[scythe]

>This is exactly what would have also happened if the water companies were not privatized

The post office in the United States is not privatized and yet has been able to set prices in a way that sustains the business for centuries. You can't simply assume that all public entities will ignore fiscal reality.

In fact you may run into the opposite problem: when a utility is public, their debts appear on the government balance sheet and legislators are responsible for them. When it's spun off as a quasi-private monopoly, the government can impose debt on the utility without appearing to increase the public debt.

[jdietrich]

The US Postal Service has been running at a loss since 2007. It lost $9.5bn last year, despite a colossal bailout in 2022 that was supposed to return it to profitability. Most of these losses can be attributed to pension and healthcare costs. The USPS is pretty much the worst example of a sustainable nationalised business that you could possibly choose.

[Aushin]

Only because of legislative sabotage in 2006 by right wing ideologues determined to prove that public services "can't work"

https://www.congress.gov/bill/109th-congress/house-bill/6407

[coryrc]

The problem that's at-least-purporting-to-address is one facing all the levels of government: boomers promised themselves future taxpayers would give them lots of services (money) while setting aside wholly insufficient capacity to make it fair to the future working citizens.

[qcnguy]

Yes, in theory nationalized companies can set prices rationally and turn a profit. In practice they rarely manage this for long because sooner or later a populist comes along and forces them to lower prices in order to win votes. It's not just water where the UK has a problem with this. Transport for London has also been forced to underprice its services for years by London's socialist mayor, it's a big part of how he won votes, meaning they've been building up a huge tech debt backlog. He clearly expects that the rest of the country will eventually bail London out and he'll be seen as the hero.

The US is a very right wing country. It's politicians are better able to avoid populist price controls. Maybe with Mamdani that's now changing.

[djankauskas]

Could you explain the case that TfL charges too low for fares due to a "socialist" mayor? Looking at the agency's reported recovery ratios, they actually recover more than 100% of their direct operating costs on the Underground from fares, and even buses have a 70% ratio. In the Western world this is actually abnormally high; in NYC buses don't even clear 20%. It's possible some of this gap is explained by accounting differences, but nonetheless London is clearly not charging cheap fares.

The reasons why Western systems often don't recoup even operating expenses, let alone capital costs, from fares are because transit is a public service with public externalities. Drivers on the road contribute to pollution and congestion, especially relevant in dense areas like London. Some level of subsidy is appropriate to account for the positive externalities of discouraging these negative outcomes while still encouraging regional mobility.

This is not to say TfL is as efficient as it could be; there is a well-documented capital costs crisis in the Anglosphere, particularly when it comes to transit. The issues here are more complex, though, than vote buying from an allegedly "socialist" mayor.

[qcnguy]

Since lockdowns I think the underground only recovers around 70% of its operating costs. Maybe you have seen different figures?

The freezes eliminated investment projects needed to keep pace with population growth. There's also just big problems maintaining the stations and doing more than the bare minimum needed to keep the lights on. Travel on it and the stations are dirty, overly hot, etc.

Drivers on London's roads are very heavily taxed already, supposedly to reflect those externalities. Public transport obviously also contributes to pollution and congestion, especially when building underground lines, it's not externality-free.

I don't think TfL has a cost crisis. Crossrail overran but that was mostly due to the software complexities of the signalling tech debt around the Heathrow tunnels and other issues that can affect any kind of project. It's just hard to tell right now because they can't build at all.

The fare freeze was broken by central government briefly, but only by bribing Khan with central government money for upgrades. Exactly the outcome he wanted!

[midnightclubbed]

> The US is a very right wing country. It's politicians are better able to avoid populist price controls. Maybe with Mamdani that's now changing.

Rather than placing price controls on private companies the US slashes taxes to the point where public services then cannot invest in infrastructure and maintenance - and then use that as an argument why public services should be privatized.

If tax cuts aren't populist policies I don't know what are. The magic trick of the right wing parties has been to sell tax cuts as a great thing to the very people who don't benefit from the cuts and are hurt by the fiscal fall-out. That and attaching themselves to Christianity while not following any of Jesus's teachings.

When a service is a monopoly there is no good reason for turning it into a for profit company outside of feathering the pockets of the rich. If the electricity supply to my house (and by extension my street and my city) is controlled by one company and they own the cabling and infrastructure then what is the motivation for them to not jack up my prices to generate profits to their shareholders, as they should as a shareholder owned company? What is their motivation for encouraging renewables or improving infrastructure when those would reduce profits and reduce shareholder value?

Mamdani hasn't even been voted in yet. Keep sowing that fear so that the people his policies might benefit don't actually vote for him - because he's a scary socialist (in the loosest, most American, definition).

[qcnguy]

The difficulty of getting people to vote for tax rises is a good justification for privatization. This difficulty isn't some uniquely right wing thing. The Democrats and Labour don't campaign on general tax rises either. At most, the left are willing to campaign on "tax rises for people who aren't you". That's because any party that wants to raise taxes on the majority loses.

So, governments of any color have to work with that as a constraint. Given that nobody has worked out how to convince everyone to accept big increases to their tax bills, you can either pay for new expenditures with borrowing or with cuts elsewhere. Sometimes cutting elsewhere is also hard, so either:

1. Everything gets put on the credit card. This ends badly.

2. Stuff is privatized. This yields an immediate cash influx, and voters are usually happy with the results which is why very few privatizations have been rolled back. The reason is that outside of very left wing spaces most people trust private companies on pricing much more than governments. Private companies run special offers, sales, sometimes cut prices even in the face of inflation and can be visibly seen competing on price. Government owned organizations never do this.

It's also (quietly) popular with governments on both left and right for another reason - it means they have less stuff to manage and less stuff that can blow up. If there's a problem with a privatized industry they can just tell you to switch to a competitor instead of needing to campaign on it and promise to do better.

Natural monopolies do exist and sometimes governments just have to bite the bullet and run such things themselves. But there's a lot of room to debate what is and isn't a natural monopoly.

[worik]

> The Democrats and Labour don't campaign on general tax rises

They should try it. We desp3rately need to move the Overton window on this.

Tax is good. We need more of it. A screamingly obvious fact. Give us a chance, please, to vote for it.

[danans]

> It's not just water where the UK has a problem with this. Transport for London has also been forced to underprice its services for years by London's socialist mayor

In the US we have a problem with fantastically underpricing public roads. We don't expect their books to break even, much less generate a profit. Meanwhile everyone asks why train systems are not profitable.

> The US is a very right wing country.

Yeah, at least compared with most of Europe.

> It's politicians are better able to avoid populist price controls.

You didn't notice when the current president (somewhat successfully) bullied retailers into swallowing tariff-caused price increases, so they wouldn't damage his popularity? That almost seems right-wing socialist.

[qcnguy]

I don't think Trump is anyone's idea of a textbook conservative, especially not economically. He's a former democrat with populist instincts. Such politicians are often popular. It's frequently said in the UK that the median British voter is socially conservative and economically liberal.

It's true that the US subsidizes its road network. The effect is somewhat different though. If TfL doesn't get enough money in due to price controls then the network just degrades. If the US subsidizes its roads, the network can be maintained using subsidies. For it to be equivalent, roads would have to be privately owned but unable to charge the true cost of maintenance.

[swiftcoder]

The point is that the US doesn't subsidise rail, and yet they do exercise price controls on many forms of rail, so on both fronts rail is screwed when it comes to competing with road travel

[danans]

> I don't think Trump is anyone's idea of a textbook conservative, especially not economically

I'm just going off what you said above:

> The US is a very right wing country. > It's politicians are better able to avoid populist price controls.

I don't think he is a traditional conservative either, but rather a right-wing nationalist ethno-socialist.

However, the fact is that he has the near unanimous support of most "textbook conservatives", both in Congress and in the broader Republican party, as evidenced by their voting for and supporting a massive debt-exploding budget and their silence in the face of his ethno-nationalist executive actions.

If he isn't a textbook conservative, neither are they.

[wredcoll]

I'm just piling on but:

> a textbook conservative, especially not economically

Wtf is a text book conservative supposed to be, exactly? And have we ever had one?

All the republicans in my life have raised the national debt and spent their time passing laws about culture war issues.

[Matticus_Rex]

Conservatives have generally been at least somewhat pro-market. American Republicans haven't been fiscally responsible, but until Trump they were meaningfully more pro-market than the alternative. Trump's economic views have at least as much in common with Bernie Sanders (as Bernie keeps pointing out!) as with pre-Trump Republicans.

[qcnguy]

Trump has certainly dragged his party towards the left economically speaking. With lots of squealing and resistance, but they went there in the end because it's popular with voters. They haven't managed to win people over on fiscal conservatism despite trying.

But US politics plays out in many ways, including at the local level. For water supply who the POTUS is doesn't matter that much, it's not handled at the federal level. American political outcomes vs the rest of world are the result of long term social trends beyond any one man.

[danans]

> Trump has certainly dragged his party towards the left economically speaking

Only rhetorically, but that's just fodder for his blue collar base.

In practice he's done the opposite. His massive tax cuts for the wealthy and gutting of the social safety net is Reaganism/Thatcherism at its most explicit, and his broad tariffs are a tax on people who spend most of their income in survival.