Sunday, 2 October 2011

Nationalised services in all but name

Privatisation was introduced as a policy in the late 1970s by politicians who saw the benefit to the consumer that would result from competition between the suppliers of goods and services. The naturally regulated ebb and flow of those who seek their own interest in the process of supplying such goods and services to others for personal gain.

Earlier, one of the first movers to challenge nationalised industries was Freddie Laker who took on the national flag-carrier airlines much to their abiding horror. They managed to substantially defeat him personally, but not the move that he had started as can be seen in the proliferation of budget airlines today.

It did not take long for some of those suppliers of the nationalised functions to see that the huge captive market they benefitted from as a nationalised goods or service provider was something to be retained if possible.
And of course, anything is possible more or less, if one puts one's mind to it.
As they saw the great cash cows slipping away perhaps they simply set up "private" corporations to supply the goods or services that had been supplied by the nationalised industries?

This revised privatisation mantra indeed spread around the world during the 1980s and 90s and in some situations the instigators did not even bother to conceal their identity with the state. They simply formed private companies wholly or majority owned by the state. Such as Telkom, in South Africa.

In Britain it seems to have been more subtle in its outworking, but the monoplised or cartellised situation of supply would seem to have been achieved none the less.
So much that has tried to pass itself off as privatisation since its earlier days of more honest implementation circa 1979 looks basically like a con game.
It's not the banker's bonuses one needs to be looking at so much as the people, who may be bankers or have interests in banks, or in large corporations, companies or global service providers, who may also be in state employment or rather, simply influencial in the state structure.

Privatisation as now practised would clearly seem to have been transformed from a policy of throwing open nationalised industries to free enterprise competition, into that of throwing open the nationalised sector to monopolistic cartels.

Effectively, back to business as it was, with the market controlled by suppliers rather than consumers, and in hallmark style of the enemies of freedom, giving freedom a bad name in the process as they have allowed standards to erode.

It was tragic that the Herald of Free Enterprise was sunk.


  1. Spot on John - what we have now is 'worst of both worlds' privatisation, where rewards come without risk and the taxpayer is always there to bail out the corporation that fails.

    The energy suppliers and railways have to be amongst the most botched privatisations ever implemented by any government. Without freedom to fail, you merely create a new legion of undeserving rich and gangster capitalists.

  2. Gangster capitalists are only responding to a hole torn in the natural fabric of free exchange, of course.
    The original problem is artificial control and distortion of the natural flow, backed by coercive force, established to benefit those able to get away with it.
    Which they do in the "name of the people".
    Rather clever.
    K. Marx might blush?

  3. The first fake privatisations were of Fannie Mae and Freddie Mac in the United States. In this case it was not so obvious as in the South African case (where most shares in the "private" company were owned by the state), but these government created enterprises continued to be CONTROLLED by government (specifically people like Congressman Barney Frank) it was just that private people (either share owners or managers) were allowed to profit from government created, backed, and controlled entities. Institutional corruption.