4 ms·

The problem with this assement is that it misunderstands the role of the private sector. Yes, those crashes happened, and they were disasters, but they were on

The problem with this assement is that it misunderstands the role of the private sector. Yes, those crashes happened, and they were disasters, but they were only partially down to rail track being privatised. They were a result of systemic under investment both pre and post privatisation. THe _other_ key thing that needs to be remembered is that rail is highly regulated. To the point that both price, timetables profit and pay are controlled by the deparment of transport. The bigger issue is that actually the department of transport doesn't have the specialists needed to run the railways, they are hired in as consultants. If you compare that to TFL, which operates both private (DLR and some of the overground) and public (most of the tubes, not sure about elizabeth line) and buseses (which are entirely private) The railways are in the state they are because of poor governance from central government. and poor investment, also from government. IF they had been publicly owned, we'd be in the same state, because the UK government is not currently able to run services effectively. Unless and until the political classes are willing to pay civl servants competitive rates of pay and trust data, then we will continue to be in a mess. Yes, privatization is bad, but the lack of effective governance is the hidden crisis here.

VBprogrammer 1y ago
I'm just not convinced that privatisation of natural monopolies is ever sensible. Especially when failure isn't option, you can't just stop the trains running because some operator spent all of their budget on executive bonuses. It's privatised profits and public liability.
- skippyboxedhero 1y ago
  You can see that it is highly effective even within the UK. Ofgem publish components of the energy price, of the average annual cost of £1300 I recall that profit was £40. Government subsidies are now £200-300 and are growing (I believe I read a story the other day that said that if the wholesale cost of energy fell to zero over the next few years, the cost of energy would not fall...that is how expensive the government's corporate subsidies to high-cost suppliers is...for some reason, no-one talks about this). If you compare to the 70s when the government was throwing cash at these industries (largely because of the political incentives), it is unbelievable how low costs are. The problem is that the political intervention has been very bad, the public liability comes from bad regulation (which was just as true in the 70s). For example, in energy the regulator has encouraged operators, like Tomato Energy the most recent failure, who are very clearly not operating in a financially sustainable way. If you look at who works for regulators (and look at what they get up to outside of regulation, in other parts of government), I am not sure how you can conclude that it could ever be any other way. We are paying for people who are largely unemployable outside of government to attempt to govern companies that are responsible for powering the whole of the country. Why does anyone think is wise? Another example mentioned in the OP is retaining much in public ownership and then privatizing ROSCOs...it isn't just this is a bad idea, it is so clearly a bad idea that it is unclear who could have thought this is a bad idea. Again, this happened because of very ineffective regulation/political leadership. Finally, what profits? One of the issues with most regulated industries is that the profits are very low because of the politics (for some reason, people think that public ownership will fix this...rather than make it much worse...we don't need to imagine, the UK has tried this several times, it has failed every time but the politics mean that there is no option but to keep trying it). The result has led companies to do things that are not wise because, otherwise, investors will pull capital. If you read any article about this is any paper in the UK, you would assume that the profits on offer in these industries are wild...they are not, share prices are collapsing, the reason why the government is taking over rail operating companies is because they are going bust, there is massive demand destruction in almost all of these areas because prices are sky-high, profits are non-existent, demand is being destroyed, and no-one wants to deal with the lack of supply because it would require admitting that the world isn't divided into Monopoly Man and a Victorian urchin. There are countries that have made it work but the UK will never be one of them because of the political environment (significantly more raucous than the European style of managed democracy).
- ndsipa_pomu 1y ago
  England's water companies are a classic example of why you don't want a natural monopoly to be privatised.
  - KaiserPro 11mo ago
    Yes, and the way that they were privatised was markedly different to the railways. The failure point was subtly different (regulatory capture and incorrect powers to say "fuck off thats fraud") I think the issue is that there you need infra to be at arms length, so that they can make long term decisions free of political interference. (for example can you imagine the noise if "rates" went up by as much as the water bills went up to fund the modernisation of the water system?) But if you're at arms length, how can you have enough oversite to correct for regulatory capture (ofwat) or failure to build future proof infrastructure (defra). That requires industry experts, who are in government and are trusted to advise. It also require politicians who are willing to take such advice and evangelise it to a skeptical public.
insane_dreamer 1y ago
> lack of effective governance is the hidden crisis here but privatization makes that worse, by adding profit-seeking (which tends to minimize investments) to the lack of effective governance the solution is improving governance and public investments, not privatization (not to mention the problem with infrastructure paid for by the public over decades being sold off on the cheap to private companies who can reap the benefits thereof)
- KaiserPro 1y ago
  > by adding profit-seeking apart from in this instance, the amount of profit was dictated by the government as part of the franchise.
  - insane_dreamer 1y ago
    Not the ROSCOs at least, which is a big part of the problem.
skippyboxedhero 1y ago
For some reason, people also tend to ignore the many other cases where this is also true: telecoms, energy, water, etc. The problem is that there is massive political gain to both sides so we will likely keep rotating through the same options. In either case, the exact same people are in control, and no-one will ever ask whether the issue might be the people. I also think that people fundamentally misunderstand why they were privatized: the public cost was massive, it was ever growing, and there was no capacity to fix this. Any discussion around money was completely impossible. Can you think of any part of the government where this is true? Actually, can you think of any part of the government where this isn't true? The government struggles to do bin collections, they struggle to police effectively, nothing works...and people assume that the problems will magically be fixed if they are given more control. I think the lack of investment is a side-effect btw. There is a massive issue in the UK with management, it stretches across government, the larger public sector, and the private sector. It is true that in regulated industries, regulators have created bad incentives for the private sector, this is true generally of the incentives that government creates for the private sector...but even outside of those areas, it is generally quite bad. One of the sources of this problem is the complete and total obsession with politics outside of the outcomes that it creates i.e. the purpose of politics is politics, not running things effectively. There is no real way to fix this (and we have done almost everything possible to make it worse).

VBprogrammer 1y ago

I'm just not convinced that privatisation of natural monopolies is ever sensible. Especially when failure isn't option, you can't just stop the trains running because some operator spent all of their budget on executive bonuses. It's privatised profits and public liability.

skippyboxedhero 1y ago
You can see that it is highly effective even within the UK. Ofgem publish components of the energy price, of the average annual cost of £1300 I recall that profit was £40. Government subsidies are now £200-300 and are growing (I believe I read a story the other day that said that if the wholesale cost of energy fell to zero over the next few years, the cost of energy would not fall...that is how expensive the government's corporate subsidies to high-cost suppliers is...for some reason, no-one talks about this). If you compare to the 70s when the government was throwing cash at these industries (largely because of the political incentives), it is unbelievable how low costs are. The problem is that the political intervention has been very bad, the public liability comes from bad regulation (which was just as true in the 70s). For example, in energy the regulator has encouraged operators, like Tomato Energy the most recent failure, who are very clearly not operating in a financially sustainable way. If you look at who works for regulators (and look at what they get up to outside of regulation, in other parts of government), I am not sure how you can conclude that it could ever be any other way. We are paying for people who are largely unemployable outside of government to attempt to govern companies that are responsible for powering the whole of the country. Why does anyone think is wise? Another example mentioned in the OP is retaining much in public ownership and then privatizing ROSCOs...it isn't just this is a bad idea, it is so clearly a bad idea that it is unclear who could have thought this is a bad idea. Again, this happened because of very ineffective regulation/political leadership. Finally, what profits? One of the issues with most regulated industries is that the profits are very low because of the politics (for some reason, people think that public ownership will fix this...rather than make it much worse...we don't need to imagine, the UK has tried this several times, it has failed every time but the politics mean that there is no option but to keep trying it). The result has led companies to do things that are not wise because, otherwise, investors will pull capital. If you read any article about this is any paper in the UK, you would assume that the profits on offer in these industries are wild...they are not, share prices are collapsing, the reason why the government is taking over rail operating companies is because they are going bust, there is massive demand destruction in almost all of these areas because prices are sky-high, profits are non-existent, demand is being destroyed, and no-one wants to deal with the lack of supply because it would require admitting that the world isn't divided into Monopoly Man and a Victorian urchin. There are countries that have made it work but the UK will never be one of them because of the political environment (significantly more raucous than the European style of managed democracy).
ndsipa_pomu 1y ago
England's water companies are a classic example of why you don't want a natural monopoly to be privatised.
- KaiserPro 11mo ago
  Yes, and the way that they were privatised was markedly different to the railways. The failure point was subtly different (regulatory capture and incorrect powers to say "fuck off thats fraud") I think the issue is that there you need infra to be at arms length, so that they can make long term decisions free of political interference. (for example can you imagine the noise if "rates" went up by as much as the water bills went up to fund the modernisation of the water system?) But if you're at arms length, how can you have enough oversite to correct for regulatory capture (ofwat) or failure to build future proof infrastructure (defra). That requires industry experts, who are in government and are trusted to advise. It also require politicians who are willing to take such advice and evangelise it to a skeptical public.

insane_dreamer 1y ago

> lack of effective governance is the hidden crisis here but privatization makes that worse, by adding profit-seeking (which tends to minimize investments) to the lack of effective governance the solution is improving governance and public investments, not privatization (not to mention the problem with infrastructure paid for by the public over decades being sold off on the cheap to private companies who can reap the benefits thereof)

KaiserPro 1y ago
> by adding profit-seeking apart from in this instance, the amount of profit was dictated by the government as part of the franchise.
- insane_dreamer 1y ago
  Not the ROSCOs at least, which is a big part of the problem.

skippyboxedhero 1y ago

For some reason, people also tend to ignore the many other cases where this is also true: telecoms, energy, water, etc. The problem is that there is massive political gain to both sides so we will likely keep rotating through the same options. In either case, the exact same people are in control, and no-one will ever ask whether the issue might be the people. I also think that people fundamentally misunderstand why they were privatized: the public cost was massive, it was ever growing, and there was no capacity to fix this. Any discussion around money was completely impossible. Can you think of any part of the government where this is true? Actually, can you think of any part of the government where this isn't true? The government struggles to do bin collections, they struggle to police effectively, nothing works...and people assume that the problems will magically be fixed if they are given more control. I think the lack of investment is a side-effect btw. There is a massive issue in the UK with management, it stretches across government, the larger public sector, and the private sector. It is true that in regulated industries, regulators have created bad incentives for the private sector, this is true generally of the incentives that government creates for the private sector...but even outside of those areas, it is generally quite bad. One of the sources of this problem is the complete and total obsession with politics outside of the outcomes that it creates i.e. the purpose of politics is politics, not running things effectively. There is no real way to fix this (and we have done almost everything possible to make it worse).