They have allowed the balance sheets to become untenable, now they lose their capital. PE has sold to the next fool - but more fool them.

The debt holders are going to have to take a haircut as well, again this is a hard but fair lesson from the pages of capitalism.

Privatisation means, "you that don't give a fc... take care of that problem for me"

Railways were privatised because government couldn't afford the investment required. But because of rail unions I'm currently subsidising rail travel I don't use.

Energy market competition has been destroyed by price controls (thanks Mrs May).

I can't read all the article because of the paywall. Nothing on archive.org yet. Maybe these points have already been addressed.

One thing I don't understand here is: who's on point for that debt? Who's willing to lend that money, and why - are they just betting that there will be a bailout at some point?

Privatization for key services (eg public transit, health care, power generation, housing) has been an unmitigated disaster, almost without exception. It's mystifying why anyone still supports it for any reason other than self-interest.

The main infrastructure company that operates country wide (OpenReach) are heavily regulated by how much they can charge for last mile termination. So that means there's a floor to how cheap services can be, but gives wiggle room for charging more in return for better customer service (e.g. Zen, AAISP). I pay £53 a month, with no yearly price increases, for 900/100 FTTP - which is still pretty pricey compared to other places in Europe, but from what I've seen of the likes of Comcast in the US, is pretty decent. No data caps either.

It's an incredible feat of psychological engineering spanning over a century, and now people love to believe in the absolute fairy tales of rags to riches, ideologically instead of realpolitically or resource driven geopolitics and meritocracy instead of the realities of an ever increasing gini coefficient.

The current market cap of the company is around a 1/3rd of the value of its pension scheme. Any takeover would be under intense scrutiny from the regulator.

Thankfully when it comes to water, in Scotland we did not privatise, nor is our water metered. We also continued to build onshore wind farms, unlike in England where it was effectively banned.

I know it seems simplistic, but generally the private market is full of corruption the poor can't really avoid. So they just end up victims to it.

The FDA and USDA are captured by Monsanto et. al. The FDA is captured by pharmaceutical companies. The FCC is run by telecom companies. The FTC is a toothless shell of itself which cannot stop any but the most blatant of anticompetitive measures (and often not even those).

What is the public to do? They can exercise choice in the market, but not when an oligopoly exists, which often only offers the illusion of choice under different brand names. The regulatory bodies have no elected positions and thus no accountability to the public. The public can elect new officials who hopefully appoint new officials to the regulatory entities, but the politicians put forth are only two flavors of the same pro-corporate regime. The media, which is deeply entangled with politicians and their will, degrades every third-party or outsider candidate at every chance they get to ensure the public never sees anything else. So even if the party at the top changes, it is still the party setting the tone, mostly, and they are funded to huge extents by all the largest corporations; and thus we have the inmates running the regulatory asylum.

Direct election of heads of regulatory bodies seems like a decent solution, but it could fall victim to the same issues as the major political parties. We could fight to get money out of politics, but with both sides benefiting from the current state of affairs, it seems impossible.

As far as I can tell, our hands are tied. I’d love for someone to tell me I’m wrong, and that it isn’t the world of multinational companies, which we just happen to live in.

someone who is good at the economy please help me budget this. my family is dying

Scenario 2 - Decisions are made by people shouting at each other.

Scenario 3 - Decisions involve a big review of some successful energy grids in other countries and starting with one that works really well as a baseline.

A big shouting match to decide what a successful energy grid looks like is a good idea. But fixed infrastructure is long-lasting and hard to replace - it would make sense to make the decision rationally rather than making political guesses at what might or might not work.

A good example is when people say "look how bad private healthcare is in the US!". Yeah, it's horrible because of the framework the government put around it. If you look at things like vision correction or plastic surgery, you have none of the problem you have in typical private health coverage - surprise billing, inflated costs, etc, etc.

But my favourite example of trains done right is Japan, and to my surprise, their expansive rail network is dozens of private companies. It turned a lot of my assumptions upside down.

I still don't think we should privatise core rail infra, but obviously it can be done right. So we can at least try to do that.

State owned enterprises are fine if something needs massive capital investment to start off and nobody has the resources but there must be a plan for the state to disinvest.

Then again I prefer subsidies like the US does for semiconductor plants.

I'm not in the UK, but searching for what those is Britain and Scotland pay for combined water and sewage annually I found claims of an average of around £410 and £320, respectively.

If you look around at the British state it's very clear to see, the issue isn't whether X Y Z is private, the issue is the state spent 2010-2020 systematically ensuring the state was incapable of acheiving anything. And then decided in 2016 that they were going to repatriate a tonne of regulatory power from the EU. The result is a state that's got a lot to do, and no way of actually doing any of it.

Also, according to Wikipedia, the largest shareholder for Thames Water is a Canadian public pension fund, so it is at least partially public, just owned by another country.

One of the things it made sense to privatise was transportation. If you have some sort of disability you can apply for public help for various things. This can be the elderly going to play bingo, it can be parents of a disabled child getting a taxi service to and from school, and a range of other things. The financial “issue” is that it’s rather expensive to have a car park and drivers on staff, and it’s an area where some years you’ll need a lot of drivers and cars and other years you’ll need almost none. There is also a “scheduling” thing where you’re most likely going to need a lot of drivers/cars in “rush hours” and then none the rest of the time. For a range of reasons, the public needs mix very well with the private needs for taxi services. You and I will need a taxi on weekend evenings and the city will need a taxi when you and I are at work. On paper this is a very nice match. Especially in the rural cities where you can also help subsidise the taxi companies.

Here is where it gets expensive. Because taxi companies come and go. It’s hard to make money in that business, and it’s also sort of “easy” to get into it because at its most basic all you need is 1 car and 1 driver. Yes, it’s much more complicated with the various licensing and so on, but you get the point. What the city would do is to buy yearly contracts from companies. Sometimes many different companies, which would add a little to the bureaucratic “burden” but not much, and if things ran smoothly then it would be a massive win for everyone. But things don’t run smoothly. Sometimes a taxi company is going to bankrupt, and sometimes this can happen with very little warning. But you still have to get your citizens to where they need to go. In the perfect world, you would call a different taxi company and have them take over. But in the real world, there isn’t a different taxi company with available rides, because why would there be? In our bigger cities, sure, you can do this, but in around 90 of our 98 municipalities you can’t. So now you’re looking to have a 100 citizens driven around to things they can’t miss. Some things like the weekly bingo can be cancelled, but doctors appointments can’t. And the only option you’re left with is often going to be to reach out to one of the larger taxi companies in one of those 8 municipalities that don’t have your issues. Which is expensive. Sometimes it’s so expensive that a whole decades worth of savings and local investments go up in smoke compared to having just run a public car fleet.

Like I said in the beginning, it’s a hard nut to crack. Because politics aren’t going to operate on a modus where it expects things that look good to fail. Maybe someone can argue that it should, but it won’t. Because we don’t. You and I are going to look at the business case and want our cities to work with the taxi companies. Not only to be able to use public funding smarter but also because we will want to have a taxi service. We may even know a person who runs or works in the local taxi service and will want to support them. So the fix isn’t going to be to stop privatisation. At least not in all cases. I’m personally still not sold on why our waterworks should ever be privatised. But for some things, it’s just always going to make sense. So what can we do? You can’t buy insurance, and unless the companies in your area happen to be well managed and capable of producing stable profits, then you’re likely always going to sit with a situation where the best intentions turned out to be part of the road to hell?

The bondholders/lenders lose 100% and shareholders lose 100% of equity, but have likely received huge dividends already.

Entity goes back to being public.

Lesson learned.

But I’m not sure what point you’re trying to make here. Many medical procedures are necessary even if not urgent, and healthcare costs in a privatized system like the US are astronomical. Emergency procedures and life-sustaining medications like insulin, that cost a fraction of the price in other nations, are bankrupt-worthy events in America. And people have no choice but to pay it. People’s health are being held hostage by these companies.

The number one priority of a functioning healthcare system should be the care of their customers, which is antithetical to a company’s priority of delivering value to shareholders and executives. And when your product is a basic essential and you have a captive customer base, it’s really easy to make huge profits by cutting costs and jacking up prices because you’re customers have no other options.

Most nations care about the health of it’s citizens, hence why every single developed nation has some form or other of universal healthcare. Because a healthy population makes a robust workforce and actually substantially reduces healthcare spending by the government.

Exactly, we just end up with a large number of micro-monopolies.

Not even the free market diehards can point out the competition in rail travel.

And here you have a problem: different electricities are not equal. Suppose you have two large electricity-consuming areas (cities) physically separated by huge nothingness. One electricity plant can make roughly 1.5x demand of one city. There are two options: 1) build a plant physically near each city and 0-0.5x capacity interconnect between cities 2) build two plants near one city and have 1x capacity interconnect.

The question is how do you distribute costs of required infrastructure? This is a very non trivial problem, apparently. You may have sort of free market for "generic electricity" i.e. power/energy, but then the cost of transmitting that electricity falls on the grid and it may be a very significant cost burden. You may discount electricity of each provider by the network cost, but that cost is in practice dynamic, even more so with renewables. On one hand that would incentivize building of microgrids and small plants, but on the other hand that would disincentivize construction of base load generators, which are necessary for stability of the grid, especially with microgrids.

Datacenter connectivity faces the same problems. Say you need 1 gbps gateway to app, 10 gbps app to db, 40 gbps db to storage. How do you allocate network interconnects and node placement in racks? If some team has a spare storage shelf in another part of the dc, do you want to allocate that to app server in another part of dc without physically moving servers and instead routing extra 40 gbps fiber? Who pays for that?

It makes sense that energy production should be competitive. But for energy supply I can choose from dozens of companies that all supply the same gas/electricty, using the same pipes. These energy supply companies are really just billing operations. The actual supply of electricity is done by National Grid, another private company, but with no competition. Same for gas, and Centrica.

I can't even discriminate between them based on whether they're likely to go bust; when an energy supplier goes bust, some other supplier is forced to take on all their customers. That is an incentive to not run the company finances responsibly (whther you're the one that goes bust, or the one that is forced to take over).

Regulators are consistently hopeless. Regulatory capture is part of it - half the executives in these companies used to work for the regulator. But part of it is that you simply can't make a competitive market just by having a regulator tell you how much profit you're allowed to make.

"When Dr Beeching wrote his 1963 report, half the UK rail network carried only 4% of the passenger traffic, a third of the passenger fleet was used less than 20 times a year, and the railway employed 475,000 staff. British Railways annual deficit was then £87 million, or £2.3 billion in today’s money.

Today’s rail network is more intensively utilised and employs about a quarter the number of people. Yet in 2018/19, operational funding (i.e., less HS2 and enhancements) cost the taxpayer £4.7 billion or twice that of Beeching’s highly inefficient railway"

https://www.railengineer.co.uk/is-rail-affordable/

Also on the busiest West Coast mainline route London-Glasgow most trains still take around 5 hours the same as in the 1970s but with less legroom, more uncomfortable seats and highly extortionate ticket prices.

What I see everywhere, not just in Britain, is the same old story over and over again: privatizing the profits, nationalizing the losses.

In my town, most of our utilities are public utility districts that are a private company with a publicly elected board of directors.

Our electric company, SMUD, is fantastic with excellent customer service and much cheaper rates than PG&E.

I called SMUD about a tree that was leaning towards a power pole during a storm and they cut it down within 4 hours!

I’ve been to some board meetings to complain about some shenanigans with our water district, and it’s pretty cool to see public oversight in action.

I agree that it’s in the people’s interest to own the infrastructure. But the management of the service on that infrastructure should be auctioned into the private sector with oversight from the government.

I suspect though that when clean water was a new thing it probably cost a much bigger amount of people's income than it does now.

People that need insulin need it regardless of price, so a 'free' market has the property that the price increases until the 'customer' is broke and then dead. It creates corporate structures that are based more around a 'leech' model. There is no incentive to create better or more efficient products.

This goes for basic food, housing, healthcare, transportation, education and so on and so forth.

So much life hardships would disappear if this was our reality and all it needs is political will.

I believe it's not done like that, because there is little opportunity to make huge profit on such privatisation. Would you rather own the entire rail network, or buy some trains and have to pay rent for rail access? No one will invest in the latter without financial history of operations in such environment.

To do privatisation properly the state should breaker up the infrastructure from the services. Split the services into separate companies (then do we want them to compete or each will have it's niche? Usually it's the latter). Restructure and run those service companies until they're profitable. Finally sell them, or better yet over the span of the years get the employees to get a sizable ownership share, give local go another sizable share, sell the rest on the stock market.

That IMO is roughly a good way privatisation could work, but it takes more than one electoral cycle to do it right, and which government wants to create gifts for their opponents? So we usually don't see anything like it.

"Distributing goods and services" also sounds as if these were inherently available in infinite quantities.

Problem is, they use finite resources. Such as oil, gas, soil, people.

So you are probably right and your belief is not a belief but a fact, but I strongly disagree with the implicit statement that this would maximize human wellbeing, present and future.

What is the empirical evidence for the efficiency of "free" markets (free from "externalities" too?), and what do they minimize, what do they maximize?

This sounds sensible the first time you hear about it. The reality is pretty awful.

This happened to the national railway company in Norway (NSB). The result was lack of investment, poor service, and a bureaucracy where nobody seems to be responsible for anything. Which means that rather than concerns being addressed, they get ignored. Because when, for most things, you can blame someone else, nothing gets fixed because nobody is really in charge anymore. As a consumer you do not really deal with one company anymore - you have to deal perhaps half a dozen companies that do not work well together.

NSB went from a somewhat poorly run public sector organization to an entirely dysfunctional failed NPM experiment. The reasoning behind this was about as sane as suggesting we terraform Mars rather than try to not screw up the Earth.

I have seen this in the private sector as well. I worked for a telco for a decade, and they are very similar to how New Public Management works in the public sector. (Which isn't too odd since a lot of them are former state monopolies, so they will be prone to the same sort of defective reasoning you see when NPM is applied in the public sector).

You fragment, outsource and then pulverize accountability. Telcos are usually fragmented from the outset. The restrictions on ownership models, a large telco will typically have separate companies with entirely separate cultures, technology stacks and business processes for every country they operate in. Yet within those countries they will fragment further - ensuring that you have siloed organizations working at cross purposes. Usually due to very localized prioritization to achieve goals that affect bonuses, ignoring the large picture.

One thing that is very striking in telcos is that it is really, really hard to find people who actually understand telecoms technology within them. And they rarely have much control over the technology. Which most of the time has exorbitant operating costs and extremely slow evolution when compared to large internet companies.

In the telco sector it tends to lead to an inability to make sensible use of capital to act on opportunities and evolve the business. You have companies that make a lot of money, but because of how leaders are incentivized and promoted, nobody wants to take risks and evolve new business areas because that might affect short term profitability or personal compensation for leaders. And even if you have leaders who want to, they will typically have very little manouvering space and anything that doesn't have a quick payoff will typically be sabotaged and then axed.

The way you "solve" problems in the telco sector is typically through mergers and acquisitions. The latter often having a very low chance of realizing much value. I've also seen a lot of examples of companies just selling their operations when, due to failure to respond to how markets develop, just have to give up and find new markets where their outdated strategy still works. (One way to look at this is to see what happens when a market reaches various saturation milestones).

Under capitalism, private capital predominates; it decides the laws and the commons. If you think you've found a way around this, it's only a matter of time. We call it capitalism for a reason.

The problem is that the government let companies like Virgin off when they broke their contract, allowing them to bid high, take the profits, then walk away rather than fulfilling their contracted duties. Privatise the profits, socialise the losses.

Nethertheless there is tons of competition on transport in the UK

1) To get from Birmingham to London you can choose 3 different rail providers giving 3 different cost/value returns. Faster more frequent ones cost more.

2) On top of that you can also take a coach, hire a car, drive your own car, or of course not travel at all

3) Manchester to London you can fly, take the coach, drive (car hire or your own car), take three different trains ranging from £50 return and 3 hours to £180 return and 2 hours.

"Railway tracks" isn't where the competition is, transport is, and there's tons of competition. I remember I used to commute from a commuter town into Manchester. I could take the train during the peak, or I could take it off peak, or I could take the slower train from a different company, or I could drive, or I could take a commuter bus.

When it comes to the last mile of say BT, you used to have a monopoly, it would take months to get a replacement handset connected. Today though "a phone line" isn't what you want, internet is, and there are options

1) BT/Opeanreach connection (fibre or copper)

2) Non-BT fibre (in many cities)

3) Wireless ISPs

4) Satelite ISPs (Starlink/Oneweb or Geostationary)

Each has benefits and drawbacks

I would agree that the last mile of water and possibly electric provision shouldn't have been privitised. Treatment works though -- why not? There's no real limit on the number you can have.

When it comes to long distance electric again why not. There is a lot of money to be made transporting Electricity in Scotland and selling it to the south east. Let multiple companies do that.

The problem is planning permission and nimbyism means it's impossible to actually build new lines.

I agree with most of what you've said but I don't agree that this conclusion follows. If anything when I was less well off I was far more inclined to put up with the hassle of changing providers every few months to minimise the costs than I am now.

I do think there were some efficiencies generated, it's just hard to figure out if a nationalised entity would have gotten there eventually. The online only account management for example probably saves a bunch over call centre staff and sending people around to read the meter.

The public sector is unfortunately a terrible place to pursue ideological projects. Especially in a democracy where the ministers with leadership authority of a department change every 2-3 years and very wide groups of stakeholders need to endorse any substantial change.

The issue of privatised companies taking on debt whilst paying dividends is a pure failure of government regulation.

I live in a rural area in Scotland, until recently we only had 20 Mbps down and 1 up. I had enquired to a specialist ISP about installing fibre and they quoted £7000 to do an estimate - which I interpreted as "please go away".

BT/Openreach came along and installed full FTTP - which I am very happy about but I did wonder how commercially sensible it was with us paying £50 a month or so...

We can debate metrics, but Britains aging and expensive diesel trains sont loom good in any of them.

The free market cultists pretending that these two things that are very different are equivalent is half of how we got into this mess, in fact.

Whilst participants in the utilites market will often complain that it's "not fair" that they have to compete with a state actor, they're often the best way of exerting market discipline on them.

This is particularly true in utilities space where private actors unhindered by state competition try to bamboozle their customers into giving them fat profit margins with stupidly complex bills. State run companies that provide a bare bones low profit service that matches what most people actually want inhibit this kind of market abuse.

I'm assuming the main issue with government is that people keep electing politicians uninterested in statesmanship or running an administration, and with personal incentives to privatize.

I still don't understand how voters can choose to entrust public service to people that claim public service is inefficient: they can run it in the ground and claim "see, I told you!"...

My country (Denmark) is social democratic which has nothing to do with socialism. Tired of Americans calling this place "socialist" like we are Cuba.

authoritarian capitalism -> fascism

democratic capitalism -> capitalism

democratic socialism -> socialism

authoritarian socialism -> communism

From the mixed economy wikipedia:

> Common to all mixed economies is a combination of free-market principles and principles of socialism.[5]

From the socialism page of wikipedia:

> While no single definition encapsulates the many types of socialism,[13] social ownership is the one common element,[6][14] and is considered left-wing.[15]

If you don't have to pay tolls for the majority of the roads that you drive on, you are living a mixed economy because those toll free roads are owned by the state, not by private companies or individuals, and are paid for by taxes. Which makes them a socialist element, most likely within a majority capitalist system. Which makes what you live in a mixed economy. The vast majority of countries on the planet are mixed economies.

It astounds me how this keeps coming up on HN over and over again.

Competition also doesn't really work as soon as your journey isn't large metropolis to large metropolis and involves connecting trains, because a) if a connecting train only runs hourly (or at best half-hourly), it's impossible to have attractive connections from that one train to a multitude of competing operators and b) there are usually ticketing problems which start to matter as soon as one of the trains is delayed and you miss a connection.

Spain has, considering its size, economy and population a relatively generous high speed network (to a large extent financed by EU grants) that by necessity (broad gauage vs. standard gauge) is also completely separate from the legacy network and consequently isn't utilised super-heavily. Plus RENFE already sees its AVEs as a sort of plane on wheels and traditionally has a minimum connection time between trains of 60 mins (!) with only some exceptions, so there is still room for running additional trains and things can't get much worse even with competition and incompatible ticketing between operators on top.

France's and Italy's high speed lines are somewhat more heavily utilised, but you can still get comparatively far by staying exclusively on the high speed network. Plus in France the geography favours the simple Paris-to-province model with no complicated connecting services necessary, whereas Italy is favourable to a linear arrangement (Turin - Milan - Bologna - Florence - Rome - Naples are all along the same line).

In Germany on the other hand population centers are somewhat more distributed across the country, the high speed lines are of a more fragmentary nature and you have much more running on mixed traffic lines, plus a lot of network sections are effectively at capacity.

The result is that in Germany competition mostly isn't solely directly about passengers, but often rather about train paths, and almost any new non-DB long distance service that has been introduced in recent years (thankfully there weren't that many) caused varying amounts of havoc among local services running along the same sections of line, or in some cases even with DB's existing long distance trains.

Plus it means that e.g. RENFE and SNCF now see each other as enemies, so good luck booking a journey between Spain and France that involves a change of trains in one country or the other (or even worse, both of them).

Edit: I suppose it's not as obvious if you only have an American education.

No they are not! In Britain rail companies were bailed out during Covid.

Railways that had zero passengers reported profits and paid dividends!

> Look at what is happening with South Africa's power utility

South african society has various issues that are not applicable in UK/france/etc. Same goes for Russia. If suddenly French government does the kind fo shit Russian government does, half of Paris will be on fire before you can spell Baguette

Privatisation makes this harder because you run into all kinds of issues with taking them over without paying market rates that acts as a massive barrier. E.g. this was a major factor in the arguments against Labour's 2017 and 2019 election manifestos in the UK, because the costs of buying out the private providers vs. the drastic risk to the economy of sending the signal that UK companies are at risk of uncompensated takeovers by the government were both used to hammer them with.

But yes, you need strong oversight either way.

> With a profit motive, the utility is at least incentivised to deliver the service so that they can get paid.

I don't really agree with this. Semi-monopolised privatised providers only care to deliver service to the level where they maximise their return on investment. This is why we've seen multiple train operating companies collapse in the UK, because they were low capital to set up and bid on terms designed to let their owners extract as much as possible, without care for whether or not they'd remain viable, because until Virgin and Stagecoach faced outright bans on participating in bids for some new franchises there appeared to be no consequence. Worst case you'd just start a new one.

It's also why we're seeing Thames Water fail to address a network of pipes that leaks an astonishing proportion of the supply because while you're right in as much as they've had to deliver service to consumer, they've not been incentivised to deliver the service to society as a whole that they were tasked with, which is broader than delivering water to consumers and includes stewardship of the capacity. A pure profit motive for a monopoly resource can often descend into looking for ways to extract maximal margins that are in the long run wildly detrimental both to customers and to society as a whole.

I have numerous thoughts on what would be better, such as sortition, or devolution and administrative federalisation, but as long as we have party politics and elections on mass scales, we will have corruption baked into the system. What we have worked reasonably well before mass communication, but with each step of communications technology, one of the core principles of representative democracy - representation - erodes, as the battles become tribal and personality driven on vast scales, and defy ration and reason.

They frequently can't for their health decisions.

Again, it's 'market competition' amidst healthy consumer choice, not 'free markets' that are beneficial for society.

Which station? Or which TOC?

> Also comparing trains to cars and busses as a positive competition is missing the point that our roads are over capacity

Which roads? I had no problems driving the kids to school this morning, never are. Well that time fro about 2 weeks a year that the cows cross the road at that time of day after milking which adds a few minutes onto the trip.

If you doubled the passenger mileage on rail, you would reduce passengers on the roads about 10%. Rail isn't going to be a fix for general capacity problems.

Road increased from 666 to 741 bkm, increasing 11%.

Saskatchewan has SaskTel. It’s a public telecom that provides internet (DSL, fiber, wireless)/POTS/cellular. They and their subsidiaries (e.g., SaskTel International) provide all sorts of other services.

When the CRTC removed rules about charging for data overages and things, they didn’t implement any additional charges because their mandate is to serve the people of the province not extract the most profit for shareholders.

They contribute money back into the government coffers every year while also being the sole telecom covering large swathes of the province, working through a FTTH rollout, etc.

When I went to sign up for a cellular plan with a different provider, the person on the phone kept telling me the plan didn’t exist—they had the same plan, but it was $30/mo more than what I was telling them.

Because they had the wrong province selected. All of that provider’s plans were 30-50% cheaper in my province due to the competition from the (profitable) public telecom.

I’ve been away a while, it’s probably gone to shit by now (when I left the government was trying to sell it off for a quick buck _again_), but at the time it was magical to live in the only place in the entire country with an even relatively sane cellular market.

Turned out the winner was massively cheaper because they had massively underestimated the work required. Trash piled up for weeks while the new trash collectors worked illegal amounts of overtime trying to get rid of it.

Now, this switch had happened just before local elections, which the right-winged parties who'd been in control soundly lost.

The new left-winged leadership ended up canceling the contract and bringing the service back in public hands.

Unregulated markets move away from market competition. They move towards monopolies, exclusivity contracts and similar items. Enforcing competition is the only effective method of benefiting society.

When employed in the right place. It's very much not clear that train networks are that place, in fact I'd say it's quite clear in the UK that train networks are not that place.

The cooperative was performing poor profit-wise while middle management lined their pockets. If it was not a cooperative, their share price would have been in the gutter, and someone would have bought up enough shares for cheap to fire the leadership and replace it with people who are competent, and then benefited from the increasing share price of having the company ran competently.

When wholesale energy prices spiked last year, followed by a cap being applied to the prices that they could charge, they weren't hedged and several ended up going bankrupt.

Which, incidentally, the cynic in me would suggest is the reason for why e.g. the water privatisation was done the way it was.

Compare to the train privatisation, where after the failure of Railtrack brought the infra itself back under government control, time limited franchises means that the government can at least regain control over time at low cost by simply ending the issuing of new franchises (and where the government have operated many franchises for various lengths of time due to outright failures of the franchise-holders to meet their obligations). You can even see it as allowing for shifting governments to change their mind without it becoming big all or nothing decisions (though the original franchise model is utterly messed up in how it aligns the incentives).

To be clear: I think the rail privatisation was also an utter disaster, but it's current incarnation is not nearly as bad with the water companies - largely, incidentally, because large early failures like with Railtrack ended up with the undoing of some of the worst parts of it. It's still shit, though.

1. https://en.wikipedia.org/wiki/Network_Rail

Even a government that borrows, needs to pay something back with interest. And an investment by the way of shares the government makes needs something back roughly matching the interest rate too.

I don't really see an argument where a public setting is any more beneficial from what you're saying, if the international investor was the the treasury, it would still want something back by shareholder returns.

We don't make murder legal because it still happens, and the existence of corruption doesn't make regulation a bad idea - it means we need to clamp down on corruption.

White collar crime has good PR representation, and that needs to stop.

Ehhhh... nah. There is still a cost vs. return.

Postal Services, for example. $10 ships 1.1 packages on average, or they get efficient and $10 ships 1.9 packages, etc.

You absolutely see this in things like Medicare where $100 worth of spending doesn't get you 90-100 generic aspirin, but more like 20 pills, and the rest of it goes to pay middle men.

As for zones of influence... It is very real. That's why we jumped into NATO at first opportunity. A lot of companies were privatised looking for capital from, e.g., specifically USA, to make sure they have more interest in our survival. And any Russian investment is seen as a possible risk.

Someone with no home connection to the Internet is still way ahead of anyone in the 20th century, where you often needed to travel in person to various government offices throughout the year for things that can now be trivially done online.

People "need" ISP's for entertainment purposes.

This is how utilities/water work in the vast majority of the US. I’m unclear why you think this is strange? At the very least, it doesn’t explain the UK’s problems.

But "2 + 2 = 3 is false" is not an argument for "2 + 2 = 5 is true".

(FWIW - I've seen arguments, in a broad range of periodicals, to the effect that the current generation of British politicians - if not the entire British ruling class - are dysfunctional sh*t, and the UK's future looks pretty bleak.)

Overeducated as in having university degrees and being “highly skilled” which demands imports of “unskilled” workers which causes integration problems.

Or overeducated as in understanding how “the system” works and are aware of the class war they were thrown in since their conception, how the system pits the working class against each other while the ruling class enjoys a paradise.

Have you seen the dividends and bonuses at Thames Water, or read the article posted here?

Now pick something that's a natural monopoly, like water supply. Consumers can't choose water suppliers - deploying pipes is prohibitively expensive - so there's no incentive to lower prices. Instead the efficiency goes to paying shareholders and management. Additionally these companies often have set leases on the infrastructure. If you have a 20 year contract and you know the pipes will start to fail in 25 years if you don't do maintenance... why do maintenance?

Government departments might not be the most efficient, but we can demand they're open and report what they spend money on.

Right, but efficient at what? The answer is almost invariably 'efficient at making money' - that's the whole point; competition normally forces alignment of incentives, wherein 'better' service (for some value of 'better') results in higher income. Thus a business that provides better service is more efficient at making money - the free market hypothesis. When there is a captive audience, as in the case of public utilities, there is no incentive to provide a better service, but the company goal is the same - make the most money - and they are freed up to do it in the easiest way possible, usually by cutting costs across the board and paring down the services to a bare minimum. This is still efficient in the sense that they maximise income for minimum outlay, but it's not in any way desirable for the customers who are forced to use the now crappy service.

What's more, a private company which has monopoly does not really have special incentive to respect deadlines and everything: it is the only choice, so customers won't deal with any competitor and are stuck with this private company.

That is often at odds with “making profit” either from over hiring so there’s always fallback people on call to overbuilding so in 50 years your still under capacity.

The goals are entirely different and so should the incentives

This doesn't happen.

When the government is the customer, and the private company is maximizing profit, the company's effort goes towards figuring out how to 'raise' rates.

This might sound like free market, I'm just trying to increase prices while reducing my overhead (efficiency). But in practice you end up paying a lot for a little. So instead of government workers slacking off, you have even less well payed people slacking off, with managers making a lot of money.

If you ever had to go to a 'privatized' DMV you can see it. Just awful everything, because of cutting corners. Yet the company gets paid a lot. The money goes to the company leadership, it doesn't 'trickle' down to operations to do a better job.

You never invest in infrastructure - in 30 years since privatisation, water companies in Britain haven’t built a single reservoir, lose 30% of water to leaks and dump raw sewage on the beach where children swim

A profit maximizing company may reasonably say "oh this population is super expensive to serve so we will let services there stagnate or even remove services for that population because it is more efficient for us to focus elsewhere."

Or consider a subscription service that makes it considerably more difficult to unsubscribe. That increases profit while making the product actively worse.

Profit incentive leads to efficiency of profit extraction, which is only loosely correlated to efficiency of services for consumers and occasionally runs in total opposition to efficiency of services for consumers.

Cuz that never happens in the private sector, lol. Guess where I'm at now...

There was a week while consulting pre-COVID I tried to see how many hours of Skyrim I could play on Switch, both in the office and remotely. I got to about 11.

Yes but one way that happens is by ignoring unprofitable customers. That's great if you are a car dealership and sell higher end cars to wealthier people or run a botique grocery store with fancy all-organic produce, but terrible if you are (for example) trying to provide healthcare or education and decide that the profit margins aren't high enough for you to serve various segments of the population.

Sure, there's lots of pressure, but, at least for someone with my profile, it's limited by the fact that it's easier to walk away.

I mean real world education, such as how their body works, how to navigate society, critical thinking, cognitive biases, how probability works. If humanity is to survive we need to move away from empiricism and dogma, we need to move towards an educational system where kids grow into rational adults.

The competition should be the grades attained by the students or their entry into higher education/vocational training. Not value on the stock market or the directors total comp.

Measuring pupil attainment is harder than comparing share prices, but it's certainly better for society.

Specifically table 1 on page 2, "The ten industries with the highest profit margin", has the spots 1 (elec: 42.5% profit), 2 (gas: 40.5%) and 8 (water: 32.1%) being utilities.

A water company caring about some international investors more than the people they serve, and siphoning money out to those foreign interests, borders on treason.

"Often" seems like weasel words? Look at e.g. tech worker salaries rocketing up. Or the year on year improvements in key items such as cars and phones.

What you're saying doesn't jibe with my understanding of the 20th and 21st centuries' explosion of innovation and quality of life improvements.

If you think Fords and VWs are no better than Ladas, or SpaceX rockets aren't better than Soyuz rockets, or people flock to countries run by "the commies" vs, say, the US, due to the better products and wages in said "commie" countries, then we might just have a fundamental disagreement on the state of reality. But my understanding is the opposite is true.

> why not sell 10s of the cheap one over and over?

Companies can do that, but in a decent economic environment a competitor or twelve can spring up and offer products at different prices and levels of quality. E.g. not every restaurant is McDonald's. Why is that?

Pravda is both the Russian word for ‘truth’ (правда) and was/is a publication advancing the interests of the USSR/Russian state establishment.

The ‘economist’ implies a similar ‘truthfulness’ (it must be right about the economy if it’s an economist!) and advances the interests of the London financial establishment.

But I do think it's a bit of hyperbole in a way, although I'm only tangentially familiar with the publication.

Or run a nationally important service into the ground and then need emergency government money to keep providing it.

I think that's what the poster above was trying to say - they're not competing for customers, they're competing for investors. Effectively their only products are ROI and share value.

And when I say it out loud, I get a little shock, as I realize how much all industries are trending that way. No matter how consumer-facing your business is, the real competition is for capital investment. Consumers had better hope that capital investment depends on their happiness, because if it doesn't, their happiness is going to slide far down the priority ladder.

Competitors who take large loans and fail to deliver are out competed by alternatives who went a more efficient route.

The profit margins are fixed, but everything is still competitive.

>The only thing they are competing against is which company can extract money the fastest (at the expense of the company and English citizens). Second of all, from the article, they aren't spending the raised money on capital investments.

The owners of the company are competing with others in society to buy land/houses/cars/services/etc.

When does profits don't materialize, the company goes bankrupt, the government rescues it (can't just cutoff power and water!) and everyone is happy! Well everyone but the majority of taxpayers who aren't also shareholders of the utilities...

There's this thing called a "leveraged buyback" where a company borrows money from lenders and uses that money to buy back shares.

At least that’s they playbook they’re all using.

2.) Raise the regulatory bar to prevent startups from entering your field.

Milk whatever half dead infrastructure you have and people depend on.

Oh and raise prices every odd year while still not investing in the rotten infrastructure. Somehow investors need to see growth and dividend payments.

Due to 1.) there is no competitor left that could offer a better service. People cannot simply switch.

Die to 2.) you are not in danger of ever having to face situation 1.) again.

Job of the government is to not let 1. and 2. happen.

I mean, do you really not understand how earnings are calculated, or are you trolling?

I was just at EWR last night waiting for an arrival and there was an old man looking for water. He asks an employee where to find some and she looks at him like he has two heads.

“You have to buy some. Or you can drink out of the faucet in the restroom”

Can you imagine that? Telling an old man at 1am he has to drink out of a bathroom fixture to quench his thirst.

In my mind, I was hoping he was flying to a more civilized country. Because that’s the system we’ve built for ourselves. In a better present, the man would have access to a drink for free. But because a profit needs to be made, the entire airport is organized around little nickel and dime scams.

Especially when the service is a necessity for many (Train to work, water to drink, electricity to keep warm and cook, etc).

There was an excellent book on the subject published this year called Our Lives in their Portfolios[^1].

[^1]: https://www.ft.com/content/7da72f9c-978b-41e7-8e4b-478818f74...

Here is how that works in American railways: https://m.youtube.com/watch?v=jNkYNjADoZg

And why they are on a road in implosion.

Most important is that the target service coverage, quality, etc should be decided by government (who should be seeking to please voters), not corporations who are seeking to please shareholders.

So the example of rail doesn’t really apply to this branch of the discussion.

However, once you’ve bought a house, it is very difficult to to but in new pipes from a different water works.

In the examples here, no, CEOs don’t face real competition. Water companies are sold off public utilities. They way they make profit is to degrade service and raise prices. No one is going to install a competing water system. No AI is going to do that anytime soon.

The Economist has a political bent, but they are clear on how privatisation has gone: ‘Dogmatic adherence to privatisation in the face of its sustained failure suggests ideology, not pragmatism, was the motivation.’

> Water companies are delivering a minimum standard of water

No they aren’t. That’s a key point in the article.

https://www.scottishwater.co.uk/About-Us/News-and-Views/2022...

I meant while applying to their own position. Not between corps. The CEO market is artificially small.

Of course they will! There's an entire industry (leveraged buy outs) built around it. And more generally, lenders will let you do dumb things with the money they lend you. As long as they expect to get paid back.

So, could a small business borrow money to pay it's owners? Probably not, it's not likely to get paid back. Could a multinational corporation borrow money to pay dividends? Yes, it's happened.

Water company does a debt bond issue, parent owning fund takes a % of the issue (enough so that the bond issue is a success at a good price), parent fund extracts all the funds raised as a dividend, and sells the % of the issue it own too

All while extracting management fees etc too

- buybacks are taxed when a person gets money for their shares, as capital gains tax

- lots of corporate tax is about exactly the opposite of what you say; i.e. reaching inside a company's bank account and taxing its profits directly, rather than waiting for the money to flow out and taxing it as VAT/income tax/cap gains. A huge amount of money and effort is spent on balancing this correctly, with R&D credits, structuring profits to appear in the correct year, etc etc.

> Railtrack made a lot of money

"Made" implies creation, growth, increase.

This is the opposite of what happened.

The money wasn't made. It was /extracted/. They /extracted/ a lot of money.

Railtrack doesn't have that money. Their succeeding entity doesn't have that money. The government doesn't have that money. The taxpayer doesn't have that money. None of that money was invested such that any of these entities might benefit from it in any way. It was removed from the system into private wallets.

The private owners plundered and fled, and the remaining skeleton was socialised again so it might regrow a bit of flesh from public taxes for the next extraction cycle.

> The passenger train operating company had failed to inform Railtrack and the signaller that the automatic warning system (AWS), which warns drivers of adverse signals, had been turned off in the cab of the HST.

But Ladbroke Grove was Railtrack's fault entirely (within the first few years of its creation). Meanwhile it's been 20 years since National Rail was created, when do we get to blame current governments and National Rail for bad infrastructure?

In Britain, British Telecom spent around 20 years making it impossible for other players to supply an internet service to consumers. They used various anti-competitive practices and had very good capture of the largely toothless regulator OfCom. This is all documented.

What about using revenue to buy it? You don't have to use (or have) debt to buy something with revenue.

It's a sham market.

There's so many factors potentially at play here and some of it we wont get to ever know about, but life has taught me there is manipulation in many guises.

I, for one, think it's a good thing that people are entitled to their mail regardless of the profitability of their mail route. That's the point of a public service.

USPS is not a business, and it’s a fundamental mistake to pretend it is, solely for the sake of slandering it.

Among other core competencies, USPS has nationwide daily coverage of the entire United States and centuries(?) of experience interoperating the the respective mail services of every country in the world and then some.

Amazon wont even take MY package one town over.

However that doesn't change what I said so I'm not sure why you are bringing it up. Amtrak most likely wouldn't be profitable if they had priority.

Each big city we came to we had to stop and wait without having any idea how long it would take for “freight traffic to clear”.

I love train travel, and I’m not price sensitive at all, but the delays were completely absurd.

https://en.wikipedia.org/wiki/Private_Express_Statutes