Why British Rail Privatisation Has Failed

[The Lawspeaker]

WHY BRITISH RAIL PRIVATISATION HAS FAILED
PATRICK CROZIER

British rail privatisation has failed. I think that’s pretty safe to
say. But I am a free-marketeer, a libertarian. I believe that the world would be a better place if we privatised schools, hospitals and even the police. I cannot at one and the same time claim that privatisation is a good thing and a bad thing. I have some explaining to do.
But before I do, I want to make some comments and disclaimers.
I am not a railway expert. I am not an authority on all the details of trains, timetabling, signalling or the finer points of the 1993 Railway Act. Railway enthusiasts are a passionate and informed bunch. The amount of information available is enormous. My previous specialisation was Northern
Ireland. By comparison Northern Ireland is a simple and
straightforward subject. I suppose what I am saying is that I could be wrong.

AN UNPLEASANT FEATURE OF MODERN LIFE
Rail is a fragile industry. It doesn’t take much to cause chaos.
A crash, a guards’ strike, some bad weather or a person under a train will grind operations to a halt instantly. It is also hugely capital intensive. Trains, signalling, stations all cost huge sums of money. You have got to be pretty sure of your return if you are going to invest. Although roads can be just as expensive they are not nearly as prone to disruption. Or at
least not until the Fuel Protests of August last year.
Travel is crap. Whoever said it is better to travel than to arrive needs a good kicking. It takes time, it is tiring, you are subjected to people you don’t know, you are often cramped, it is uncertain, it is dangerous. And that goes for all modern forms of transport be it rail, air or road. It is an essential, if unpleasant feature of modern life so people will always find reasons to complain.

Source and more (http://www.libertarian.co.uk/lapubs/econn/econn091.pdf)

[RoyBatty]

Imo certain services and infrastructure ought to remain under state control.

Some examples:

- Policing
- Basic Medical Care
- Rail Transport
- Water supplies
- Education
- Military
- Electricity (should be at least partiatlly state)
- Road maintenance
- Add others....

The rail privatizations in the UK were a disaster. The often heard claim from capitalists are that "under capitalism the system can be made more efficient, safer, better run, cheaper" and so forth but it just isn't true. In the UK's case they took over a railsystem which was in reasonable condition and

- cut services (in order maximise profits by squeezing people into packed cattle carts)
- cut maintenance on the rail network (to maximise profits, leading to a number of fatal train accidents)
- increased fares (to the extent that the UK rail network is now probably the most expensive in the world)
- reduced train speeds (due to the collapsing state of the rail network and fatal accidents)
- increased delays (low speeds, shortage of trains, creaking infrastructure)

It became a poor service, highly priced and in the end it still gobbled up money from the state who had to provide massive amounts of funding, much of it going straight into the pockets of the rail-carpetbagger barons.

[Beorn]

Privatisation = maximised profits and investor run initiatives at the expense of the customers/people.

Government owned = efficiency or election night disaster.

It's as simple as that for me.

[Æmeric]

Imo certain services and infrastructure ought to remain under state control.

Some examples:

- Policing
- Basic Medical Care
- Rail Transport
- Water supplies
- Education
- Military
- Electricity (should be at least partiatlly state)
- Road maintenance
- Add others....

Rail Transport: In the US the railways are ran privately, though they have had bailouts in the pass. Militant unions & government regulation were a big problem. In the states, longhaul trucking is a big competitor to rail transport & those railways still in service are generally profitable or else they couldn't compete. As for passenger rail service, it is almost non-existent outside of the densely populated BosWash corridor. There just isn't the demand to make it profitable. People now travel by plane or car. And some airlines are doing very well, Southwest for example. Other's have been struggling for years, mainly because of unions & legacy costs. Some such as PanAm & TWA no longer exist. The US government subsidizes AmTrack a passenger rail service but as pointed out it needs subsides. It's mainly for tourist of people afraid to fly.

Water Supplies: Water is a service generally provided by local government authorities in the US, primarily municipal or county. In many rural areas it is provided by cooperatives, owned by the customers. Any profits are returned to the customers as rebates or lower costs.

Education: Many publicly operated schools are a disaster in the US. The school boards are elected by any elegible voter who votes. So the boards pander to the public at large, not the parents. And because turnout is generally low for something like a schoolboard election, special radical groups who turn out in large numbers have extraordinarey influence on the operation of schools. Which explains why the marxist-feminist teacher's unions have so much clout over the US education system. I think the prefered method would be to abolish a; abolish compulsary education & free public education - many 18-19 year olds are graduating practicly illiterate anyway - or b; have the various states take over from the local schoolboards & award vouchers/scholarships to school age children & allow the parents to pick their children's school. This would make the education system much more responsive to the wants of parents & needs of children, instead of the demands of the lefties currently running public education.

Electricity: Some electric companies are public owned by cities. Sometimes it works out well, some times not. City owned utilities can be a source of political payoff, especially to unions. Historically most urban areas got their electric from privately owned but publicly regulated power companies. These are what is know as "natural monopolies". Deregulation - buying electricity on the open market - was a dumb idea. It still has to come over the local grid. And it resulted in power outages & huge rate increases in some parts of the US, especially California - though much of California's problem had to do with regulations & the lobbying power of the Greens who are opposed to the construction of new power plants & expansion of the power grid. Some areas, predominately rural - have electric co-ops. This is because the big corprorations didn't want the nuisance of providing electricity to low population density areas. The same as with co-operative water companies, any profits come back to the customers as rebates or in the form of lower rates. Many rural areas in the US also have telephone co-ops, running on the same principle as the water & electric co-ops.

[stormlord]

Privatisation = maximised profits and investor run initiatives at the expense of the customers/people.

Government owned = efficiency or election night disaster.

It's as simple as that for me.

I get your point, but you're being a bit unfairly simplistic here. For one, we all know that governments can get away with highly inefficient services by simply taxing people more heavily (i.e. the way Labour has for the last decade, they claim to provide better public services, but better is not the same as "efficient"; an increase in cost of 100% for an increase in quality of 50% is a "better" service but a less efficient one.) The Labour government has been stunningly inefficient and won three elections so..



The rail privatizations in the UK were a disaster. The often heard claim from capitalists are that "under capitalism the system can be made more efficient, safer, better run, cheaper" and so forth but it just isn't true. In the UK's case they took over a railsystem which was in reasonable condition and


As for "capitalists", that's not really fair, the reason things like trains are so bad, is that they are privatised without being subject to competition; that's market failure (i.e. monopolisitc behavior) not an inherent defect in privatisation or capitalism.

As an example of private enterprise outdoing the state in a sector where markets are allowed to operate freely, private schools are vastly superior to and vastly more efficient than state schools.

The point is that privatisation only fails when services that can't be made subject to competition are privatised; i.e. trains, water etc, and it is true that private businesses are much more efficient service providers than government when placed in a fully functioning market.

[RoyBatty]

Rail Transport: In the US the railways are ran privately, though they have had bailouts in the pass. Militant unions & government regulation were a big problem. In the states, longhaul trucking is a big competitor to rail transport & those railways still in service are generally profitable or else they couldn't compete.


At the moment longhaul trucking is profitable but this is not a very efficient form of transporting heavy goods. It also adds to congestion on motorways. The minute the fuel price goes up there is a massive pricing knock-on effect for goods which need to be transported over long distances.

For me, the moral of the story is that rail transport (when properly implemented) should be able to provide a more efficient and economic solution for goods transport which will be less prone to fluctuations in fuel prices.

Another point (slightly off topic) is that a globalisation side-effect has been that goods and fresh produce (food) which could have been produced locally is now being moved over massive distances because it can be obtained cheaper elsewhere which harms the local economy, makes the region dependent and incurs unnecessary transport costs.



As for passenger rail service, it is almost non-existent outside of the densely populated BosWash corridor. There just isn't the demand to make it profitable. People now travel by plane or car. And some airlines are doing very well, Southwest for example. Other's have been struggling for years, mainly because of unions & legacy costs. Some such as PanAm & TWA no longer exist. The US government subsidizes AmTrack a passenger rail service but as pointed out it needs subsides. It's mainly for tourist of people afraid to fly.

The situation in the US is quite different to Europe and many other parts of the world.

For example, in many European countries and Russia:

- people often don't own cars (many do, of course)
- people tend to live not too far from where they work (ie they're not out in the suburbs in the middle of nowhere)
- there are often fairly usable rail services or other forms of public transportation which can provide much or most of the local transportation needs

From what I recall reading, one reason why public transport in parts of the US exists on a much lower scale than typical parts of Europe is because the oil industry, tire manufacturers and car manufacturers clubbed together to buy up and remove some of it in order to generate a demand for cars, oil and rubber. Almost everybody in the US drives because there are few alternatives, people often live in suburbs far from where they need to be and there is a "driving culture". How long can this last though?



Water Supplies: Water is a service generally provided by local government authorities in the US, primarily municipal or county. In many rural areas it is provided by cooperatives, owned by the customers. Any profits are returned to the customers as rebates or lower costs.


Over here in London the major water supplier is "Thames Water". They're another example of a private company who adheres to the much beloved model of "privatising profits" and "socialising debts, expenses and losses", meaning that the State has to hand them huge wads of operating cash from time to time while they keep increasing costs to end consumers. For a long time they banked profits without properly maintaining the water supply infrastructure. In other words, they're having their cake and eating it which is grossly unfair and imo, corrupt.





Education: Many publicly operated schools are a disaster in the US. The school boards are elected by any elegible voter who votes. So the boards pander to the public at large, not the parents. And because turnout is generally low for something like a schoolboard election, special radical groups who turn out in large numbers have extraordinarey influence on the operation of schools. Which explains why the marxist-feminist teacher's unions have so much clout over the US education system.


We should differentiate between schools being controlled by "The State" vs controlled by "The People". In certain communities "the People" will no doubt make sensible choices and run their schools well but as you mention, in other's the nightmare scenarios of feminist-marxist teachings + liberalism ++++ will occur because the general public aren't able to organise against the radicals.

In the former Soviet Union, for example, one thing the Communists did get right (imo) was education. They managed to implement fairly good quality education for all. I think the important thing to note here is that they didn't allow "democratic forces" to control education. They would have implemented it according to their own standards and practices and it is my belief that if qualified, sane and responsible civil servants were to take control of education (as opposed to local voters + radical groups) there is no reason why it can't succeed.



I think the prefered method would be to abolish a; abolish compulsary education & free public education - many 18-19 year olds are graduating practicly illiterate anyway - or b; have the various states take over from the local schoolboards & award vouchers/scholarships to school age children & allow the parents to pick their children's school. This would make the education system much more responsive to the wants of parents & needs of children, instead of the demands of the lefties currently running public education.


Imo there should be compulsory education until at least the age of 16, thereafter the illiterates (and the State's coffers) are hardly going to benefit from extra school time for them. After that age they can go work, learn a trade, join the military etc. The ones who want to study can continue their studies at school until they're ready to move on to higher education or elsewhere.

I'm not familiar with how children are allocated to schools in the US but when I was a kid I spent some time in a good US school in the midwest....until the lefty Governor and some henchmen/women decided what a glorious benefit to the community it would be to bus kids from ghettoland to that school AND to take a percentage of the kids from that school and bus them to Gangbanger Middle School. All this to promote diversity and integration of course. This was in the mid-1980's.....



Electricity: Some electric companies are public owned by cities. Sometimes it works out well, some times not. City owned utilities can be a source of political payoff, especially to unions. Historically most urban areas got their electric from privately owned but publicly regulated power companies. These are what is know as "natural monopolies".


Right



Deregulation - buying electricity on the open market - was a dumb idea. It still has to come over the local grid. And it resulted in power outages & huge rate increases in some parts of the US, especially California - though much of California's problem had to do with regulations & the lobbying power of the Greens who are opposed to the construction of new power plants & expansion of the power grid.


Right, Enron springs to mind? As far as the nuke plants go, there was similar hysteria in Europe after the Chernobyl disaster but now they've come to the realisation that there aren't any viable short-term alternatives. (Green energy and "Alternative Energy" are of course touted as "the solution" but as we all know.....it's a handy scam to enrich the Al Gore's of this world and a lot less practical and affordable to implement)



Some areas, predominately rural - have electric co-ops. This is because the big corprorations didn't want the nuisance of providing electricity to low population density areas. The same as with co-operative water companies, any profits come back to the customers as rebates or in the form of lower rates. Many rural areas in the US also have telephone co-ops, running on the same principle as the water & electric co-ops.

Right, seems sensible enough.

[RoyBatty]

As for "capitalists", that's not really fair, the reason things like trains are so bad, is that they are privatised without being subject to competition; that's market failure (i.e. monopolisitc behavior) not an inherent defect in privatisation or capitalism.


You're right, I should have been clearer about this point where there is a lack of real competition (due to the nature of the service, the costs involved, the infrastructure etc which makes it impractical). I'm not against capitalism per se but against "capitalism" where it becomes exploitative such as what happens in this case.



As an example of private enterprise outdoing the state in a sector where markets are allowed to operate freely, private schools are vastly superior to and vastly more efficient than state schools.


They can be, sure but I wouldn't say it's an absolute rule. I went to a state school which was pretty decent. The quality of the school depends on a number of factors such as the calibre and ethic of the teaching staff, the grade of citizen which makes up the local community and I'll add (it's becoming more of an issue nowadays) to what extent the school is being forced to pander to liberal and PC agendas.

Private schools tend to be successful because:

- they're funded by the well-off who are financially successful people from fairly functional backgrounds so the school may then have superior facilities and resources vs the average State school

- they can usually apply more rigorous criteria when it comes to employing staff

- the pupils attending are generally from well-off backgrounds so there's less chance of being saddled with the complete hopeless cases the State has a duty to educate as well

- they're less prone to political interference by the State....(this interference varies of course... in some countries the State doesn't interfere while in others it does).



The point is that privatisation only fails when services that can't be made subject to competition are privatised; i.e. trains, water etc, and it is true that private businesses are much more efficient service providers than government when placed in a fully functioning market.

Agreed here for the most part. Sometimes I just wonder whether success really ought to be measured in terms of "efficiency" or whether other factors also need to be taken into account. Imo (could be wrong) super-efficiency isn't always the determining factor...I'd rather have a quality service even if it costs a bit more and more "wastage" is involved.

[Æmeric]

In the US we have public schools systems, corporations, districts... the form varies from state to state. In some places they are contigious to cities - New York for example. In others - Indianpolis for example - there are several independent school systems. In the Phoenix area the boundaries for the various school systems were drawn when the area was still primarily agarian, so otday you have instances of school systems in the Great Phoenix area that overlap 3 or more cities. In some areas they are an extention of the municipality. In many areas they are an independent public authorty. Where you live decides which system/corporation you reside in. Many schools systems operate several different schools for the various level of schools (elementary/primary, middle/junior high, high school). In those instances the local governing body will have to divide their system into districts for the various schools. Since the 70s, with court mandated busing to achieve racial balances/imtegration, race has been an important part of drawing boundaries, not geography.

[RoyBatty]

It seems that in our case going "private" is the only way to go as far as schools are concerned. Once the State starts pushing unwelcome social agendas what alternative is there? :confused: