When Homer and his pals wanted to remember long epics without the benefit of a Psion organiser, they used a sort of low-technology word-processing. Zeus’s wife Hera was always cow-eyed, Odysseus was always wily, and the sea was always wine-dark. From which we deduce that pollution has done wonders to the hue of the Mediterranean, or that the guys were drinking some murkily noxious home-brew while on their extended vacation at that prototype Club Med on the beaches of Troy.
Today, such epithets seem to be electronically processed into the text but it can still make seas pretty murky. Apocryphally, Odessa found itself the home of the Soviet Navy’s African-American Sea Fleet once a politically-correcting program ran over the text. However, the epithet towards which this shaggy dog is scampering is the one the New York Times invariably used to attach to Margaret Thatcher, ‘The woman who privatised the loss-making state industries.’Its frequent use after her dethronement made it more of an epitaph, even though, in fact, it was a terminological inexactitude, as Winston Churchill kindly termed such fibs. Privatise them she did; state-owned they had been; but loss-making they were not – not necessarily, anyway – except when they were sold for much less than the oversubscribed market valued them.
Of course, a firm like British Petroleum, originally nationalised by that stalwart unsocialist Churchill, is not what springs to mind in the average American mind when a state-owned industry is mentioned. Indeed, any confrontation with US bureaucracy, at any level, city, state or federal, will show good cause for the citizenry to suspect government enterprise to be an oxymoron of the first degree.
But the nice thing about prejudice derived from local experience is that it never lets facts fetter its free range. So the experiences of a New York broker getting his driving licence renewed in an office that makes the KGB receiving department seem warmly welcoming, are transferred to all government enterprises anywhere in the world. And the untold billions of profits poured into the British treasury by BP are not going to spoil a good epithet like ‘loss-making.’
The problem with a word like that, or ‘nationalise,’ or ‘privatise,’ is, as Humpty Dumpty said, ‘it means just what I choose it to mean – neither more nor less.’ So, under the one heading come companies like British Telecom, Thomas Cook, Egyptian state-owned cements works, or Haitian telephone networks. ‘Privatisation,’ includes everything from laudable attempts to raise private capital for industries to wholesale looting of public property in the former Soviet Union.
In fact, in my travels, one of the few people to make a credible distinction was the Chinese commissar in charge of Canton province’s economy. He was careful to distinguish between state-owned enterprises, in which the government held more or less of an equity share but which were not expected to defy the laws of economics; and state-run industries, in which every bureaucrat’s cretinous cousin could be sure of finding a sinecure and which had a limitless lien on the public purse. It’s a useful distinction, usually ignored.
For examples closer to home, one can only assume that too many of Wall Street’s finest now live in Westchester, or New Jersey. Otherwise they could see the downside of private enterprise themselves. While the great city of New York with (surprising) efficiency collects the garbage from residential properties, the solid waste of commercial premises is a matter for private contractors.
This has two results. One is that Manhattan residents, who even in the city that never sleeps do take the occasional snooze, must contend with the nightly noise of scores of contractors’ trucks criss-crossing the city, screeching brakes, revving up, and sounding horns with a decibel level of the Titanic’s last hoot. It would, of course, be an ethnic slur to note the preponderance of names with terminal vowels emblazoned on the side of these Behemoths. But in July the District Attorney estimated that the Mob-controlled cartel that dominates the business is overcharging its customers (including Federal offices in New York) some $500 mn a year. It would take a lot of state-owned Egyptian factories to dissipate that much.
Indeed, the UK’s Business magazine, just before its demise in 1991, compared British industries pre and post-privatisation and found that most were less efficient in traditional terms of return on capital afterwards than before. That is hardly surprising, since they were often in the hands of the same management, whose main added value was to their personal returns.
So are we speculating about a massive extension of state-ownership? Not really. Just calling for a sense of proportion.
There are cumbersome, inefficient and barely profitable enterprises that are private, and highly efficient ones that are owned by governments. It is their management, organisation and remit that determines their efficiency, not necessarily their ownership. An unregulated private monopoly is more likely to be a conspiracy to loot the public than to generate much benefit to the customer.
Getting everyone to honk ‘government bad, private good’ in unison may be therapeutic for some and profitable for the tombstone placers. But maybe taxpayers and consumers shouldn’t always take it as stated.
– The Speculator
