Wednesday, 23 February 2011

Public good, private bad

I never thought I would be re-publishing a previous post on this blog, but David Cameron's statement this week that every public service should be privatised made me realise that this re-post was essential. This was posted in April 2009, when we had a new Labour government but it anticipates what a future Tory government would do:

People who have followed the posts on this blog will know that I have been explaining how privatisation benefits the rich at the expense of the poor but it is probably worth pulling it all together in one post so here goes.

Privatisation of public services has been a key part of the neoliberal Thatcherite project of the past thirty years. Privatisation of public services makes the rich richer and the poor poorer. This neoliberal project is all about dumping costs onto the poor whilst creaming off more of society's wealth for the rich.

So how does it work? Quite simple really but it has to be bolstered by one big crucial lie. The lie is that the private sector is always, but always, more efficient than the public sector alternative. No evidence is ever produced for this but it has been repeated so often over the last few decades that most people accept it as a fact. There is evidence though to show that the private sector is not more efficient than the public sector. Here is an example that comes from the International Monetary Fund! (IMF) - see this paper. Here is a quote you might find interesting:

“….the empirical evidence and the theoretical debates do not support this assumption. There is a consistent stream of empirical evidence consistently and repeatedly showing that there is no systematic significant difference between public and private operators in terms of efficiency or other performance measures. The theory behind the assumption of private sector superiority is also being shown to have serious flaws”.

But we do need to consider what is meant by 'efficiency'. Normally it is taken to mean that the private sector can deliver public services at a lower cost - as if that was all that mattered anyway. The fact that the private sector can deliver services at a lower cost is questionable to say the least. But let’s consider what happens when a public service is privatised. A private company moves in and takes over the service and the workforce that delivers it. The company needs to make a profit so the first thing it does is to cut the workforce and lower the terms and conditions of the remaining workers. Workers have their pay, holidays and pensions slashed. The cost of resulting unemployment and low pay is pushed onto the taxpayer and the cost of the profit is pushed onto the remaining workforce. In fact the employer is literally taking money out of the pockets of its new employees and giving it to shareholders - hence a direct transfer of money from the poor to the rich. This is not lower cost delivery it is dumping the costs onto workers and the wider society. Its not efficiency - it is legalised robbery.

But it’s much worse than just this. Because we don't have competing public services (i.e. you only have one waste collector in your local council area) - what you end up with is a private monopoly. Once the public sector alternative has gone what happens if the company providing the service goes bust? Well it has to be bailed out. Why? Because even if you wanted to you couldn't just bring in another company to take over at short notice – wheelie bins have to be emptied. We are also sold a lot of guff about competitive tendering as if hundreds of companies were competing for every public service contract. This simply isn't the case and contracts are awarded to one of a few usual suspects.

What we end up with is a very cosy private monopoly replacing the public service and easy money for the people who own the company. In time, costs can be hiked up to increase profits and all this is at the taxpayer’s expense. No private company could ever compete with an efficient public sector alternative. Why? Because the public sector alternative does not have to make a profit therefore it will always offer better value for money. In addition, the public sector can always borrow money for investment at a lower rate of interest then the private sector which again saves the taxpayer money. The reality is that the most cost effective way to deliver public services is the public sector option. That is the way services should be delivered, paid for collectively by all of us and delivered without the profit motive.

Of course, it is an essential part of the privatisation project that the public sector is excluded from competing with the private sector because it is unacceptable to the privatisers for the public sector to be seen to provide better value for money and competing successfully. That is why everything has to be privatised. And that is why the public sector is now being privatised by stealth - slowly but surely. Once the Tories get into power they will have the confidence to accelerate this process because they will claim that they are eliminating 'public sector waste' and delivering ‘better value’ in a time of budgetary restraint.

Privatisation of public services is basically a racket. Its hard for people to understand that their government would want to institute a system which costs them more, reduces their employment opportunities, dumps costs onto local communities and only benefits capitalists but that is the kind of government we have. That is what New Labour stands for. In the long run we will all have to pay more for less and those who benefit will be the better off.

Saturday, 19 February 2011

George Osborne isn't Working

I went to the UKuncut demo in Knutsford today. It was the usual clever UKuncut approach, mocking Osborne based on the famous Labour isn't Working poster created for the Tories by Saatchi & Saatchi in the 1979 general Election. The poster was credited with helping the Tories win. The demo took place at George's constituency office in Knutsford. Unfortunately George wasn't in. I guess he was probably dining with Bob Diamond the chief of Barclay's bank who must be celebrating their record profits and 1% corporation tax.

The demo was featured on Granada Reports which is a good result but a slightly disappointing turnout. I would estimate that there were just less than 100 people participating - we could have done with a couple of thousand. Nonetheless it was all good stuff and well worth going. We need to build on these demos and keep up the pressure on the Coalition, which is feeling distinctly uncomfortable at the moment.

Wednesday, 16 February 2011

The Tories know the price of everything and the value of nothing

Ever felt you were being governed by a bunch of second hand car salesmen? Well, you wouldn't be far off. The spivs who fill the cabinet have the same sort of mentality. Cameron and co. remind me of Flash Harry in St Trinians, always looking for the best knock down price as they sell off UK Plc to their 'free' market chums. The Tories haven't ever changed over the years, they still know the price of everything and the value of nothing.

This has been well illustrated by their cunning plan to sell off our forests to the private sector, a nice little earner that would have raised a mighty £100 million. Peanuts (or should that be pine cones?) in the grand scale of things. Many of the forests have been managed by the Forestry Commission on behalf of the nation for years. They have been opened up to the public and provide a valuable recreational facility and a refuge for wildlife. Lots of us treasure our forests. We use them to get away from the towns and cities for walking and mountain biking. We like the idea, which is anathema to the Tories, that they are owned by the state on our behalf.

It looks like the Tory-led government may be forced to make a U turn on its sell off plans due to an outcry and a petition amounting to 500,000 signatures so far. But don't be fooled. Nothing has changed. The purveyors of the 'Big Society' really have no idea when it comes to both society and the communities that make it up. They are like a bunch of sociopaths with their eyes always on the money.

Sunday, 13 February 2011

Now we need liberation from 30 years of Thatcherism

The Egyptians have achieved the first aim of their peaceful revolution - the removal of President Hosni Mubarak. Now that power has passed into the hands of the army will we see a peaceful transition to democracy? The Army has played a strange game in the past 20 days or so, refusing to turn on the protestors, whilst at the same time being complicit in the torture and detention of some of the anti-government campaigners. Because The Army is very much part of the ruling establishment its hard to see how they can turn against their own, which is ultimately what the protestors want. At best, we are likely to see a shoddy compromise where there are elections, but how free and fair these will be we will have to wait and see.

So what has this got to do with Thatcherism? More than you might think. Firstly the Egyptians have just removed a despot who ruled them for 30 years. In the UK we have now had 30 years of Thatcherism. Thatcherism is a right wing neoliberal ideology which aims to ensure 'free' market domination of the world's economies. In the 1980s neoliberalism was known as Reaganomics in the USA and Thatcherism in the UK. Ever since that time, UK and US governments, including those lead by Clinton and Blair, have pursued neoliberal policies characterised by tax cuts and privatisation of public services. These policies benefit the wealthiest in society and have been responsible for increasing the gap between rich and poor.

In the USA there has been a marked increase in inequality with the incomes of workers (including the middle classes) stagnating whilst those of the richest boomed. In the UK the changes have not been as marked yet because we have historically had a much stronger public sector. The current Coalition government has set out to change this by cutting the public sector, slashing welfare and dumping the costs of the economic crisis onto workers and middle classes. We are catching up with the USA. The Tory-led coalition plan is clearly to pave the way for further tax cuts before the next election, which will further reduce the tax base leading to further cuts in public services and, eventually, the privatisation of the NHS.

The point is that if you take what the current Thatcherite government is doing to its logical conclusion in the UK you end up with a country like Egypt. A country with a small wealthy elite, mass unemployment, and the majority living in relative poverty. That is the plan for the UK. Of course if you have such a society you have to have a repressive state/police apparatus to make it work. The foundations of this were laid by the last government. Think it can't happen here? Can you afford to wait and find out?

Of course its ironic that Cameron is calling for greater freedom and fairness for the Egyptians whilst putting in place economic measures that will inevitably take us closer to them. But he has to doesn't he? The Americans and the British have to maintain the illusion that they support democracy abroad despite the fact they have been propping up Mubarak and the other despots for many years.

Like the Egyptians we need liberation, liberation from a neoliberal 'economic' system which is gradually making us poorer and taking us closer to the kind of society they live in. That is why we have to fight the cuts and crack this coalition apart. If you can, join the protest organised by the TUC in London on March 26th. The Egyptians have shown that determined protest can work!

Sunday, 6 February 2011

The Myth-makers of the universe

Remember the "Masters of the Universe"? No, it's not a bunch of fictional sci-fi heroes - though it might as well be. It refers to the bankers who made eye-watering amounts of dosh, both before, and after, the economic crash. These are the supermen - and funnily enough the vast majority are men - who are so special that they have to be paid millions because er ... they're so special that we can't do without them - or so we are told.

You see, despite the fact that these special guys made a huge contribution to collapsing the world economy, a collapse which has lead you and me have a pay cut, or pay freeze, or lose our homes, and welfare, we still need these men - apparently. And , what's more, they still need to be paid millions to work for banks owned by us, like RBS. If we didn't pay them that much they would leave and we would all suffer as a result.

What's odd though is that so far all that has happened is that we have suffered because of these guys, so you might, like me, think that we'd be better off without them. So why is it that we have to put up with the nonsense spouted by 'free' market fanatics like Digby Jones, that our economy can only function if the supermen at the top are paid vast amounts in salaries and bonuses? The answer is simple - naked self interest. It's vitally important for the 'top' people who run our banks and corporations to have us believe that they are better than the rest of us - that is how they exploit us.

For every highly paid banker there must be dozens of young unemployed people in the UK who could do their job just as well if they were given the opportunity. But in ConDem Britain they will never have that opportunity. If you don't believe me look at some of the latest research in Adita Chakrabortty's excellent article in the Guardian recently. The research shows that bonuses don't improve the performance of bankers - they are not necessary. In fact, the research shows that the very people whose performance is improved by bonuses are people who do boring repetitive jobs like fruit picking. Furthermore, when bankers switch from one institution to another their performance tends to go down - so much for our bankers leaving the UK if we regulate the banks like we ought to.

The fact is that, far from being Masters these people are Myth-makers who propagate the myths that; a) we need them and b) they need huge bonuses. The sooner we call their bluff the better. If they want to leave - let them! We should be having a whip round to pay their (economy class) fares. I'm happy to make a contribution because it would be a contribution to a better society.

Tuesday, 1 February 2011

The Egyptian revolution gives us all hope for the future

There is so much going on at the moment that its difficult to keep up: change in the middle east; phone hacking; privatisation of the NHS; massive cuts in welfare; the forest sell off and the crumbling world economy. But what is happening in Egypt is really significant. People are voting with their feet and taking to the streets to protest about a corrupt and dictatorial regime which is supposed to be a democracy, and to protest about lack of jobs and opportunity. This is democracy in action - no need for a ballot - the Egyptian people have had enough and have voted with their feet.

We can only hope that there will be a positive outcome. The bad news is that even if Mubarak goes, and it looks like he will have to, the chances are that the corrupt apparatus that surrounds him will survive and that the establishment will gradually regain control. There is no clear focus for the revolution other than the removal of the regime and its replacement by an open plural democracy. We can only hope that a genuine secular democracy will be the eventual outcome.

What the Egyptian revolution has exposed is not just the oppression and the wasted lives of Egyptians, but has also exposed the cynicism of western governments, including the USA and UK, who have been happy to support this regime as long as it brought "stability". But what is this "stability"? It means that corporations can operate and make profits without fear of any interference, and in particular, can exploit the resources in the region. Western governments have been acting in the interests of the corporations - and screw what that means for the people. That is capitalism in action and that is what really matters to our governments, that is the 'bottom line'. When will people realise that the same applies here?