of conformity. Legislation already brings conformity in many ways, but this is still after people but typically businesses have been consulted on for a govt white paper. It also gives govt the ability to say its not my fault when something messes up, so if you really want to beat up on the govt, get everything taken back into state control, then beat up on the govt. If the govt is smart, it will push responsibility's onto other people who feel they have the chutzpah to run a multi million/billion utility company, in the words of L'Oréal "because they are worth it".
- frereubu 3y agoIn this kind of situation I often think of the government as the primary customer, as that's who effectively purchases the services of the rail operator via their contract. Passenger satisfaction is secondary (although theoretically that's mediated via the government regulator). Even more so because there's often no choice for passengers. If I want to get a rail ticket from London to Edinburgh I have to buy it from one rail company. If I want mains water, I have to pay a specific water company. It's the government who chooses, not me.
- andy_ppp 3y agoThey should be publicly owned but the money ring fensed and the prices rise depending on works needed. For example I think it would cost something like £100bn to sort out the sewerage system in the UK - we should just ask people what they want (continue as is or have higher bills) and charge people based on their assets an amount over say 5-10 years that covers it. So for rich people it might be several thousand £ per year and for poorer people a lot less. These sort of taxes that are needed can never be done currently so we continue pumping sewage into our waterways and seasides.
- pbhjpbhj 3y agoThe water companies could afford to address the problem, they just chose to afford dividends instead. Absolutely, privatise and then increase taxation if needed to provide the service. But why do you need to, just give a water allowance per person and then adjust prices above the allowance to cover the cost of the service?
- makomk 3y agoWe know what people want, though: they want the sewage system fixed and to continue paying the same amount for water and sewage as before, and they've been convinced they can have it by cynical populist campaigners and politicians telling them that they were already paying for this and the evil, greedy privatised water companies just stole the money and used it for shareholder profits. (They were not. The amounts the regulators allowed the water companies to charge were way too low to cover it, basically by design since people weren't willing to pay that much and didn't consider it worth fixing until a year or so ago. All of the shareholder dividends post-privatisation were not enough to pay for it, and of course without those dividends no-one would invest anyway.) Oh, and they don't want the inconvenience of having their streets dug up to install the new infrastructure either.
- iso1631 3y agoRailway tracks aren't privitised and haven't been for 20 years. The trains running on them were - at least until covid broke everything The problem is that the government let companies like Virgin off when they broke their contract, allowing them to bid high, take the profits, then walk away rather than fulfilling their contracted duties. Privatise the profits, socialise the losses. Nethertheless there is tons of competition on transport in the UK 1) To get from Birmingham to London you can choose 3 different rail providers giving 3 different cost/value returns. Faster more frequent ones cost more. 2) On top of that you can also take a coach, hire a car, drive your own car, or of course not travel at all 3) Manchester to London you can fly, take the coach, drive (car hire or your own car), take three different trains ranging from £50 return and 3 hours to £180 return and 2 hours. "Railway tracks" isn't where the competition is, transport is, and there's tons of competition. I remember I used to commute from a commuter town into Manchester. I could take the train during the peak, or I could take it off peak, or I could take the slower train from a different company, or I could drive, or I could take a commuter bus. When it comes to the last mile of say BT, you used to have a monopoly, it would take months to get a replacement handset connected. Today though "a phone line" isn't what you want, internet is, and there are options 1) BT/Opeanreach connection (fibre or copper) 2) Non-BT fibre (in many cities) 3) Wireless ISPs 4) Satelite ISPs (Starlink/Oneweb or Geostationary) Each has benefits and drawbacks I would agree that the last mile of water and possibly electric provision shouldn't have been privitised. Treatment works though -- why not? There's no real limit on the number you can have. When it comes to long distance electric again why not. There is a lot of money to be made transporting Electricity in Scotland and selling it to the south east. Let multiple companies do that. The problem is planning permission and nimbyism means it's impossible to actually build new lines.
- samwillis 3y agoYou've cherry picked two routes Birmingham/Manchester to London where there is choice, but for the majority of the country there isn't. From my town there is one train company that has exclusive use of the route, and its motivator is profit extraction, not quality of service and encouraging more people off the roads on to the trains. Also comparing trains to cars and busses as a positive competition is missing the point that our roads are over capacity. Moving more people off of the roads onto the train networks should be a priority.
- frankfrankfrank 3y ago[dead]
- Roark66 3y agoExactly. 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 one will invest in the latter without financial history of operations in such environment. To do privatisation properly the state should breaker up the infrastructure from the services. Split the services into separate companies (then do we want them to compete or each will have it's niche? Usually it's the latter). 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. That IMO is roughly a good way privatisation could work, but it takes more than one electoral cycle to do it right, and which government wants to create gifts for their opponents? So we usually don't see anything like it.
- Jochim 3y ago> 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.
- bborud 3y agoThis sounds simple, but it isn't. In reality there are complicating factors. For instance, the introduction of New Public Management ideas can complicate things immensely. You fragment an organization into multiple smaller organizations, each responsible for some part of the business. Then you require each of them to be profitable. This also provides an opportunity to privatize by then having the resulting companies having to compete for contracts. This sounds sensible the first time you hear about it. The reality is pretty awful. This happened to the national railway company in Norway (NSB). The result was lack of investment, poor service, and a bureaucracy where nobody seems to be responsible for anything. Which means that rather than concerns being addressed, they get ignored. Because when, for most things, you can blame someone else, nothing gets fixed because nobody is really in charge anymore. As a consumer you do not really deal with one company anymore - you have to deal perhaps half a dozen companies that do not work well together. NSB went from a somewhat poorly run public sector organization to an entirely dysfunctional failed NPM experiment. The reasoning behind this was about as sane as suggesting we terraform Mars rather than try to not screw up the Earth. I have seen this in the private sector as well. I worked for a telco for a decade, and they are very similar to how New Public Management works in the public sector. (Which isn't too odd since a lot of them are former state monopolies, so they will be prone to the same sort of defective reasoning you see when NPM is applied in the public sector). You fragment, outsource and then pulverize accountability. Telcos are usually fragmented from the outset. The restrictions on ownership models, a large telco will typically have separate companies with entirely separate cultures, technology stacks and business processes for every country they operate in. Yet within those countries they will fragment further - ensuring that you have siloed organizations working at cross purposes. Usually due to very localized prioritization to achieve goals that affect bonuses, ignoring the large picture. One thing that is very striking in telcos is that it is really, really hard to find people who actually understand telecoms technology within them. And they rarely have much control over the technology. Which most of the time has exorbitant operating costs and extremely slow evolution when compared to large internet companies. In the telco sector it tends to lead to an inability to make sensible use of capital to act on opportunities and evolve the business. You have companies that make a lot of money, but because of how leaders are incentivized and promoted, nobody wants to take risks and evolve new business areas because that might affect short term profitability or personal compensation for leaders. And even if you have leaders who want to, they will typically have very little manouvering space and anything that doesn't have a quick payoff will typically be sabotaged and then axed. The way you "solve" problems in the telco sector is typically through mergers and acquisitions. The latter often having a very low chance of realizing much value. I've also seen a lot of examples of companies just selling their operations when, due to failure to respond to how markets develop, just have to give up and find new markets where their outdated strategy still works. (One way to look at this is to see what happens when a market reaches various saturation milestones).
- friendzis 3y ago> I am a deep believer in free markets as the most efficient mechanism for distributing goods and services > e.g. electricity providers that add energy to the grid. And here you have a problem: different electricities are not equal. Suppose you have two large electricity-consuming areas (cities) physically separated by huge nothingness. One electricity plant can make roughly 1.5x demand of one city. There are two options: 1) build a plant physically near each city and 0-0.5x capacity interconnect between cities 2) build two plants near one city and have 1x capacity interconnect. The question is how do you distribute costs of required infrastructure? This is a very non trivial problem, apparently. You may have sort of free market for "generic electricity" i.e. power/energy, but then the cost of transmitting that electricity falls on the grid and it may be a very significant cost burden. You may discount electricity of each provider by the network cost, but that cost is in practice dynamic, even more so with renewables. On one hand that would incentivize building of microgrids and small plants, but on the other hand that would disincentivize construction of base load generators, which are necessary for stability of the grid, especially with microgrids. Datacenter connectivity faces the same problems. Say you need 1 gbps gateway to app, 10 gbps app to db, 40 gbps db to storage. How do you allocate network interconnects and node placement in racks? If some team has a spare storage shelf in another part of the dc, do you want to allocate that to app server in another part of dc without physically moving servers and instead routing extra 40 gbps fiber? Who pays for that?
- GrumpyNl 3y agoFree market has destroyed the affordability of healthcare.
- refurb 3y agoNot really, it works really well for truly free markets like cosmetic surgery and vision correction. The “free market” healthcare in the US isn’t free at all, there are a ton of regulations many of which make it worse, not better.
- BoiledCabbage 3y agoNo, it's because those aren't essential services that people need with little option to competitively shop for. People can choose not to get cosmetic surgery, or postpone it significantly, or shop attorney between many different options. They frequently can't for their health decisions. Again, it's 'market competition' amidst healthy consumer choice, not 'free markets' that are beneficial for society.
- aeyes 3y agoAnd the healthcare providers make it hard to even see their prices up front. It's like going into a grocery store without price tags. You can't really compare prices.
- refurb 3y ago90% of medical procedures are elective (i.e. not urgent). Giving patients time to decide when and where to get them. People already shop around for things like joint replacement.
- sweezyjeezy 3y ago> I believe the best way to make this work is by keeping the network itself in public hands and then having a competition of contributors to the network Even then it doesn't always work out - UK rail services have that system - the infrastructure is maintained by a public body [1], but the operators are private. UK rail is quite expensive, and mediocre in quality compared to our EU counterparts. One of the issues is that it's basically impossible to have competition on a single rail journey joining two large cities - there's aren't enough tracks to support it without making it unprofitable for operators. So rail networks bid every few years on sections of the rail network, and then have no competition for their term. Again the incentives that make the free market efficient are just not there. A nice video that summarises this mess here: [2] [1] https://en.wikipedia.org/wiki/Network_Rail https://en.wikipedia.org/wiki/Network_Rail [2] https://www.youtube.com/watch?v=DlTq8DbRs4k&t=1077s https://www.youtube.com/watch?v=DlTq8DbRs4k&t=1077s
- sofixa 3y ago> One of the issues is that it's basically impossible to have competition on a single rail journey joining two large cities - there's aren't enough tracks to support it without making it unprofitable for operators Evidence from the new post-fourth rail package landscape seems to contradict this. Multiple places in Spain, Italy, France are connected with at least two competing high speed rail operators, to massive success (Paris-Lyon SNCF and Trenitalia, Madrid-Barcelona and Madrid-Seville by Ouigo, AVE, AVLO, Iryo; many routes in Italy by Italo and Trenitalia).
- iggldiggl 3y agoIt can sort of work if you've got enough spare track capacity, but unlike buses or planes, with trains its quite easy to run out of capacity very soon, especially on mixed traffic railways (e.g. Karlsruhe – Basel at the moment only has capacity for two long distance trains per hour and those two trains need to be flighted together in order to leave enough space for local trains and freight). As soon as you reach that point, competition stops being directly about passengers and moves to the level of train paths instead (meaning you start getting some disalignment of incentives between the railways and the passengers), and consequently can't happen without actively worsening the service offered by the incumbent operator or even "innocent" third parties (local/regional trains as well as freight operators). Competition also doesn't really work as soon as your journey isn't large metropolis to large metropolis and involves connecting trains, because a) if a connecting train only runs hourly (or at best half-hourly), it's impossible to have attractive connections from that one train to a multitude of competing operators and b) there are usually ticketing problems which start to matter as soon as one of the trains is delayed and you miss a connection. Spain has, considering its size, economy and population a relatively generous high speed network (to a large extent financed by EU grants) that by necessity (broad gauage vs. standard gauge) is also completely separate from the legacy network and consequently isn't utilised super-heavily. Plus RENFE already sees its AVEs as a sort of plane on wheels and traditionally has a minimum connection time between trains of 60 mins (!) with only some exceptions, so there is still room for running additional trains and things can't get much worse even with competition and incompatible ticketing between operators on top. France's and Italy's high speed lines are somewhat more heavily utilised, but you can still get comparatively far by staying exclusively on the high speed network. Plus in France the geography favours the simple Paris-to-province model with no complicated connecting services necessary, whereas Italy is favourable to a linear arrangement (Turin - Milan - Bologna - Florence - Rome - Naples are all along the same line). In Germany on the other hand population centers are somewhat more distributed across the country, the high speed lines are of a more fragmentary nature and you have much more running on mixed traffic lines, plus a lot of network sections are effectively at capacity. The result is that in Germany competition mostly isn't solely directly about passengers, but often rather about train paths, and almost any new non-DB long distance service that has been introduced in recent years (thankfully there weren't that many) caused varying amounts of havoc among local services running along the same sections of line, or in some cases even with DB's existing long distance trains. Plus it means that e.g. RENFE and SNCF now see each other as enemies, so good luck booking a journey between Spain and France that involves a change of trains in one country or the other (or even worse, both of them).
- VBprogrammer 3y agoIt's interesting, I haven't looked into the full history of it so I may not have this quite right, but from the museum's I've visited (Kempton steam museum for example) a lot of London's infrastructure seems to have been built by private companies. I suspect though that when clean water was a new thing it probably cost a much bigger amount of people's income than it does now.
- Aaargh20318 3y agoFree markets work for a lot of things, but they aren't the best for providing services that are needed by everyone. If there is something that everyone in the country needs, like clean water, electricity, roads, law enforcement and health care, then it's most efficient to collectively buy and provide these services. We appoint a couple of people to organise this for us. We call these people 'the government'.
- pyrale 3y ago> I believe the best way to make this work is by keeping the network itself in public hands and then having a competition of contributors to the network - e.g. electricity providers that add energy to the grid. Even in that configuration, companies often have trouble fronting the money required to build a sizeable power production infrastructure. It can be seen in renewables, where investors build a lot of renewables production, but don't really care about what will happen once these renewables produce a large share of the network's power, and don't research and develop the missing pieces or the expertise to maintain. You could argue that the public market regulator needs to better incentivize private companies to build the right thing, but at this point, the real value is the regulator's planification, not private companies buying and installing Chinese PV. So you have a capital-intensive private industry with little value-add.
- ClumsyPilot 3y ago> at this point, the real value is the regulator's planification Exactly, in many of these markets a small team of public ally employed engineers could design a reasonable strategy in a week. Now you need a massive team of lawyers just to draft a contract with a private company that isn’t full of loopholes they are gonna abuse. Managing them is more work than doing the job directly. And government can always access cheaper loans
- pyrale 3y ago> And government can always access cheaper loans I'm assuming the main issue with government is that people keep electing politicians uninterested in statesmanship or running an administration, and with personal incentives to privatize. I still don't understand how voters can choose to entrust public service to people that claim public service is inefficient: they can run it in the ground and claim "see, I told you!"...
- libealistand 3y agoThe irony here is that the massive water price hikes must surely have contributed in less waste of water resources.
- kergonath 3y agoIt’s not going to plug leaks, though. The amount of water that goes straight into London’s ground is astounding.
- FrustratedMonky 3y agoIt also doesn't work for any product with inelastic demand. People that need insulin need it regardless of price, so a 'free' market has the property that the price increases until the 'customer' is broke and then dead. It creates corporate structures that are based more around a 'leech' model. There is no incentive to create better or more efficient products.
- zouhair 3y agoAnything or any good that is a necessity to live in society need to be publicly distributed and if cannot fully it should be highly regulated (especially the price and production). This goes for basic food, housing, healthcare, transportation, education and so on and so forth. So much life hardships would disappear if this was our reality and all it needs is political will.
- 111111IIIIIII 3y agoKarl Marx showed us 150 years ago why your vision is impossible, and that is why we aren't taught about him in grade school despite him being the most famous intellectual in the world. Under capitalism, private capital predominates; it decides the laws and the commons. If you think you've found a way around this, it's only a matter of time. We call it capitalism for a reason.
- spacebanana7 3y agoWhat's the alternative? State capital - controlled by politicians, media and swing voter/military segments - decide the laws and the commons in socialism/communism/fascism.
- 111111IIIIIII 3y agoObviously people made the same defeatist appeals about feudalism but here we are. Imagine if we popularized such pessimism about technological progress; we have plenty of cause to. Edit: I suppose it's not as obvious if you only have an American education.
- nemo44x 3y agoThe rub is when it becomes run and managed by the state it becomes political. And it has a tendency to grow unbound as bureaucracies tend to. And then they organize and become a political force and they negotiate their next contract with the person they helped elect. I agree that it’s in the people’s interest to own the infrastructure. But the management of the service on that infrastructure should be auctioned into the private sector with oversight from the government.
- denton-scratch 3y ago> e.g. electricity providers that add energy to the grid. It makes sense that energy production should be competitive. But for energy supply I can choose from dozens of companies that all supply the same gas/electricty, using the same pipes. These energy supply companies are really just billing operations. The actual supply of electricity is done by National Grid, another private company, but with no competition. Same for gas, and Centrica. I can't even discriminate between them based on whether they're likely to go bust; when an energy supplier goes bust, some other supplier is forced to take on all their customers. That is an incentive to not run the company finances responsibly (whther you're the one that goes bust, or the one that is forced to take over). Regulators are consistently hopeless. Regulatory capture is part of it - half the executives in these companies used to work for the regulator. But part of it is that you simply can't make a competitive market just by having a regulator tell you how much profit you're allowed to make.
- globular-toast 3y agoWhat you're describing is called a natural monopoly. Free markets fail in countless ways to the extent they never truly exist in practice. Some industries are close than others, though. A natural monopoly is one of the more obvious and easiest to understand failures. All natural monopolies should be public owned.
- xbmcuser 3y agoSingapore is doing something like this as they move to free market electricity. the network is owned by a government controlled company but everything else like maintaining the network etc as well electric suppliers are private. They all are charged a fix amount for network use. They tried it first with fiber internet and after successful implementation are not doing it slowly with electricity.
- ch4s3 3y agoRail is different I think. Private companies successfully operate rail networks all over the world. The NYC subway system was built privately and only fell apart due to urban flight. Most of Japan rail network is private I believe, and more than a dozen companies. I think Stockholm's subway and regional rail systems are privately run and have been for ~30 years.
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- kibwen 3y agoIt's entirely cromulent to believe in the usefulness of markets while also acknowledging that certain contexts cause markets to be inefficient, and thus reduce their utility, possibly to the point of utter uselessness. Natural monopoly? The market is inefficient. Inelastic demand? The market is inefficient. Negative externalities? The market is inefficient. Markets are just a means, not an end. We should apply them judiciously, not religiously.
- ccorcos 3y agoHow about public utility districts? In my town, most of our utilities are public utility districts that are a private company with a publicly elected board of directors. Our electric company, SMUD, is fantastic with excellent customer service and much cheaper rates than PG&E. I called SMUD about a tree that was leaning towards a power pole during a storm and they cut it down within 4 hours! I’ve been to some board meetings to complain about some shenanigans with our water district, and it’s pretty cool to see public oversight in action.
- willyt 3y agoFrom the article linked below comparing the 1960s nationalised rail service to todays privatised service: "When Dr Beeching wrote his 1963 report, half the UK rail network carried only 4% of the passenger traffic, a third of the passenger fleet was used less than 20 times a year, and the railway employed 475,000 staff. British Railways annual deficit was then £87 million, or £2.3 billion in today’s money. Today’s rail network is more intensively utilised and employs about a quarter the number of people. Yet in 2018/19, operational funding (i.e., less HS2 and enhancements) cost the taxpayer £4.7 billion or twice that of Beeching’s highly inefficient railway" https://www.railengineer.co.uk/is-rail-affordable/ https://www.railengineer.co.uk/is-rail-affordable/ Also on the busiest West Coast mainline route London-Glasgow most trains still take around 5 hours the same as in the 1970s but with less legroom, more uncomfortable seats and highly extortionate ticket prices.
- ClumsyPilot 3y ago> 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.
- AndreasHae 3y agoYou'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.
- ClumsyPilot 3y ago"Best" does not mean 'Luxury service that costs the most capital", it can mean "the most cost effective", or "most envitonmentally efficiant" We can debate metrics, but Britains aging and expensive diesel trains sont loom good in any of them.
- moritzwarhier 3y agoIsn'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?
- moritzwarhier 3y agoClarifying, 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.
- kazinator 3y agoStreets, tracks, waterpipes ... mobile networks, broadband internet ...
- Moomoomoo309 3y agoI have a hard time thinking of any privatization wins in the US, to be honest. Pretty much every example in recent memory I can recall was an abject failure. Can you list a few? I agree with you in principle, but I just can't think of any...