"Nationalisation vs privatisation: the public view"

Here's what DBC Reed linked to in the comments to the previous post on the topic (click pics for links):



It's not as revealing as the previous one we looked at:



Discussion here.

Suffice to say, any serious debate about whether something should be run by the government or private businesses doesn't include waffle about the private sector being more efficient or 'customer focussed', they usually are.

The government is pretty crap at running all but the most simple things, agreed.

But would you really want competing private police forces, or competing private land registries?

Some things have to be run by the government. In a proper democracy, we, the people, decides what counts as a crime and what doesn't, and the police are paid to reduce those crimes as much as possible. Not crap like arresting Twitter trolls. That's yer 'customer focus' right there. Would you want one land registry showing you as owning your home but a competing land registry showing that it belongs to somebody else? How would that work?

The other limit of the private sector is where something - if privatised - would lead to blatant rent seeking. Clearly, we can't have competing private land registries, but what if the Tories had really gone mad and privatised it as a monopoly instead? That business would effectively be able to collect Land Value Tax by charging people 'annual renewal fees' and staff would be bribed into transferring titles.

As (I think) Sobers said, there are some things that are better off in the private sector, even monopolies like water - on the proviso that a government regulator imposes serious price caps, quality and environmental standards etc (or in my view, let's them charge as much as they like and tax them at swingeing rates). This applies to all the natural monopolies on the first list (railways and water).

Health and schools are not natural monopolies or the natural preserve of government but there's too much opportunity for rent-seeking. I see no good economic reason for the government to be involved in delivering letters, broadcasting, generating electricity, telephony, banking or airlines. Bus companies are borderline, private companies are fine for long distance but in larger towns they have to be co-ordinated.

Re nationalisation - people aren't as stupid as Legatum make out.

Here's the summary of Legatum's opinion poll:



Commenting on the report, the Legatum Institute’s Matthew Elliott said:

“The findings of our polling are concerning for anyone committed to the principles of free enterprise. Competition entrepreneurship and free trade are all essential to achieving prosperity, not to simply generate profit for businesses, but to extend opportunity to all...

It is clear that those of us who believe passionately in free enterprise need to up our game. We need to redouble our effort in the battle of ideas, because populist thinking has a superficial attraction and we need to better articulate the case for free enterprise, which is the most effective path to prosperity.”

He's missed the point (probably deliberately), as has Jeremy Corbyn (probably supidly) and most other commentators, right or left. The point is that people seem to realise that there is a big difference between monopolies and competitive industries, and are more likely to want to see nationalisation of monopolies. That is not a straight neo-liberal vs socialist thing, it is far more nuanced.

One the second half of the list, there's ship building, food, cars and travel agents, these are competitive industries not monopolies, so only a minority are in favour of nationalisation. I assume 'travel agents' was a trick question to identify the base level of socialist nutters who want to nationalise everything.

Mobile phone companies are very competitive (switching is easy and prices are ever cheaper for ever better services) and they pay for the value of their radio spectrum. We've tried nationalising airlines and it never works, although - unlike mobile phone companies - they do not pay for the value of their landing slot privileges.

Happily, the majority agree with this overall analysis, probably intuitively.

Going down the list of things where a majority is in favour of nationalisation, they are all monopolies in some way...

1. Mains water supply is a natural monopoly, there is simply no point laying parallels set of pipes and drains.

2. Electricity generation can be done perfectly well by private businesses and historically was. It is the national grid which is a natural monopoly, and it only exists because the UK government forced it through in the 1920s and 1930s to hook up all the existing competing electricity generators - thus enabling more competition in the first place.

3. The same sort of logic applies to gas as it does to water or the national grid.

4. People have strong views for or against rail nationalisation, it's not something I'm overly bothered about, suffice to say Transport for London does a great job, it runs the Tube network itself and co-ordinates all the private bus and train companies to provide a pretty seamless service - you can use an Oyster card on just about any mode of transport in Greater London, for example. In most other large towns, public transport is a complete mess.

5. Defence spending is largely a slush fund for a few large manufacturers, it's a heavily subsidised cartel rather than a monopoly.

6. Banking is also a cartel. Banks are brilliant at the day to day stuff, like direct debits, debit cards, online banking and so on, there is no doubt in my mind that if we had only ever had a single, government-run bank it would be really primitive in comparison. So hooray to all that. The problem is that 80% of their lending is mortgages on land so they are behind all the land price/credit bubbles and inevitable land price/credit busts.

'Nationalisation' is only one way of dealing with monopolies and is not always the best. As I said before, there are various ways of dealing with them (items 1 to 6 at the end of that post), you have to decide on a case-by-case basis what to do and try and get the best of both worlds (private provision and public rent collection) in each specific case.

This is not a 'mixed economy' approach, that is far too vague a term, but in an ideal world, the government builds the road network and private businesses make the cars (in a literal sense, but the logic applies to everything else as well). Consider the opposite - driving British Leyland cars on a network of private toll roads...?

Highly unusual to see these three sources saying much the same thing on the same day.

From City AM, normally a huge supporter of the rent seekers and the practices referred to in The Guardian article below:

The government is making its case for stepping up the Sino-British relationship by announcing £30bn worth of new trade and investment deals, despite escalating concerns that the UK steel industry is crumbling at the hands of Chinese manufacturers.

The Prime Minister announced the business deals, which the government says will create more than 3,900 jobs across the UK, one day after reports that [British steelmakers are to cut over 5,000 jobs in the face of Chinese steel dumping].

From The Guardian, actually hitting the spot for once:

Osborne is all for renationalisation – so long as the nation isn’t Britain

To secure EDF as a builder, Cameron guaranteed a fixed price for electricity from Hinkley of £92.50 per megawatt hour. That is around double the going rate for electricity on the wholesale markets, a price so high that equity analysts term it “financial insanity”.

Change your supplier as often as you like, you and everyone else in Britain will be paying for that de facto subsidy in your electricity bills for decades to come. Britons will in effect be paying more for their energy so that French households can pay less. Indeed, so generous are the terms of this deal that the government of Austria is currently taking Britain to court on the grounds that it’s handing out state aid to EDF.

Yes, you read that last sentence right: the UK stands accused of dispensing state aid – to another state. How many times have you read about some age-old manufacturer and thousands of jobs going down the swanee, while ministers wrung their hands over European state aid rules? Now we know that such rules can be tested – provided the recipient is headquartered not in Port Talbot, but Paris.

And finally, from The Daily Mash:

As thousands of redundancies in Redcar are followed by hundreds more in Scunthorpe, the business secretary said he wishes there was something he could do.

Sajid Javid continued: “Tragically, the industry has been hit by a perfect storm of being in the provinces, traditionally supporting Labour and not being financial services. Add that to us not wanting to do anything that might offend our new Chinese friends, and there’s absolutely nothing we are prepared to do.

“If only these plants manufactured something useful, like insurance derivatives supported by credit default swaps, then we’d gladly go billions into debt for them. But steel? What’s that even for?”

How to encourage inward investment

From City AM:

BOLIVIA followed in Argentina’s protectionist footsteps yesterday as it nationalised a local unit of Spain’s Red Electrica, blaming a lack of investment in the country.

"Nationalise private schools plans"

OK, the headline hams it up a bit, but it just goes to show why proper lefties love recessions - it gives them an excuse to go round nationalising, subsidising and regulating stuff, thus keeping everything permanently frozen in the whatever poor condition it happens to be in, thus locking us in to a permanent state of recession.

As to the issue of private schools, all I can say is "vouchers", that way many more, possibly most, parents would be able to afford it.

Is it just me, or is there a pattern emerging here?

Ross pointed out yesterday that even though it was the Nulab gummint who cheerfully allowed a credit bubble/house price bubble to develop, they have cheerfully deflected the blame onto others and are now taking credit for adopting the worst possible solution, to wit, propping up/nationalising the banks with taxpayers' money.

This reminded me of a comment I left at Stumbling & Mumbling over a year ago; there is, to my mind, a clear pattern - Nulab f***s things up in the worst possible way and then chooses the worst possible response, which normally involves increasing taxes and/or enlarging the powers of The State:

You're working on the false assumption that Nulab have any goals whatsoever apart from clinging on to power.

To do this they need votes. So they swell the size of the State, lots of captive voters. Nulab are also the political wing of trade unions, in particular public sector unions, which leads to the same sort of sub-aim.

So these f***-ups are part of the plan.

F*** up private industry (regulation and taxes) and you've an excuse to increase taxes on what's left and to increase number of welfare claimants (captive voters) and public sector jobs (captive voters) so that unemployment doesn't fall too much.

F*** up immigration and you've the perfect defense - anybody who even mentions the topic is a racist. And you can employ loads of people in the race relations industry. And you've an army of Mullahs declaring war on us so we need ID cards and 90 day detention, innit?

F*** up education and you've got a stupid subservient population only fit for hte dole queue or a public sector non-job.

F*** up the welfare system and you've got a quarter of children being born to single mothers, more welfare "clients" and more DSS employees sorting out 80 page forms.

F*** up housing (bubble) and you can bleat about "unaffordability" and the State has a foul excuse to interfere with Key Worker and Shared Ownership Schemese and Housing Associations and all the other crap. Housing starts are half what they were in the 1950s.

F*** up immigration and housing at the same time gets us back to where we were above.

F*** up law enforcement, make all the coppers fill in forms 90% of the time and then ignore the data. "Oops, we forgot to build any prisons", and you've an excuse to let violent criminals walk free after serving a few weeks of their sentence.

F*** up the NHS by throwing money at it to compensate for "eighteen years of Tory underinvestment" and then when that doesn't work employ an army of consultants to do these constant "radical shake-ups" and use it as an excuse for even more tax rises "to invest in the NHS".

F*** up so completely that you can just pass responsibility to the EU, "Don't blame us, all we do is rubber-stamp stuff from Brussels". After giving it a shiny 24-carat gold plating, you bastards.

F*** up the budget for the Olympics "oops, did we say £3bn, we meant £10bn". And to which political party will businesses who want a slice of that £10bn pie make soft loans? Ditto £19bn or whatever for ID-cards, who cares if they work, ****** plc will be happy to make a soft loan of tens of millions to Nulab to get that contract.

F*** up our whole constitution by having "The Human Rights (For Criminals And Terrorists) Act 1998", that's another excuse to overide all our ancient laws and allow criminals to walk free.

F*** up the environment by joining in EU schemes to build loads of new airports, as a result of which ticket prices drop, as a result of which people fly more, hey ... that even gives them an excuse to increase taxes on fuel, oops, oh no it doesn't because of EU rules on VAT. Fridge mountains. Slap a ridiculous 800% tax on landfill sites but cave in to environmentalists who don't like waste incinerators (not clear why not).

F*** up pensions so that OAPs have to fill in 30 page pensions credit, housing benefit and Council Tax benefit claim forms - more captive voters and more DSS employees.

I could now add "F*** up the housing and financial markets and then waste £billions of taxpayers' finest on bailing out the bondholders and trying to keep house prices as high as possible"

The problem is that this cycle will never end, it is difficult to estimate the enormity of what there next f*** up is going to be.

Just sayin', is all.