Privatisation, Power & Propaganda…

Privatisation has its origins in fascist ideology. In the mid-1930s it was the Nazi regime that transferred public ownership to the private sector.

“Nationalization was particularly important in the early 1930s in Germany. The state took over a large industrial concern, large commercial banks, and other minor firms. In the mid-1930s, the Nazi regime transferred public ownership to the private sector. In doing so, they went against the mainstream trends in western capitalistic countries, none of which systematically reprivatized firms during the 1930s. Privatization was used as a political tool to enhance support for the government and for the Nazi Party. In addition, growing financial restrictions because of the cost of the rearmament programme provided additional motivations for privatization.”

Most people are completely unaware of just how much privatisation has occurred in the U.K. over the last four decades. It’s staggering. Privatisation is an attack on democracy that reduces oversight and accountability.

One of the biggest lies pushed in regard to privatisation is the efficiency myth… and it is a myth.

Even the bastions of global capitalism have admitted as much. Here’s the International Monetary Fund (IMF) in a 2004 policy paper:

“While there is an extensive literature on [the relative efficiency of the private sector], the theory is ambiguous and the empirical evidence is mixed.”

The World Bank came clean in 2009 and said that:

“privatization per se does not guarantee improved performance”.

Large scale meta-studies have drawn similar conclusions:

“the evidence shows no significant difference in efficiency between public and privately owned companies in public services”.

Some research has even shown privatised services perform worse, including one of the largest studies, whose authors include renowned economist Joseph Stiglitz.

Which brings us to the news this week that privatised U.K. rail companies are to get a £3.5bn bailout.

This is in addition to the the government support of £7.1bn in 2018-19.

U.K. railways are almost entirely state-owned, just they’re owned by foreign states.

The Germans run Chiltern, Cross Country, Grand Central, London Overground, Northern, Tyne & Wear Metro and Wales & Borders. The French State runs (or part-runs) Docklands Light Railway, Gatwick Express, London Midland, Southern, South Eastern and Thameslink. The Italian State runs Essex Thameside. The Dutch State runs Greater Anglia and Scotland The French and Belgian State co-run Eurostar.

This causes a huge export of finance. Profits are going into the coffers of private’s shareholders and foreign state owned rail operators who use these profits to invest in their own domestic networks and services.

Rail passenger fare income in the U.K. has been steadily climbing (current situation aside), from just over £6 billion in 2006/7, to £10.2 billion for 2018/9

This is before you factor in direct government subsidies for the railways, which has increased over 200% since privatisation. At the same time, fares across all operators are 20% higher in real terms than they were in January 1995.

According to figures from the Office of Road and Rail, UK Rail Industry Financial Information, private rail companies have paid out £1.031 billion in dividends to shareholders since 2012/3

U.K. rail has always been a highly propagandised subject, important to the narrative of ‘success’ under control of the private sector.

‘An illusion of success: The consequences of British rail privatisation.’

This article accounts for the British experiment with rail privatisation and how it has worked out economically and politically. The focus is not simply on profitability and public subsidy, but on the appearances which accounting arrangements create. The article scrutinises the Network Rail subsidy regime, which enables train operators to achieve fictitious profitability without increased direct state support. This enables supporters of privatisation to claim train operators produce a net gain for the British taxpayer. The claim forms the heart of a trade narrative which is employed by the industry and their political backers to deflect criticism and stymy reform.”

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