Fourth Democracy Café held

The fourth Democracy Café was held yesterday in its new location in the Playhouse.  Twenty four attended and the chosen topic was nationalisation and in particular, of the utilities.  This beat a debate on the decision by Donald Trump to relocate the American Embassy to Jerusalem.

Democacy Café in action. Pic: Salisbury Compass

The last 3 or 4 decades has seen a considerable number of publicly funded organisations being privatised including the utilities of water, gas and electricity as well as the railways and British Telecom.  The arguments at the start of the privatisation spree was that these organisations were poorly managed and run and that private sector management was superior; that it would provide more choice to consumers instead of being at the mercy or monopoly suppliers, and that competition would drive down prices.   There are worries now that there is a backdoor attempt to privatise the NHS which is in effect happening with elements being put out to tender.

Much of the debate centered on how much in fact had these promises been achieved.  We were reminded that before there was competition in the supply of telephony for example, we were at the mercy of BT.  If you wanted a phone you had to wait up to 6 months to do so.  Now, suppliers fall over themselves to supply you.  So in that example, competition and privatisation had resulted in a better service.

It was also pointed out that nationalisation enabled more political interference to take place.  The NHS provides an example of this with top-down management of the service by Whitehall.  It is easier to suppress complaints or criticisms of the service.  Separation of powers was important and this was difficult if the organisation was run by government.

There was a suggestion that care homes would benefit from being nationalised instead of being run by profit seeking firms.  The problem here though might be the nature of how they were run.  What is termed ‘financial engineering’ is common in this sector and is where hedge funds buy up the assets, load the firm with debt, take what profits they can and then walk away.  One of the benefits of nationalisation it was claimed was that it enabled forward planning to take place more easily.

In this connection organisations like G4S was mentioned who, despite many examples of scandals, keeps its contracts and is awarded new ones.  This led onto a general debate about the morality of private firms in the supply of services.  Their prime motivation is profit and they had little interest in the wider community.  Apologists for the privatisation used to argue that what was good for the company was good for the consumer.  They were also able to ‘externalize their costs,’ shedding staff for example who became a problem for the state.  On the other hand, the problems the nationalised industries had with industrial relations was brought up.  During those days, there seemed to be a never-ending series of strikes and industrial actions going on although whether that was to do with them being nationalised per se is debatable.  Poor management would also have played a part.

It was also questioned how efficient they really were and the related problem of being too big to fail.  Failing PFI contracts had to be picked up by the state because you could not just close a hospital for example.  The recent example of the east coast rail line was mentioned where the franchising system has dramatically failed and the losses just disappear.  Dare one also mention the banks who had to be bailed out by the state with quantitative easing because of a mixture of incompetence and excessive greed.

The appropriateness of privatisation of ‘common goods’ as economists call them was discussed.  People cannot be excluded from the roads or receiving water and power without their being significant repercussions.  Was it appropriate for these to be run by profit seeking enterprises?

We were reminded that profit was not all bad: it provided the incentive for people to create new services and underpinned the lending process.  There was a balance to be struck between the profit seeking individual and altruism.

Ethics

These questions raised the general point of ethics or morals: was there a moral imperative to look after each other?  In this connection, the ‘revolving door’ was mentioned.  This is the system which allows ministers, senior civil servants and military chiefs, to leave their occupation and work for firms who supplied their departments.  [This is an under-reported scandal and you can read more in a Transparency International report on the subject.]

It was argued that maybe nationalisation was not intrinsically bad but that to make it work for the benefit of society what was needed was better regulation.  If firms were allowed to use zero hours contracts and flout the minimum wage laws, individuals were affected as well as the state having to pay benefits.  Many receiving benefits were in fact in work.  Poor pay meant there was less money to circulate in the economy.

One of the changes made during the privatisation programme was to change how we perceived ourselves.  We were encouraged to become ‘consumers’ and the belief was that this would change the relationship we had with post-nationalised organisations.  This linked to ideas of markets and choice.  But how realistic was this?

A sense of loss

An interesting point was raised and concerned the sense of loss people felt when there was a change in the social order.  This was noticeable in former communist countries.  However poor living standards were, there was a degree of stability and that was lost with the collapse of the Soviet Union – they ‘knew where they were’.  A similar point could be made with the declining influence of religion in society.

What we now have is increasing control by unaccountable corporations.  We maybe consumers but we have little influence over what happens.  In this connection it was suggested that the Human Rights Act might be the basis for a moral order.  The act shifted power to the citizen and gave them rights ‘against’ the state.  This might explain why it is so disliked by the powers that be and why they want it abolished.

Conclusions

The point of a democracy café is that we do not come to any specific conclusions.  However, there was general disquiet that the system of privately run enterprises did not always offer the best service.  The notion of ‘private good – public bad’ – which was the belief three or four decades ago – did not seem to resonate in the meeting.  Although the profit motive did have benefits and there was more choice today, this had to set against a lack of accountability by major corporations who are able ignore their wider obligations to society, either directly with poor wages and the ‘gig economy,’ or through creative tax avoidance.  One of the disadvantages of nationalisation was it allowed for more political control and this was seen as a bad thing.

So how did the debate compare with the advantages that privatisation was going to deliver four decades ago.  On choice probably there were some advantages.  Instead of being subject to the whim of a public monopoly, there was an increase in choice in many cases.  Better Management?  Well not if you are a customer of Southern Rail or of some of the utilities or anything much run by A4E or G4S.  Prices?  We are in the middle of a debate about controlling energy prices and energy caps.  What happened to the belief in competition to do this job for us?  So on balance we might just say 1 out of 3.

An interesting debate with a wide range of views put forward.

The last few minutes of the session was spent debating Brexit as the previous day had seen the conclusion of phase one of the negotiations – or not depending on your point of view.

Peter Curbishley

The next meeting is on Saturday 13 January in the playhouse starting at 10:00

 

 

 

 

 

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