Thatcher did not start off as a privatizer. The idea seemed to creep up on her. After all, the idea of selling off the "family silve r", the long-term assets the country held that contributed to the exchequer's coffers, in exchange for the short-term gain of the income from the sale, was not obviously a good idea. Thatcher, as a populist, would not at first go near it. Surely, the people would rumble what was happening and how future Britons would be fleeced.
Once she had concluded that she could get away with privatization there was no stopping her. It was sold to the public on the basis of two ideas:
1. It would lead to popular share ownership
2. Private companies are automatically more efficient that state-run companies
As I have said, Thatcher was a populist and an ideologue. The first idea was populist, the second was ideological. Let's look at each in turn
What happened in reality to the idea of wider, popular share ownership? Who now owns the shares? In fact, very little of the original float has remained in the hands of private individuals. The shares were all sold too cheap and so people found themselves sitting on a potential profit and the temptation to sell off was too strong for most. Where institutional investors such as pension funds have bought into ex-state industries you might argue that they have ended up being owned by the public -- but this is far from being so in many cases.
In the worse cases, such as some of the water companies, the companies have ended up being 100% held by private-equity concerns and so the shares are no longer floated. Private-equity companies exist because of the huge amount of wealth that has accumulated in recent years to the global state-free super-rich - about which I have written several times. The wealth of these individuals is so colossal that buying properties and shares is too small beer for them. They want and can afford whole companies. They particularly like cash cows such as monopoly water companies. So ownership passes to private equity (a long way from popular-share ownership). These companies do not register in Britain but exploit tax havens to reduce their taxes to minimal amounts. Often the services they give to their customers is poor and they use customer receipts to finance capital. They have a stranglehold over their customers (in spite of the 'watchdogs') and so there is little need to plough back profits into investment.
Turning to the second argument for privatisation, that the state cannot run companies, is pure ideology. The French electricity company EDF, for instance, is mostly state owned and it is as efficient as any private company. It is also predatory as, where other countries have foolishly privatized electricity, it can buy up the private companies -- so we have the irony whereby the privatized companies have been returned to state ownership but the state in question is foreign. Thatcherites would never accept the simple truth that an important reason why the state-owned companies in Britain functioned poorly is because the state starved them of investment. By not maintaining them properly, a self-fulfilling policy was constructed.
Private entrepreneurship is the essential motor that drives an economy and so companies should be private -- unless there is a compelling reason why they should not be. There are two such compelling reasons:
Next Page 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9
(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).
1
1
1
