[dan_can_code]

That's the UK in a nutshell this past decade. Privatise all of the public services for a quick buck, and slowly but surely the service decays whilst the prices for consumers increases. The trains in the UK are a great example of this.

[ralferoo]

It does seem to be the inevitable consequence, but often privatisation is required too.

Publicly run services and utilities often suffer from inefficiencies because there's no incentive to change the processes and lots of government funded agencies suffer from the "we must spend our entire budget or we'll get less next year" syndrome.

Privatisation replaces the leadership with people who are incentivised to make the organisation as efficient as possible, but the actual quality of the services delivered matters if people are stuck with a now privatised monopoly and they have no choice of provider (or e.g. energy companies where the choice doesn't really make a meaningful difference anyway).

Probably the sensible middle ground is for the government to maintain a sizeable but minority share in everything that gets privatised, with a general policy of never exercising the voting rights unless it's against a course of action that is clearly detrimental to public interest. Probably even the threat of being able to vote out key personnel would be enough to keep them focussed on serving the public better. And with something like a 40% share, the shareholders have enough incentive to keep profitability high, and the government would also share in the profits of the previously public entity.

[franga2000]

> Privatisation replaces the leadership with people who are incentivised to make the organisation as efficient as possible

This is the core lie that economists have sold us. Private companies are not incentivised to be efficient, but to make as big a profit as possible. This usually means they cut quality, reduce unprofitable activity and extract every last cent they can out of their customers or other source of funding.

Public benefit companies run on a service-first principle. They deliver the required service to everyone, at the same quality, at a reasonable price - at all cost. They're sometimes inefficient at doing that, but more often than not, any "efficiency" gains would mean reducing service quality or accessibility, which is not acceptable when you work for the people, not the shareholders.

[dgroshev]

This logic breaks apart in high positive externality areas, like public transport (or indeed postal systems).

Public transport brings a lot of value to other businesses and communities it operates in that can't be directly captured in fares. Which means that if a public transport system is profitable and the goal is maximising total economic (and social) value of the area as a whole, the system either under-invests, or is too expensive, or both.

The classic economic solution to this is subsidies: capture some of the generated value in taxes, re-invest back into the transport system. However, this makes the business part of the whole arrangement almost meaningless, because the amount of optimal subsidy can't be objectively determined. It's impossible to distinguish a bad business losing money from inefficiencies from a good business asking for subsidies to optimise its total impact.

There are some peculiar arrangements that some countries and systems were able to create, like direct land value capture through transport companies buying and selling property. But those cases are pretty exceptional and for practical purposes don't scale.

[moooo99]

> but often privatisation is required too.

Based on what exactly? That privatisation is required is something you hear quite often, but rarely a solid explanation. Often times, the organization or service operating at a loss is cited. But this is barely a good KPI to look at when it comes to public services. Even if a public service operates at a loss on a business level, it can still mean the very same service is „profitable“ in a macro economic scope.

> Publicly run services and utilities often suffer from inefficiencies because there's no incentive to change the processes and lots of government funded agencies suffer from the "we must spend our entire budget or we'll get less next year" syndrome.

This is not inherent to government services, it is a leadership issue. One - as I may add - is frequently encountered in many large entirely private organizations as well. As such, it barely serves as a good argument in favor of privatisation. Private companies are not incentivized to be efficient, they are incentivized to make money. Money can be made by being efficient. But the ultimate way to be „efficient“ and make loads of money is by being a monopoly - something that you‘re often supporting by making formerly public services private.

Beyond that, what counts as inefficient? A public service can and should have different bars as a private org. For a private company, anything where the process cost is higher than the expected return is inefficient.

Take a postal service as an example. Running a postal office in a small town with few people and little postal traffic is almost certainly inefficient. But is this a good enough reason to cut people off such a critical service?

> Privatisation replaces the leadership with people who are incentivised to make the organisation as efficient as possible

That is what the theory states. In the real world, efficiency gains almost always come down to cost cutting in terms of reducing the service quality, reducing the service availability or a combination of each. In my opinion, to talk about efficiency gains, you need to provide the same service for less - this is rarely happening.

> Probably the sensible middle ground is for the government to maintain a sizeable but minority share in everything that gets privatised, with a general policy of never exercising the voting rights unless it's against a course of action that is clearly detrimental to public interest

This just seems like an elaborate way to privatize without actually privatizing. Again, I am generally strongly against privatization, particularly when it comes to natural monopolies such as infrastructure.

[ch4s3]

There's no iron law stating that private services must necessarily decay or be under provisioned.

[card_zero]

Besides, government-run British Rail was historically shit, reaching peak shitness in 1984 when they brought out the pleading slogan "We're Getting There".

[aitchnyu]

This is news to me. When did they fall far behind other western countries?

[ch4s3]

The Stockholm subway and basically all of Japanese rail are privately run.

[stuaxo]

Fiduciary duty usually achieves this.

[drweevil]

The iron law of capitalism--maximize investor return, minimize expense, even at the expense of the core product. This is especially true when there is not adequate competition, which is the case in a lot of sectors in this country.

[ch4s3]

Destroying your core offering isn’t a core feature of capitalism.

[UltraSane]

Greed

[ch4s3]

Incentives?

[kitd]

Maybe not iron, but "common" law if you like is for privatised services to enshittify post haste.

;)

[pas]

water companies in England and Wales are perhaps even better

the same sorry ass situation that PG&E is in California, everything is brutally expensive because it's an absolutely shitty old system sustaining an overgrowning fucking sprawl (which coincidentally also means more roads and pipes and less trains and tickets)

[jacobp100]

[flagged]

[halo]

If this is the case, why are many other EU postal services still state-owned (e.g. Ireland, Poland, Cyprus, Greece)? The UK left the EU 5 years ago yet it’s still being used as cover for UK political decisions.

[osrec]

We live in a world where, for certain topics, people believe whatever narrative suits them at the time. Facts seem to not matter too much. Brexit is one of those topics.

[rwmj]

Citation definitely needed for this one.

[exasperaited]

jacobp100 is referring to: https://eur-lex.europa.eu/eli/dir/2008/6/oj/eng

They did not force the privatisation of Royal Mail; it was first made a special sort of PLC back in 2000 so that it could access private money, and arguably that helped accelerate the EU belief that postal services needed competition.

But they did force competition in EU postal delivery, and that effectively drove the decision to essentially fully privatise Royal Mail so it could compete.

It also had a very unfortunate outbreak of Crozier Disease and that didn't help.

[zimpenfish]

> Following the 2010 general election, the new Business Secretary in the coalition government, Vince Cable, asked Richard Hooper CBE to expand on his previous report, to account for EU Directive 2008/6/EC which called for the postal sector to be fully open to competition by 31 December 2012. Based on the updated Hooper Review, the government passed the Postal Services Act 2011. The act allowed for up to 90% of Royal Mail to be privatised, with at least 10% of shares to be held by Royal Mail employees.

https://en.wikipedia.org/wiki/Royal_Mail which links to https://web.archive.org/web/20150224033637/http://stakeholde... (the EU directive has gone from their website and isn't in archive.org) which says

> Summary of legal position: Article 7 of the EU Postal Directive (Financing of universal services), has required the progressive – and since 1 January 2013, total - liberalisation of postal services throughout the EU.

Hopefully this qualifies as a valid citation.

[Retric]

That’s a little misleading in terms of EU requirements: https://eur-lex.europa.eu/eli/dir/2008/6/oj/eng

“The external financing of the residual net costs of the universal service may still be necessary for some Member States. It is therefore appropriate to explicitly clarify the alternatives available in order to ensure the financing of the universal service, to the extent that this is needed and is adequately justified, while leaving Member States the choice of the financing mechanisms to be used. These alternatives include the use of public procurement procedures including, as provided for in the public procurement Directives, competitive dialogue or negotiated procedures with or without the publication of a contract notice and, whenever universal service obligations entail net costs of the universal service and represent an unfair burden on the designated universal service provider, public compensation and cost sharing between service providers and/or users in a transparent manner by means of contributions to a compensation fund. Member States may use other means of financing permitted by Community law, such as deciding, where and if necessary, that the profits accruing from other activities of the universal service provider(s) outside the scope of the universal service are to be assigned, in whole or in part, to the financing of the net costs of the universal service, as long as this is in line with the Treaty. Without prejudice to the obligation of Member States to uphold the Treaty rules on State aid, including specific notification requirements in this context, Member States may notify the Commission of the financing mechanisms used to cover any net costs of the universal service, which should be reflected in the regular reports that the Commission should present to the European Parliament and Council on the application of Directive 97/67/EC.”

IE Privatizing Royal mail was not required by the EU, instead they needed to allow for competition by UPS, FedEx etc.

[xorcist]

"Open to competition" != "Privatised"

[FridayoLeary]

Other users have pointed out this isn't entirely accurate but i'm still shocked. My understanding was the job of the eu was to impose continent wide standards to enable free exchange between member states. How does dictating the policy of national postal services achieve any of that?

[avianlyric]

The EU generally doesn’t like state subsidies of services. Which makes sense, because state subsidies would provide an unfair advantage to companies operating in that state, over other member states. Reducing trade and competition across the bloc.

For postal services, the same applies. EU doesn’t like the idea of a state owned or subsidised postal business, preventing the entrance of competition from companies in other member states, or allowing the subsidised entities to expand and outcompete companies in other EU states.

The EU doesn’t set national postal policy. It only requires that the basic postal service is an open to competition from entities (private and public) in any EU member. With a carve outs for the funding of universal service (I.e. making sure that every address gets post regardless of profitability), where state aid is clearly needed.

[hdgvhicv]

Preventing governemt monopoles in a specific areas is what the eu predecessors started of back in the coal and steel days.