Privatisation – the rip-off of public resources

national | anti-capitalism | feature

Wednesday August 02, 2006 19:35

by Gregor Kerr - WSM

- But is ‘nationalisation’ the answer?

Throughout the world, public services have been under attack for the past twenty years. Forming a central plank of the capitalist globalisation agenda, ‘privatisation’ and ‘competition’ are the seemingly unchallenged dogma of modern capitalism. The levels of privatisation which have taken place worldwide are absolutely mindblowing. During the 1990s alone over $900billion worth of public assets were transferred into private hands. Globally this agenda is pushed by the World Bank and the World Trade Organisation (WTO). The basic theory by which these bodies operate is that all decisions should be made on the basis of profitability alone.

More on privatisation: Community Alliance-Sligo: Privatisation is being undertaken by stealth | IEF Challenges Threat of Privatisation | Housing activists meet to discuss redevelopment & privatisation of their homes |FFF vs PPP: Fight For the Flats or Public Private Partnerships? | All Eyes On Upcoming PPP Conference | Europe At A Crossroads? Heath and Education as Business Opportunites | A local community rejects Public Private Partnerships | People Before Profit Public Meeting expresses concerns on land value from Fatima | Living with state dereliction in St Michael's: local community rejects privatisation of their homes.

Economies in the so-called ‘developing’ world have been carved up under re-structuring deals called Structural Adjustment Programmes which have been like manna from heaven for international business. The World Bank website(1) , for example, “provides information on more than 9,000 privatization transactions in developing countries from 1988 to 2003”. This information is presented as ‘revenue generating opportunities’ for international capital. The current phase of the WTO’s strategy for the imposition of its privatisation agenda is the General Agreement on Trade in Services – which looks to sell off such basic services as healthcare, education, housing, water supply, waste management etc. This strategy is driven not in the interest of the ordinary people of these countries but by the needs of international capital. As David Hartridge, Director, WTO Services Division put it quite succinctly: “Without the enormous pressure generated by the American financial services sector, particularly companies like American Express and Citicorp, there would have been no services agreement and therefore perhaps no Uruguay Round and no WTO.” (2)

This privatisation agenda has had disastrous consequences for many peoples and communities in the developing world. According to journalist John Pilger (3) “The introduction of school fees where there was previously free education has driven many poor families to withdraw their children from school, while hospital fees have put basic health care beyond the reach of millions.

Although they acknowledge the harm which privatisation has brought to poor communities in the Third World, the World Bank and IMF still insist on prescribing it as an economic model. Water privatisation is just one example. The World Bank notes that water in Haiti's capital Port-au-Prince costs up to 10 times as much from the private sector as it does from the public supply, and that poor families in Mauritania now have to spend a fifth of their household income on water.

Yet both the World Bank and the IMF continue to force water privatisation on developing countries. During 2000 alone, the IMF made water privatisation or full cost recovery a condition of loan agreements to 12 African countries. The World Bank has promised Ghana an extra $100 million in loans if it privatises its water supply.”

Lisbon agenda
At EU level, the privatisation agenda is being driven by what is called the ‘Lisbon agenda’. This refers to an agreement made by EU governments in March 2000 to make the EU "the most competitive and dynamic knowledge-driven economy by 2010". One of the most influential lobby groups which has pushed this agenda behind the scenes is the European Round Table of Industrialists (ERT). The ERT brings together approximately 45 ‘European industrial leaders’. According to its website (4) “ERT members are chief executives and chairmen of major multinational companies of European parentage…Individuals join at the personal invitation of existing members.” Members of the ERT include Ireland’s Michael Smurfit and the CEOs of such companies as British Airways, BP, Renault, Fiat, Deutsche Telekom, Diageo, Royal Dutch Shell, Heineken, Nestlé, Bayer, Nokia and many other household names. The ERT see “the higher cost of doing business in Europe” as “a drain on competitiveness.” Current ERT priorities as listed on their website include deadlines for full liberalisation of gas and electricity markets and postal services”. The ERT has a direct line to the heart of EU decision-making, boasting that “at European level, the ERT has contacts with the Commission, the Council of Ministers and the European parliament…every six months the ERT meets with the government that holds the EU presidency to discuss priorities…At national level, each member has personal contacts with his own national government and parliament, business colleagues and industrial federations, other opinion-formers and the press.”

It is this ‘personal contact’ which drives EU economic policy and which is fuelling the push towards privatisation. One thing we can be sure of is that when the ERT get together with their political cronies, workers’ rights or defence of the welfare state doesn’t figure high on their agenda. In fact they tend to see such things as minimum wages, workers’ holiday entitlements, minimum safety requirements etc. as barriers to the god of competitiveness, and when they talk about ‘liberalisation’ what they mean is the removal of any and all barriers to their unfettered right to make unlimited profits.

‘Popular capitalism’
Privatisation can take a number of forms. It can involve the direct selling off of state owned companies to the highest bidder or can be in the form of floatation on the stock markets. The best-known example of the latter in the Republic of Ireland was the government’s selling of the national telephone company, Eircom, in 1999. This privatisation was sold to the Irish people as ‘popular capitalism’ whereby supposedly everybody had the opportunity to become a shareholder. A massive government propaganda campaign persuaded 575,000 people to buy shares in Eircom. According to Paul Sweeney’s book “Selling out? Privatisation in Ireland” (5) almost a third of those who purchased shares came from the skilled and unskilled working class. However within two years Eircom was fully in the hands of venture capitalists with many ordinary shareholders losing up to 30% of their investment. Privatisation of Eircom was successful for some however – the top 4 managers earned a total of €29million between them in a 30 month period between late 2001 and March 2004 – a staggering average monthly salary of €240,000 each!! Obviously ‘popular capitalism’ works for some.

The privatisation of the rail and water services in Britain led to similar staggering wage rates for the top managers. In the first seven years after the privatisation of the British water service in 1989, salaries and bonuses paid to the top directors increased by an average of between 50 and 200 per cent per annum. At the same time, the water bills being faced by householders soared – with an average increase of approximately 50% in the first four years. Indeed, water bills in England and Wales are set to rise by a further 13% over the next five years.

It is these consequences of privatisation that is driving the current battle against the introduction of water charges in the North. It is obvious to campaigners that the successful introduction of a charge would be the first step towards privatisation. Privatisation of the service is one of the main driving factors behind the attempts to introduce a bin tax in the South as well (and will no doubt lead to attempts to re-introduce domestic water charges in the not-too-distant future). In 37 local authority areas in the South, the bin collection service has already been privatised, in all of these an important precursor to privatisation was the successful implementation of a charge. After all who was going to be interested in running the service unless they were going to be able to make money from it? Once the last vestiges of resistance to the introduction of the bin tax is crushed, the service will be privatised throughout the state and householders’ bills can be expected to soar.

Pay and conditions
Another consequence of the privatisation of the bin and water services will be a major attack on the pay and conditions of workers. In the post-privatisation economy workers can look forward to the replacement of their jobs with ‘yellow-pack’ jobs. In late 2003/early 2004 workers at the private bin-collection company, Oxigen, which has the contract for collecting the green recycling bins in the Dublin City Council area, were forced to go on strike for 3 months to even win union recognition. Working conditions and rates of pay for Oxigen workers are much worse than for the workers directly employed by Dublin City Council. This is the future which faces all workers in state-run services if the privatisation agenda is successful.

While privatisation is sometimes open and obvious, governments often have to be more circumspect when the service being privatised is in politically sensitive areas such as health and education. This is where scams such as Private Finance Initiative (PFI) and Public Private Partnerships (PPPs) come into play. Private Finance Initiatives are the ‘Trojan horse’ used by the Blair government in the UK to introduce private capital to the public sector, especially but not exclusively in the National Health Service (NHS). Under PFI, hospitals are built by the private sector and then leased back to the NHS over a period of between 20 and 30 years. The private company is paid an annual sum for provision of the building and services in it, rather like a typical mortgage but with in addition the provision of caretaking, security, maintenance etc. - most likely at wage rates inferior to those of direct employees.

Public Private Partnerships
In Ireland the government has embraced Public Private Partnerships in a number of areas, most notably in the construction of roads and other infrastructural projects. These have inevitably resulted in huge profits for the private companies involved. For example, in 2000 the Department of Education and Science (DES) entered into a PPP agreement for the design and construction of five new secondary schools. Sites for the schools were provided by the State and contracts were awarded to companies to build the schools and to maintain and operate them for 25 years. The DES trumpeted this as the new way forward and claimed an expected saving of 6% compared to the cost of direct state provision. The truth however turned out to be somewhat different. In June 2004 the Comptroller and Auditor General’s report found that the projected cost of the provision of these 5 schools was going to be 8 – 13 per cent higher than the traditional methods of funding - a transfer of an extra €30million from the taxpayers’ pocket into that of private business!!

Transport infrastructural investment in the Republic of Ireland over the last number of years has been huge. Motorways which are built as PPPs are a licence to print money for the private companies involved. Of the €8billion which will be spent on national roads up to 2008, €1.2billion will come from the private sector. As the motorways are built, these private companies will recoup their investment through the imposition of tolls. And they will collect massive profits! It is estimated that over the next 30 years €5.5billion will be handed over in tolls by road users. National Toll Roads, the company which collects the tolls on the M50 motorway, turned in a profit of €18million in 2004.

Run down of services
Quite often governments need to be even more duplicitous in order to push their privatisation agenda. Public services are deliberately allowed to run down and become ‘inefficient’ in the hope that people will then welcome the intervention of private business. In the Republic of Ireland, this is most obvious currently in the area of public transport. Dublin Bus, for example, has been starved of necessary investment for years with the result that the company is now at least 150 buses short of what they need even to provide what is already an insufficient service. In fact Dublin Bus receives the lowest State subsidy of any public transport operator in Western Europe or North America. One result of this lack of investment is obviously a disimprovement in the level of bus service. What better way to prepare public opinion for the introduction of private buses? And this is exactly the government’s plan – the privatisation of Dublin Bus by 2008 is stated government policy, starting with the hiving off of 25% of the routes.

When the privatisation is successfully pushed through, ‘uneconomic’ routes will be gone. People who live in the suburbs can expect to have a bus service at peak times when buses are busy but at off-peak times no private company is going to have half-empty buses on the road.

And just in case it needs to be stated again, privatisation leads to a disimprovement in workers’ conditions of service. Evidence of this can be seen in the private company Aircoach which runs a coach service from Dublin city centre to the airport and from Dublin to Cork. Bus drivers for Aircoach work a 12-hour shift, they can only take a toilet break if they are ahead of schedule and they must pay for any damage to the buses they drive. The company refuses to recognise or negotiate with any union.

Privatisation of public services – whether it is through the direct sale of utilities or through indirect methods such as PFI and PPP – involves a massive transfer of wealth from taxpayers to the pockets of private business interests. It negates the concept of there being such a thing as ‘public service’ and subjects everything to the bottom line of profit. In other words it seeks to maximise the profits of a few at the expense of wages and social obligations. Furthermore, privatisation inevitably leads to an attack on wages and working conditions – conditions which have been fought for through years of trade union agitation are done away with at the scratch of a pen.

‘Nationalisation’?
While anarchists oppose the privatisation of state assets and services for the reasons discussed above, we do not call – as some on the left do - for the ‘nationalisation’ of services as a solution to problems. For example during the recent Irish Ferries dispute, the Socialist Party put forward as one of the ways in which the workers’ demands could be met (6)
- Take Irish Ferries into democratic public ownership in order to safeguard pay and conditions and to safeguard the shipping industry as a vital asset

But the taking of Irish ferries into public ownership would in no way ‘safeguard pay and conditions’. We’d be expecting the same politicians who are busily implementing the neo-liberal agenda to now take on the role of workers’ protectors. While I’m not suggesting for a moment that the Socialist Party are proposing this, it is important to point out that the ‘nationalise it’ or ‘take it into public ownership’ slogan is far too often spun out by people on the left without their taking into account that there is a massive difference between state control/ownership and workers’ control/ownership.

Of course that is not to say that nationalisation is of no consequence. What I am trying to argue is that while we don’t see nationalisation as the answer, it would of course be a significant development especially for the workers directly involved. In the Irish Ferries case, for example, presumably if the Irish government was the employer it would not have been as easy for them to pull the legal ruse of paying the workers wages lower than the Irish minimum wage. So while they might well have sought ways to drive down wages, their options would have been more limited.

Similarly many on the left have called for the re-nationalisation of the Corrib gas reserves off the coast of Mayo. While it is an absolute disgrace that the government gave these reserves away to Shell/Statoil for such a poor return (7) and that the billionaire owners of Shell, Statoil and Marathon stand to make a fortune from assets which should be rightfully owned by the Irish people, we all know that even if the revenues from the gas were still in state ownership, spending it on housing the homeless or reducing hospital waiting lists would not top the agenda of the government.

Their being in state ownership would however make more possible the type of political campaign which might force them to spend the moneys in the interests of the working class. A nurses’ strike to demand the Irish government invest the proceeds of the Corrib gasfields in healthcare would have a much greater likelihood of success than a similar action directed at the Shell management.

Put simply, state ownership does not equal workers’ ownership. No-one would argue that the fact that apartheid South Africa had a very high level of state ownership made it a workers’ paradise. Neither would it be claimed – except by some died-in-the-wool stalinists – that Soviet Europe, where the ownership of all industry was in the hands of the state, was good for the majority of workers.

Alienation
It can actually be argued indeed that state ownership can contribute to a heightened sense of alienation among working class people. In such a scenario we are sold the lie that the resource – be it gas reserves or whatever else – is ‘public property’. The reality however is that far from being in the ownership of ‘the public’, ordinary people have no direct say in the allocation of these resources. Just as working class people are consistently alienated from the product of their labour, this selling of the idea of ‘public ownership’ over which the public have no real say leads to an increase in apathy and a sense of helplessness among ordinary people. It is much more likely that the political establishment who control the purse strings supposedly ‘in the public interest’ will actually spend revenues generated from these ‘public assets’ on measures that will have the long-term effect of re-inforcing rather than alleviating social division. Public policy consistently results in an increase in the gap between the well-off and the poor.

There are of course advantages for working class people in services and resources being in ‘public’ rather than private hands. In the case of the Corrib gas fields, for example, a ‘public’ company would be much more susceptible to public political pressure in terms of both safety issues and the distribution of the gas. Because of the nature of the deal done with Shell and Statoil when they were given control of the gas reserves, the community in North-West Mayo are expected to take all the safety and environmental risks associated with bringing the gas ashore. But – because the oil companies’ profit margins are the principal motivation involved - there is no intention of connecting the local community to the gas grid. Instead it will be piped directly to the existing Dublin-Galway pipeline where, incidentally, the state-owned Bord Gais Eireann will buy the gas at market rates.

It could certainly be argued that if the gas reserves had remained in ‘public’ ownership the local community would be in a much stronger position when it came to trying to exert political pressure to ensure that it is both brought ashore safely and put to the benefit of the local people.

Trade union organisation
Probably the biggest argument in favour of ‘public’ rather than private ownership of services and resources is in relation to employment and conditions of service. Traditionally public sector workers have enjoyed stronger trade union organisation. In recent years this has become even more entrenched. According to official statistics published in September 2005, trade union membership in Ireland rose by around 20% from 1994 to 2004, to stand at 521,400. However, union density as a proportion of all employees fell from 46% to 35%, with private sector union density now standing at a mere 21%. Trade union organisation within the public sector is obviously much easier especially in a climate where more and more private sector employers adopt a strongly anti-union stance.

Public sector workers as a rule tend to have a greater sense of job satisfaction especially in terms of civic pride etc. Workers in education and health, for example, can see a direct benefit to the communities in which they live from the provision of the service in which they work. This same level of direct benefit to the community is not always evident in private sector employments.

To sum up, the arguments against privatisation of public services and assets are strong. Privatisation inevitably operates in the interest of the wealthy and big business. On the other hand, however, the call for ‘nationalisation’ or for the retention of services etc in public ownership only makes sense in the context of a radically changed social set-up. In today’s world ‘public sector’ has come to mean ‘government’. It is only if ‘public sector’ can be made to mean ‘people’s ownership’ in a real sense that the call for public ownership can be a truly radical one. In the absence of revolutionary change, what is important is not who owns the gas or the aeroplanes or whatever. The truly important thing is how the profits made are spent and how the service is operated in the interest of the public. This can be done through state ownership or through levying punitive taxes on the profits of the private companies. At the end of the day, if either was to happen, it would indeed be a significant change.

(1) http://rru.worldbank.org/Privatization/
(2) quoted on ‘globalissues’ website, http://www.globalissues.org/TradeRelated/FreeTrade/GATS.asp
(3) see http://pilger.carlton.com/globalisation/privatisation
(4) http://www.ert.be
(5) Paul Sweeney is economic adviser to the Irish Congress of Trade Unions
(6) http://www.socialistparty.net/
(7) see the Shell to Sea website for details - http://www.corribsos.com/

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Comments (18 of 18)

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by HB

Wed Aug 02, 2006 21:10

Gregor, this article is extremely well written, and for an anarchist, very well argued. But it is fundamentally flawed, over-emotive and misleading.

You make the point that after the privatisation of companies the wages of bosses go up, and give this as an example of a bad aspect of the process. But in reality, who gives a shit what bosses get paid post-privatisation? The money isn't coming out of state coffers! It's their dumb shareholders' money which is paying for it, so who cares?

The problem arises when there is no competition in the market to go hand in hand with a freshly-privatised state asset, and prices in that situation can be jacked up to pay the fat wages, because they can get away with it because people have no alternative service provider.

You must completely de-regulate a market first before you privatise it (just look at the airlines and how cheap a flight is now - it's a good example), then it all works out.

You go on about pay rates at Oxigen and say they are lower than state pay rates and that this fate awaits the workers of other privatised assets. Don't make me laugh! The real fat cats at the old Telecom Eireann (now Eircom) are the workers. They've creamed it! Esot (their share scheme) is the power broker everytime it gets sold, and as such, they have the other shareholders by the balls.

Also, just look at Great Southern Hotels (in the middle of the process now). They are getting 6 weeks pay per year of service (for one particular Killarney porter this is €180,000) just to keep their mouths shut, and they still get to keep their jobs on the same conditions!. If ESB gets privatised, they will get a similar deal.

Workers in Ireland do very well out of privatisation indeed when it comes to money, pay and conditions. And anyway, if public ownership serves to artificially inflate wages, that means that state money that could be spent elsewhere on necessary stuff is being spent on bigger wage packets, and that's a bad thing (whether the wage is for a financial controller or a binman).

Your schools PPP point is a good one, but slightly misleading. The reason those particular schools cost more is because that particular process was handled bady by DES. They appointed a preferred bidder (Jarvis) too early in order to speed up the process so as to deliver the schools on time, to make the Department look good to the public. That served to give Jarvis too much bargaining power before the deal was fully done, thus the high price.

That is not a problem with privatisation theory, that was just a badly-handled individual case. If they had retained the competition for longer in the tendering process and made Jarvis sweat it, and said 'Fuck You' to the clock-watchers, the schools would have come in way cheaper.

You selectively chose a misleading PPP example which had its own quirks (which you kept quiet), when there are dozens of other PPP examples (such as the new M4) where the taxpayer has saved piles of cash. Then you misleadingly blamed it on the theory of PPP.

Your Bus point about running down the services to ready them for privatisation is chicken-or-the-egg stuff. Which comes first, the lack of investment, or the inefficiency and poor service? If, by looking at private companies a government sees at what cost a service can potentially be provided for, and gives exactly this much money to a company such as Dublin Bus (less the fare payed by us), and it turns out to still not be enough, the company is inefficient...... end of story.

And with an inefficient company, you don't give it any more than you should, otherwise it's a waste.

Bottom line, when an asset gets privatised, it isn't just given away. The new owners have to pay the state a price for it. So when you say $900 billion of assets was privatised, that means $900 billion went back into the hands of the exchequer, which still has access to the services of the company as well as a brand new pile of cash to spend on other state-owned stuff.

And when a state asset is floated, the market will give it an indication beforehand of what it is willing to pay (with the competition of other buyers factored in), meaning that a fair price is usually paid. The reason the Telecom Eireann people lost money is because the whole tech sector crashed at that time, although TE held up better than similar companies in other countries.

If it isn't being privatised into a monopoly situation with no regulation (that's where the trouble starts), it is a much better way of doing things. It raises money for the state, improves the asset being privatised and thus the quality of the service, and it lets the government get on with what it should be doing, instead of fucking around trying to run a company in a business it isn't an expert in.

progressive nationalism, si

by tim

Thu Aug 03, 2006 05:27

Just as there is just and unjust violence, there is just and unjust nationalism. In Canada when Walter Gordon was implementing a programme of nationalizing Canadas' industrial base he was met by John D. Rockefellers Gun thugs and told if he continued nationalizing Canadas resources and factories, they would no longer guarantee his life. That was and unjust violence against progressive nationalzation of the means of production built in Canada by the Canadian working class. Unfortunately the Liberal party caved on it, and began implementing Nafta, mai and the fta, which are disguised U. S. Colonial treaties to annex Canadian resources and means of production, thereby making Canada a super colony of the U.S. Empire. Had the Liberals exposed the U.S. gansters and organized a peoples opposition they still would be around instead of bogged down in a guagmire of scandals and corruption. Canada needs to say no to annexation , and yes to independance and sovereinty. Canada has never really had the chance to live on their own infastructure, first ruled and bullied by the French and English Empire and now by the U.S. Imperialist system of pollution and warmongering which is not in the interests of the Canadian working people.

Information Dissemination.

by Chris Murray - The Unmanageables

Thu Aug 03, 2006 12:04

The Political Parties in the centre have not addressed these issues in nine years of
opposition. The local councillors and big brother's in the Dail tend to ring -fence issues
and use them to further the political interests of their party or if it will feed into an
existent electoral agenda. Its nice to see the issues being collated and presented
here. The ecological and environmental movement has a place in it too.

The issue of legislative change which is affecting citizen rights and disseminating that
information to a wider audience is important. Few political parties operate outside of
the sphere of their 'clientelism' and have not put resources into informing people
how laws will affect them. People in community actions opposed to legislations
such as Planning , have to learn about the PPP/Consultative process at the coal face
and the failure of the Opposition has been to score political points, reduce information
collation and sharing to an increasingly narrower agenda. A lot of people, specifically
women do not know about consistent erosion of their rights until it happens to them,
because they do not vote and are completely alienated from the political process.
Engaging through providing the information is very necessary-

It's twelve months (less) to the election and the opposition has failed. The Left parties
that are established and in the Dail (with the exception of the Socialist Party) have completely
moved into the centre. There is little between them ,and traditional Left wing parties
are moving away from the Unions and agreeing coalition, pre-election with right-wing
parties. It is simply not good enough to state that it is necessary to oust FF/PD through
dropping principles in favour of parochial clientelism. Good article.

by Caobhin

Fri Aug 04, 2006 14:02

"You make the point that after the privatisation of companies the wages of bosses go up, and give this as an example of a bad aspect of the process. But in reality, who gives a shit what bosses get paid post-privatisation? The money isn't coming out of state coffers! It's their dumb shareholders' money which is paying for it, so who cares?"

At the end of the day you’re saying it’s okay for these parasites to enrich themselves from resources built up over the years by the taxpayer? It isn’t “dumb shareholders'” who enrich the bosses - it’s the ripped-off consumer and the workforce who are invariably forced through a process of “rationalisation” post-privatisation i.e the erosion of working conditions in name of efficency.

There are plenty of privatised monopolies or near monopolies where prices are jacked up to pay inflated dividends and bonuses, what do you think the end aim of any corporation is?

"You must completely de-regulate a market first before you privatise it (just look at the airlines and how cheap a flight is now - it's a good example), then it all works out."

Air travel is the most clichéd example and flawed example of privatisation you could have picked , –a prime example of some of the most cut-throat rip off merchants around, who “deliver” cheaper flights (all going up now btw) at the cost of horrendous working conditions, rabid anti-trade unionism and a blatant disregard for minor factors such as healthand safety, not to mention the sneaky hidden costs and traps specifically designed to fleece the customer.

"Workers in Ireland do very well out of privatisation indeed when it comes to money, pay and conditions. "

Sure they do, that’s why privatised companies are so welcoming to their staff becoming members of trade unions.

"Bottom line, when an asset gets privatised, it isn't just given away. The new owners have to pay the state a price for it. "

That’s very decent of the circling sharks but the price any new owner pays for a state asset is determined mainly on it's liquidity value which is usually horrendously underestimated. In addition, state company is usually prepared for a position of “”profitiability” through hiring of consultants, "rationalisation" measures before put on the market – all at the taxpayers expense of course.

"So when you say $900 billion of assets was privatised, that means $900 billion went back into the hands of the exchequer, which still has access to the services of the company as well as a brand new pile of cash to spend on other state-owned stuff."

Our privatising regime is more likely to spend its “brand new pile of cash “on tax breaks for property developers and schemes to reward wealthy constituents than on more “state-owned stuff.” Funds go back into the exchequer for the privatising loving politicians to spend as they see fit while the public is left facing a newly privatised monopoly whose only aim is to maximise profitiability for itself. A quote from Monty Python (Meaning of Life) illustrates this ethos;

“You see we lease this machine back from the company we sold it to, that way it comes under the monthly current budget and not the capital account”

"And when a state asset is floated, the market will give it an indication beforehand of what it is willing to pay (with the competition of other buyers factored in), meaning that a fair price is usually paid. The reason the Telecom Eireann people lost money is because the whole tech sector crashed at that time, although TE held up better than similar companies in other countries.."

You’re touching on isider trading there, we all know the close relationship between the market and it’s lackeys in government. The bulk of the shareholders who lost money in TE were those encouraged to dabble in buying a piece of a state asset by a massive government propoganda campaign who through misguided loyalty held onto their shares as opposed to offloading them as soon as the stock went public. Not too many venture/gangster capitalists lost out there.

You have all the zeal of a privatisation crusader and your arguments reflect your half-baked ideology. Try getting rich if you like but not through the theft of public resources.

hear hear

by amanda - nipsa

Fri Aug 04, 2006 14:23

Not only do we (the public) have to pay for the services once they're privatised we actually pay through the nose to get them privatised in the first place as the government spends millions on consultants fees and reports and "infrastructure investment" prior to sell - off - see water service and Workplace 2010 in the North. Plus they put our rates up 19% this year and additional charges for water will be raised on top of that - I do care how much the fat cat bosses of the private companies are getting paid - its not the shareholders who take the burden of those costs its the public who ultimately pay for the services (which are usually rationalised and less accessible as well post privatisation) and our members who pay for it through worse terms and conditions. And we'll not even get into where the profits actually go - safe to say they won't be recycled into our economy through taxation - a bank account in the Caymans anyone????

Public v private

by hs - sp (per cap)

Fri Aug 04, 2006 16:23

Excellent and interesting article, but on to the question is "nationalisation the answer?" you haven't given an alternative to nationalisation, as opposed to privatisation. One basic difference between private and state owned companies is that public companies do not operate solely to make profit. They are supposed to operate to serve the public. Obviously they can be dgood or bad at this. more democratic running of organisations with the election of managers etc is obviously what we want but if the industry is not in state hands should it be in a trust or in the direct ownership of the workers, or a mixture? On alienation it's interesting to note the thousands of workers who applied for a handful of civil service jobs recently, and one or two I know were prepared to take massive pay cuts. For those I think quality of life, security and doing something useful with your life had alot to do with it.

Caobhin

Fri Aug 04, 2006 17:26

Your flimsy knowledge of economic theory isn't surprising, though hats off to you for attempting to argue a topic you haven't a clue about.

"the price any new owner pays for a state asset is determined mainly on it's liquidity value " is a prime example of your economic bolloxology. The price is based on its future earning potential. Anyway, liquidity can't be "underestimated" as you so knowingly put it. Liquidity is a simple mathematical balance sheet calculation - its a straight up figure.

I said: "Workers in Ireland do very well out of privatisation indeed when it comes to money, pay and conditions. " To which you replied - "Sure they do, that’s why privatised companies are so welcoming to their staff becoming members of trade unions". But staff in privatised companies are always already members of trade unions. They would have been before it was privatised, and would continue to be after privatisation. So I'm not sure what bonkers point you were making - but it wasn't about privatisation. I'll refer you again to the huge windfalls achieved by workers after the priv of Telecom Eireann and GSH.

We could knock heads all day on this one, but the bottom line is you are opposed to privatisation because you are opposed to all private enterprise, all monetary transactions, and anything that smacks of business or corporate activity.... basically, you are opposed to everything that doesn't fit into hard-core socialist, or even worse, anarchic ideology. And you accuse me of having a half-baked ideology?!?!

Look around you, honey, the vast majority of people don't agree with your nonsense. A simple stroll down any high street in Ireland will tell you that..........

pros and cons

by curtin

Fri Aug 04, 2006 17:46

There are pros and cons to privitisation--like anything in my opinion.

A state asset can do what it does--provide the service to its people and it can do it well, it can also bleed money--now of course its a public asset--not there to make a profit but indeed to provide a vital service, the problem is when it is a state asset it can be horribly horribly run and because the state funds it regardless, it can just get worse and worse over time, just because its a public asset does not mean it should be run ineffectively, i hope you understand what i mean and this is a massive waste of money.

public assets which have a monopoly and tend to be heavily unionised---these assets can be held to ransom by unions through strikes --prime example was ESB workers in the eighties earning vast amounts more than other government enterprises, you could say the union representation was good, you could also claim that the union had the country over a barrell and the government and the public knew it

I think there are some classes of public assets which never ever should be sold/privitised:

Water
Power--Electricity and gas
healthcare--hospitals etc
mainly as these are usually monopolies and require massive long term investment and networks

Of course trade unionists will object to any privitisation as it erodes their powerbase substancially

a monopoly industry should never be privitised, and as i stated above the unions must be kept in check in regards to a government monopoly

Everything else in my opinion should be fair game, i think everyone knows the effect of the collective old russian state and its public enterprises--which were horrendous failures and came down with a massive crash

there should be stringent government bodies on any industry that is privatised to ensure standards are kept high and fines slapped on any rogue operaters---i would say one vital difference to the way they are currently run though--totally independant from the government of the day--i mean totally as i think this is a major major problem and leads to corruption --something which Eire is no stranger 2.
correct allocation of monies from privitisation--be it health, hospitals, roads etc and NOT used to cover a budget deficit which has happened so so often---i.e prvatisation monies to be kept complety seperate and not regarded as state income --rather as money which is split in a similar way everytime--20% health 50% on the remaining government assets etc and not included in any budget forcasts etc
I can write much more fluid than this but its friday and i am at work

Fri Aug 04, 2006 19:02

I should refrain at trying to decipher your half-baked pseudo-philosophy and giving you the credibility of a reply but here goes;

“The price is based on its future earning potential”

You must have a hefty portfolio of dogs*t shares if you really believe this. Look up “future and potential in a dictionary sometime.

Anyway, liquidity can't be "underestimated"

Are you being deliberately naïve? -there are countless examples of state property portfolios magically receiving 10 or 20 times their original value when resold to private companies.

Some workers did make out like bandits when agreeing to privatize Telecom or wherever but this was of no benefit to workers at large and is another argument against privatisation. The hypocrisy of effectively bribing workers who are usually vilified as over-paid and inefficient to clear the way for the asset strippers no doubt escapes you. The carrot is used in these cases, it’s the stick from the private sector for the rest of the time.

I tip my cloth cap to your deeply researched in-depth knowledge of my political views, i.e that I’m “opposed to all private enterprise, all monetary transactions, and anything that smacks of business or corporate activity.... basically, you are opposed to everything that doesn't fit into hard-core socialist, or even worse, anarchic ideology.”

- The shops are open and therefore you’re right eh? Wipe the foam from your mouth and calm down.

Fri Aug 04, 2006 21:27

Sigh.... sigh sigh sigh...

Why did i even bother?

You say - "there are countless examples of state property portfolios magically receiving 10 or 20 times their original value when resold to private companies."

That sentence doesn't even make sense, and I note you haven't given one of these "countless" examples of whatever the hell it is you are talking about. Property portfolios? Liquidity? What?

Getting back to liquidity, which seemed to confuse you. Definition: Total dollar value of cash and marketable securities divided by current liabilities. (www.investorwords.com). It's a ratio, it can't be undervalued. It's absolute.

Future? Potential? Dictionary?..... Ok then......

"Business valuations consist of determining the value today of a business' future earnings potential and the risks (threats) of those future earnings. " - (www.ktec.com)

Does that help you? No go inside and do your homework, your tea will be ready soon.

Next time, you might like to try your hand at one of these places beforehand:

quick note

by therant

Sun Aug 06, 2006 16:46

"Look around you, honey, the vast majority of people don't agree with your nonsense. A simple stroll down any high street in Ireland will tell you that"

What would a stroll tell? I must remember the next time i have an opinion or an idea that i should check in with the majority to make sure it's ok to innovate or free think.

Not only that but it's a failed understanding of democracy to believe that it represents the majority of people and therefore making it correct and justifiable rule. I think if you're going to make points like this again try not to end with such obviously flawed logic.

Also do you think that the arrogant tone of your replies means that the same majority of people will dismiss you as nonsensical also?

"Free-Think" (tm)

by DennisL

Tue Aug 08, 2006 17:05

"Free think"(tm)

Coming to a store near you.

Huh? You make it sound like a deliberate activity..."i'm just going to sit down and have a free-think", because a normal "think" is obviously a restrained one?

About privatisation...anyone can see that it works. We now have much cheaper phone calls, and flights, and hopefully soon, better bus and rail services.

Corrib Gas - A good deal for the irish people??

by cool j

Wed Aug 09, 2006 03:26

Well HB - Do you consider the way the government has handled the share-out of our vast untapped gas and oil rserves as a good deal for the Irish people????

Who are "we" exactly?

by Andrew McGrath - The Tara Foundation

Thu Aug 10, 2006 14:37

I ask because the term "we" is the term employed by the media and the State to imply that the illusory general prosperity is a reality. I really think it's a bit desperate to attack people on the basis of a typo or imperfect syntax.

"About privatisation...anyone can see that it works. We now have much cheaper phone calls, and flights, and hopefully soon, better bus and rail services."

No, actually "we" don't. A comparison with any European country will soon have the wool dropping from your eyes on that one, no matter how assiduously you try to keep it there (in State employ, perchance, like any one of a legion of State mouths?). And I like the unintentional humour in the "hopefully soon" phrase about, you know, better services and the like. Case in point: €1 billion minimum spent on the Dublin Port Tunnel, then the PDs revive a decade-old plan to move the Port elsewhere. Meanwhile the Tunnel itself has been designed not to integrate with the existing road network and to be dificult to access by commuters, for the purpose of taking Port traffic away from the Quays. You want an example of a scam, there you have one. There are many others: the estimated €1 billion cost for *upgrades* to the M50 (do I really need to emphasize the abdurdity of this, or have the State mouths succeeded in obliterating such distinctions?), the gift of free State land to private clinics (oh, let's not forget the free State land to private developers), the closure of regional hospitals, the "Transport 21" confidence trick....

I wonder how long this famous private sector of yours would survive without vast amounts of social welfare that are dedicated to keeping it afloat? When you say that it "works", exactly what do you mean? The massive state subsidies provided to private operators to enable them to force prices down and monopolize services? I guess that works, so long as those who have to pay for it are willing to put up with getting screwed in the process.

Dirty NAC

by National Aquatic Centre

Thu Aug 10, 2006 15:32

What about the scandal that is now the National Aquatic Centre?The government is spending millions in legal fees to get this state asset back from waterworld who are literally running it into the ground dragging out an appeal as long as possible. A swim there costs €12! From a venue that all of us as taxpayers paid for. The original price was €8 but these guys got smart and raised the price even though it was without sanction.
If anyone goes in there now and sees the filth in the centre with algae all over the poolside, and disgusting changing rooms they will realise how much of a disgrace this has become. Any attempts to expose this scandal is met by Waterworld trying to remove articles from this site

oops

Fri Aug 11, 2006 21:42

"Huh? You make it sound like a deliberate activity..."i'm just going to sit down and have a free-think", because a normal "think" is obviously a restrained one?"

apologies for my error i don't know how to edit posts afterwards.

I also used the word "also" twice in sentence an obvious "no, no".

Anyway your childish mocking was well appreciated and refreshing.

caoimhin and HB

by John

Sun Aug 13, 2006 03:35

You are both making intelligent and well thought-out arguments (very unusual for this website) so why do you continue to patronise each other as if your opponent was a complete moron with no knowledge of economics or politics?

It sounds like you both know alot and I for one was following your discussion with interest but you both make yourselves look petty when you insist on arrogantly dismissing each other with such pompous phrases like "sigh sigh sigh, why do i even bother".

interesting definition.....

by misquote

Fri Feb 23, 2007 15:15

Capitalism:
"The absurd idea that the most ruthless of men doing the most evil things can do the most good for the most people"

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