freediver wrote on Apr 10
th, 2022 at 8:28pm:
How do you know this?
Privatisation transfers the model of the entity away from service to profit.
When you do this on an infrastructure level, especially when there are protections for the company when things go wrong and governments willing to bail them out because they simply can't fail, it's even worse.
But we're getting way ahead of ourselves.
The notion that the Government shouldn't run/own anything is incredibly short-sighted and is ideologically based. Even likening it to communism only strengthens that argument.
I know there are far more important examples of infrastructure, but take Broadband as an example.
The private ISPs put money into the most profitable areas and that was it. Regional let alone Rural Australia was left out. Even Telstra's billions they wanted to spend pre-NBN, it was only in profitable areas and they wanted exemptions to their minimum service obligations under legislation in return.
The private sector was never going to operate services at a loss, even if they can recoup those costs from the inner city customers, it's just not good business. If a Government has to legislate the servicing of those unprofitable areas, what's the point of privatising?
Power, Water, Health etc, it's all the same.
There is no doubt there can be bloat when the government-run these entities, but we can learn from overseas how to manage these sorts of issues, like say Singapore.
But instead, we get told from one side of politics that the private sector can do it better but time and time again, in terms of service, that's proven to be wrong.
We know what they mean by "do it better" is actually making money. Those services, and the people that use them (again, Power, Water, Health etc) become the commodity under these models.
Not only does the business model change from Service to Profit, but that profit comes by commoditising us and when things go wrong, because they're vital services and infrastructure, we have to pay a second time when our taxes are used to fix the problem/bail them out.
Gold Coast water was an example. The local council had to buy back the company because costs were skyrocketing and service levels, repairs, started falling. Water!
It should have never been privatised in the first place, but now we're left with a massive tax bill due to broken contacts that will be paid off for many many years to come.
I'm not flat out anti-privatisation, there are some use cases for it, but the notion that the private sector do it better and more efficiently and Government shouldn't run/own these entities, as a blanket statement I do not support.
This excellent critique of privatization has been transferred to the Modern Monetary Theory thread, post #130.
[The MMT thread explores the reasons why governments adopted privatization as a policy choice, and examines solutions to counter the problems associated with privatization].
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