Politics Thread!

[VNVObit]

I agree we need railways and the associated benefits but all of that is an argument for state ownership not privatisation.
The only rational commercial reason for privatisation by the state would be the reduction of ongoing cost to the state over time.

[pogo]

I agree we need railways and the associated benefits but all of that is an argument for state ownership not privatisation.
The only rational commercial reason for privatisation by the state would be the reduction of ongoing cost to the state over time.

By that logic privatisation should not have taken place – any of it - if it matters not who owns the railways, the airlines, the phone company, the car manufacturers.

But there are many things the state should not be doing, including all the above list. In some cases it's as there are private companies active in that industry, and direct state competition has a distorting effect on the industry. In some cases its as government bureaucrats make very poor business managers. In the case of socialist governments it can allow greater union participation in management, and they make even worse managers.

The railways have all three reasons against them. First there are many private firms running railways and they'll find it hard to compete against the state with its ability to borrow for free and backstop any risk. Second those with long enough memories will recall how badly managed British Railways was. And third this was negotiated with the unions; presumably they're getting something out of it. It's a really bad policy done for all the wrong reasons.

[VNVObit]

I agree we need railways and the associated benefits but all of that is an argument for state ownership not privatisation.
The only rational commercial reason for privatisation by the state would be the reduction of ongoing cost to the state over time.

By that logic privatisation should not have taken place – any of it - if it matters not who owns the railways, the airlines, the phone company, the car manufacturers.

But there are many things the state should not be doing, including all the above list.

Airlines and car manufacturers I agree should be privately run, can't see any reason for state ownership in either

The phone company, well I'd take a more nuanced approach. The infrastructure should still be in state ownership (backbone, cable to properties, etc,) as this is a strategic national asset. Actual provision of services to customers could then be run privately on a level playing field avoiding the usual nonsense we now have with initiatives getting broadband to rural areas with BT winning the vast majority.

Railway's true competition is not railway but alternative forms of transport (road, airlines). While privatisation as you point out hasn't reduce the cost to the enduser it has had the effect of increasing the salaries of train drivers as the TOCs have continually poached drivers from each other (upward spiral for an element of staff). The argument that they were inefficiently so should be run by privately is just an abdication of responsibility on the part of government. If other countries can do it (e.g. France, Spain) why can't it be done here?

[pogo]

Which exactly of France and Spain should we take economic advice from ?

On telecoms the common carrier rules work well: BT has to carry the broadband of its competitors to your door, and we have a lively competitive broadband market. You also have many choices for dialup, mobile, devices.

Again you need a long memory but with BT pre-privatisation you had not only one telephony provider, everyone paid the same, but everyone had the same telephone. The latter was particularly ridiculous. There was no technical reason why other form factors and designs wouldn't work, and you could see them inside firms. But you only got one sort from BT which was hard-wired into the wall. It came in different colours but that was about it.

[Harlequin]

I remember many different telephone designs in the places I lived. If they were all purchased from the GPO (which I doubt), perhaps the people you knew all opted for the cheapest models.

[VNVObit]

Which exactly of France and Spain should we take economic advice from ? /

What has economic advice got to do with running a good train service?

On telecoms the common carrier rules work well: BT has to carry the broadband of its competitors to your door, and we have a lively competitive broadband market. You also have many choices for dialup, mobile, devices.

Again you need a long memory but with BT pre-privatisation you had not only one telephony provider, everyone paid the same, but everyone had the same telephone. The latter was particularly ridiculous. There was no technical reason why other form factors and designs wouldn't work, and you could see them inside firms. But you only got one sort from BT which was hard-wired into the wall. It came in different colours but that was about it.

No they don't work well as a common carrier for example
http://www.pcpro.co.uk/blogs/2012/02/15 ... -given-up/
http://www.pcpro.co.uk/news/broadband/3 ... d-roll-out
http://www.pcpro.co.uk/news/broadband/3 ... ding-to-bt

The infrastructure is a national strategic asset and should not be in the hands of a private company (for the same reason network rail was renationalised) as it undermines ability to grow regional economies

As for the rest of your comment not sure who you are replying to but it's not to my post as the points raised are completely irrelevant.

[pogo]

Where it's strategic it should be up to government, and the government is investing in rural broadband:

£250m boost taking Superfast Broadband further and faster

You can have both: private firms running the service while government invests in cases where it's not profitable. In rail HS2 is similar: it's a strategic project run by the government but it will be built and one day run by private firms.

[zip accident]

I remember many different telephone designs in the places I lived. If they were all purchased from the GPO (which I doubt), perhaps the people you knew all opted for the cheapest models.

No, he's talking about a very long time ago. BT changed their minds about it in the 'seventies or 'eighties when touch tone dialing came in, but before that you could only buy (or only rent?) rotatry dial phones from BT, and only the one model, though they let you choose the colour (sometime after the 'sixties?), before that it was black or nothing.

[Harlequin]

I remember many different telephone designs in the places I lived. If they were all purchased from the GPO (which I doubt), perhaps the people you knew all opted for the cheapest models.

No, he's talking about a very long time ago. BT changed their minds about it in the 'seventies or 'eighties when touch tone dialing came in, but before that you could only buy (or only rent?) rotatry dial phones from BT, and only the one model, though they let you choose the colour (sometime after the 'sixties?), before that it was black or nothing.

I am thinking of before we moved out of Soho, so for some years prior to 1974 at the latest. They were all rotary but we had many different designs (often at the same time). I also think we owned most of the phones we had in the penthouse, the manor house (before Soho) and, IIRC, the farm, rather than renting them.

[KlaxonCow]

In some cases it's as there are private companies active in that industry, and direct state competition has a distorting effect on the industry.

But is such a distortion necessarily always intrinsically a bad thing?

For example, consider BUPA. They're a private healthcare provider operating in the same space as the NHS. If you've got the money to afford it, then you can alternatively get your medical treatment from them.

And what do you get for your money?

In essence, you get luxury. You get star treatment. You skip waiting lists, you get one-to-one personalised care, you get your own private room, you can get cosmetic treatments that don't fall under the NHS's "medical necessity" criteria and all the rest of it. You get the best that your money can afford you.

But - aye, here's the rub - does all private healthcare operate to such high standards?

No, not at all.

In America, you're paying the most per head costs for your healthcare on the planet and it's perfectly normal over there to hear of nightmares of not just a severe lack of health insurance, but under-insurance - folks paying heavy premiums, only to find out, when they try to claim on it, that their policy was junk all along and doesn't actually cover them - and claims being routinely rejected on trifling technicalities or simply not being offered whatsoever, on the grounds of "pre-existing conditions" or being "high risk", that no insurer wants to take that bet.

Obviously, the overall quality of your healthcare will depend on how much you're paying, but would the average person of average means get equivalent treatment to the NHS or BUPA for comparable cost?

No, they wouldn't. As previously mentioned, American healthcare is the most expensive "per head" healthcare costs on the entire planet (and we've seen the table that you, in fact, posted about the relative international rankings of what you get for your cash and the US is not at the top of that table at all). It is amongst the worst value for money in the entire world.

The difference is the NHS.

Yes, it does distort the market and affect private healthcare providers. But it is a positive distortion - it sets a minimum standard and forces competitive prices.

BUPA cannot give lesser treatment than the NHS - because their customers would just walk and go to the NHS instead. We don't see any of the all too frequent scandals seen of private healthcare providers in the USA, where BUPA could under-insure people or refuse to honour insurance claims on trifling technicalities - because that would be PR poison for them and they know it, so they don't dare go there. And, in comparison to what you'd be paying in America and what treatment you'd receive, you get far better value for money with not just the NHS, but also BUPA too - because they know that though their target audience is those with the money to pay that little bit extra, they can't be totally extortionate with their pricing (they're not just competiting on price against other private healthcare providers, but also the NHS, who their customers have already implicitly paid for, so it's always an alternative option for them).

So even if you've never used the NHS and never intend to use the NHS ever in your life, then you should still be grateful for its "interference" with the private healthcare market - because what it does, in essence, is make them better. It forces them above a minimum standard, it forces them to be honest in honouring insurance claims, it keeps them grounded on pricing that ensures it never gets to the silly extortionate levels found elsewhere in the world. They have to be much better than the NHS to justify their cost.

To give another example, consider the BBC.

(Okay, technically, they're a private organisation but, due to the licence fee and its enforcement by government, they operate as if a public service.)

Do you honestly think that "Sky Arts" would exist without BBC 4? Would ITV have ever bothered with "The South Bank Show", if they weren't competing against BBC2's cultural output? Would Channel 4 ever have commissioned something like "Time Team" - an archaeology show - or put on some of their impressive science / social issue documentaries?

For certain, you can be sure that Sky's recent trend towards creating much more original content for their main entertainment channels - Stella, a League of their Own, Mad Dogs, 3D David Attenborough nature documentaries, big dramas for Christmas, etc. - is finally learning the lessons that ITV and Channel 4 learnt before them.

We all know that joke of "Dear Points of View, there's too many bloody repeats on the telly. Yours, Angry from Manchester".

But the thing is, in this country, we are spoilt rotten that that is even considered a perfectly valid complaint by the majority.

Until recently, Sky operated pretty much the same as it does under the "Star" brand in Asia. Sky One and Sky Two were just endless repeats channels. They just showed syndicated repeats of American imports. Mostly Fox programmes - like the Simpsons - because Murdoch doesn't have to pay for that. Not a single shred of original content.

But they've moved to change that and start making their own original content, because they've realised that, thanks to the BBC, British audiences are entirely accustomed - not just on the BBC, but also on commercial channels like ITV and Channel 4, who've also long done this to compete against BBC output - to being pandered to with tons of original content. Repeats and films are essentially filler content / a touch of money-saving for the BBC. Most of what they broadcast is brand new episodes of original content.

Even if you don't watch the BBC and never intend to ever watch the BBC, their existence raises the standard of British TV across the board.

(Also, government interference with imposing the broadcasting regulations means that Sky News is NOT simply a British version of Fox News - thank fuck! - because there are rules on bias and needing to be impartial that all broadcasters are held to. In America, Fox News genuinely won a court case on the basis that it had every right to lie to people, if it wanted to. Seriously, that was their legal defence. "Yeah, this is complete bullshit and we know it and completely admit it, but we're allowed to bare-faced lie to our audience, if we want to, as the FTC rules do not explicitly mandate any requirement for honesty from news reporting.")

So, yes, "interference" by the public sector (or, in the case of the BBC, a private organisation that effectively acts as a public service) does distort the private sector.

But, by and large, this is most often a very good thing, because it is a positive distortion that tends to set a minimum standard for all - public and private. Because, if you're charging money, then you have to be clearly better than that "free at the point of use" public sector option to win people over.

(In the American debate over Obamacare, those who wanted more done to fix their broken system - and, yes, all political stripes agreed that their entirely-private system wasn't working and needed major reform, they just disagreed on the specifics of how to do that - were asking for a "public option", provided by government, exactly in the hopes that it could and would have that kind of distortion on the private healthcare providers to raise their games and set that minimum standard, as well as ensuring a base level "safety net" for all.)

The free market unfettered has a tendency towards "race to the bottom" because it, of course, is endeavouring to maximise profits and, if you're not raising prices, the other option is to lower costs. And, in that mad scramble by all to lower costs, there's an implicit "race to the bottom" in cutting corners and reducing quality. Maximum profits does implicitly mean a drive towards charging the most possible for the least possible cost, as that increases your profit margin. And if you're not innovating new manufacturing and distribution methods to do that for the good, then you're probably just silently making your product worse and hoping none of your customers notices this for the bad instead.

Just because it is a distortion of the markets, doesn't mean it's necessarily always a bad thing to "interfere".

[pogo]

I remember many different telephone designs in the places I lived. If they were all purchased from the GPO (which I doubt), perhaps the people you knew all opted for the cheapest models.

No, he's talking about a very long time ago. BT changed their minds about it in the 'seventies or 'eighties when touch tone dialing came in, but before that you could only buy (or only rent?) rotatry dial phones from BT, and only the one model, though they let you choose the colour (sometime after the 'sixties?), before that it was black or nothing.

Not that long ago, up to the 1980s. The law changed in the early 1980s, before privatisation, to force BT to allow you to use your own phone. They didn't like it and insisted on certifying every phone model as compatible with their crude analog circuitry. This was a particular problem for modems, as the first dialup modems appeared about this time. Then as now they often had very rapid development and release cycles. The weeks if not months it took to get BT certification seriously disrupted this and probably meant many devices never reached our shores.

[pogo]

Healthcare is a bad example though. No-one argues the NHS should be privatised. The right to health is a basic human right and it can and should be guaranteed as far as is possible by the government. The US, where there's no such guarantee, has the worst health system in the developed world largely as a consequence of its unwillingness to let the government take charge.

BUPA would exist whatever the NHS did. With socialised medicine for all there's always room for paying a lot more for 5-star treatment. I'm sure every country has BUPA or it's equivalent – except perhaps the US where everyone pays a lot more.

But there nothing wrong with having private provision within a health service. We already have it: companies make the drugs you take, the equipment doctors use, the forms they write on. Private firms build hospitals, run their catering, do the cleaning. The role of the government is to set the standards, for quality, cleanliness, service etc. and see its enforced.

Does this work with services such as patient care, operations? Yes, in the same way, with the government guaranteeing standards. You don't just need to look at the US. In most other countries, not just the US, the private sector plays a much larger role:

[Harlequin]

I remember many different telephone designs in the places I lived. If they were all purchased from the GPO (which I doubt), perhaps the people you knew all opted for the cheapest models.

No, he's talking about a very long time ago. BT changed their minds about it in the 'seventies or 'eighties when touch tone dialing came in, but before that you could only buy (or only rent?) rotatry dial phones from BT, and only the one model, though they let you choose the colour (sometime after the 'sixties?), before that it was black or nothing.

Not that long ago, up to the 1980s. The law changed in the early 1980s, before privatisation, to force BT to allow you to use your own phone. They didn't like it and insisted on certifying every phone model as compatible with their crude analog circuitry. This was a particular problem for modems, as the first dialup modems appeared about this time. Then as now they often had very rapid development and release cycles. The weeks if not months it took to get BT certification seriously disrupted this and probably meant many devices never reached our shores.

Yes, they officially needed to be "certified" by the GPO/BT, but there was a wide variety of different telephone designs available for purchase from at least the very early seventies. The statement that

pre-privatisation … everyone had the same telephone

seems quite untrue.

[tufty]

If it were kept at original levels it'd be more like 1% and your graph shows no such decline over the period. Success for the taxpayer would be somewhere south of 25% at the end of 10 years and the closer to 1% the more like a true success.

If by success you mean paying as little as possible. But cutting so much of the subsidy would also mean a much smaller rail service. I suspect little of it would be viable, maybe just the commuter belt around London. And even that would probably be closed down and sold off if run like a private company: the land the railways run on, the stations and tracks, is far more valuable today than when the railways were founded and stations were sited on cheap land away from the city centre.

I think we need railways. They have at least big benefits, providing mid to long distance journeys to people without cars (and quite a few with), reducing congestion, reducing carbon emissions. I.e. there are social, economic and green benefits. It would be a mistake to cut the subsidy so much that this ended.

Of course we need railways. If nothing else, and as you point out, the "green" benefits they bring are huge.

However, privatisation hasn't been a success for the taxpayer. It hasn't increased competition, it's created a bunch of government funded monopolies, artificially profitable companies funded directly out of the taxpayer's wallet. All they need to do is keep the system running to within the (very lax) rules the government give, and the tax dollars keep rolling in.

I suggest that it is impossible to run a railway system at a profit. There will always need to be subsidy. I think it might not even be possible to run a railway system long-term with anything much less than 1986 or so levels of subsidy; Thatcher's government, I believe, cut too deep (but I'm not a railwayman, I could be wrong). Adjusted for inflation, that would be around the 2 billion a year level.

So. In order to provide the best value for taxpayers, the subsidy has to be minimised. And there's only one place where the rail system is haemorrhaging money, one place where those cuts can be made without affecting taxpayer value-for-money or fares - the pockets of the owners of the private companies. If the rail system were renationalised, the subsidy could be reduced (or alternatively, maintained at the same level and *fares* reduced). And you've have the benefits of running a coherent system where one entity owns the rails, the running stock, the stations, schedules the trains, and so on. Y'know, the reason British Rail was created in the first place (The "big four" had been neglecting maintenance since the early 30s, and were bankrupt in 1947, kept running only by guaranteed government subsidy. Sound familiar?)

[VNVObit]

Where it's strategic it should be up to government, and the government is investing in rural broadband:

£250m boost taking Superfast Broadband further and faster

But only one company winning the contracts we've traded a state monopoly for a private one - so much for introducing market forces there then

probably explains why the UK hasn't performed that well against other countries