On the efficiency of nationalised and State run companies

Northern Ireland Water may be the only public-owned body left in the UK in charge of water supplies

In September 2009, the utility regulator found Northern Ireland Water was half as efficient at delivering services as other UK water providers.

So this privatisation thing is really, just awfully, terrible, isn\’t it?

15 comments on “On the efficiency of nationalised and State run companies

  1. “privatisation thing is really, just awfully, terrible”

    You are so jumping to conclusions.

    There is always misdirection in the attempt to judge these systems by their “efficiency”. One cannot look at “efficiency” when considering a life-sustaining service such as water – any more than in NHS. The problem with private-owned services is that they harm the economy because they don’t provide enough jobs. Eliminating the private-owned services altogether would help the economy. In the case of Northern Ireland Water, this can still be done – - provided the government will allocate additional funds to hire more staff.

  2. The opening remark seems pretty dodgy: @ WKPD
    “Scottish Water is a statutory corporation[1] in Scotland that provides water and sewerage services. Unlike in England and Wales, water and sewerage provision in Scotland continues as a public corporation accountable to the public through the Scottish Government.”

  3. I’m sorry John but you lost me here:

    “The problem with private-owned services is that they harm the economy because they don’t provide enough jobs. Eliminating the private-owned services altogether would help the economy. In the case of Northern Ireland Water, this can still be done – – provided the government will allocate additional funds to hire more staff.”

    So if we just employed one extra employee to stand beside each & every public sector worker simply to watch him work economic paradise would have arrived?

  4. Don’t be silly, Pete. That wouldn’t work. They’d have to dig some holes, and fill them in again. Otherwise they aren’t producing anything, are they?

  5. “So if we just employed one extra employee to stand beside each & every public sector worker simply to watch him work…”

    With all the HR, H&S, diversity, ‘green’ and statistical staff backing up those on the front line, doesn’t that pretty much happen already?

  6. “I’m sorry John but you lost me here:”

    Pete . . . Pete . . . Pete . . . that’s where you’re supposeta laugh.

  7. If we’re going to have government pay people for economically unproductive jobs, can we have them pay for handjobs instead? It’s not economically productive, but it would (probably) be more enjoyable. Somehow government could probably mess it up, though.

  8. John, so sorry I missed what was quite a good gag. Trouble is over at CiF about 25% of the posts read like that & a sense of humour there is a very rare thing.

  9. I agree Pete – it’s become so common to see nonsense like that posted as – and accepted as – serious fact, that the humour is hard to detect–especially on the web. Scary.

    In that same vein, my favorite comeback for anyone who tells me that “jobs” creation should be the principal aim of government policy – is to observe that if the government would just hire 5 million people the jobs issue would be solved and the economy all fixed. I usually get a blank stare. Then I congratulate the other person for their imaginative thinking, and walk briskly away.

  10. “”Governments, by and large, have little business running steel mills, and typically make a mess of it. (Although the most efficient steel mills in the world are those established and run by the Korean and Taiwanese governments, they are an exception). ” –

    Joseph Stiglitz ‘Globalisation and its discontents’, page 54.

    It is not who runs things, or why things are run, but how they are run that matters.

  11. “A power distribution firm has admitted failing to maintain electricity cables after a 20-year-old man died when he was struck by overhead power lines.

    Simon Lines, of Prees, Shropshire, was hit as he warned others about a live power cable which had fallen across a busy road in the village in 2007.

    At his inquest it emerged the cable, which had come loose in high winds, had not been checked for 28 years.

    Scottish Power was fined £130,000 at Shrewsbury Crown Court on Monday.” –

    http://www.bbc.co.uk/news/uk-england-shropshire-11984104

  12. Martin,

    It is not who runs things, or why things are run, but how they are run that matters.

    But you can’t really separate the how and the who.

    The NHS, for instance, does a number of things that are about not just treating people or advising people about health. It also ensures that it also acts in line with promoting other parts of government agenda (like having recycling officers, reducing parking spaces or buying food locally).

  13. Martin:

    Quoting J. Stiglitz can’t take you off the hook for buying his short-sighted economic analysis.

    ONLY a privately-owned firm can comprehend whether its efforts have been met with success or not (profit v. loss) and, whether (if profitable) “efficient” or not (by comparing ROI with like figures for similar firms and even with dissimilar firms).

    This is not a special situation peculiar to electrical generation, water supply, or steel production but the inherent incapability (of government) to know what its assets are “worth” (and, thus. what costs have been or are liable to be for any given period of production). It is the problem identified in 1920
    by Mises as “the impossibility of economic calculation in a socialist commonwealth” and recognized in that era (and still yet) as urmountable.

    If it were even possible for government to operate ANY business “efficiently,” it would be entirely unnecessary for government to ever “nationalize”
    any firm or industry; they could just as well (and more easily) buy the firm or industry in question
    at market prices and repay the investment involved from the alleged increase in efficiency to be generated by their operation (and al without legislating compulsion against either suppliers or customers). Only in fairy-land, Martin: to believe that government accomplishes anything by other methods than violence, deprivation of liberty, and
    seizure of property (or threat of such actions) is, imply, to believe in magic.

  14. @ 11:
    “At his inquest it emerged the cable, which had come loose in high winds, had not been checked for 28 years.”

    So this negligence was inherited by the privatised company from the state. So not a good example, Martin.

  15. Tim Almond,

    “The NHS, for instance, does a number of things that are about not just treating people or advising people about health. It also ensures that it also acts in line with promoting other parts of government agenda (like having recycling officers, reducing parking spaces or buying food locally).”

    This has absolutely nothing to do with Tim W’s original point about efficiency. I’m afraid that it’s just gibberish, actually, but you do at least deserve a dog biscuit for slavish devotion to the party line.

    Next!

    Gene Berman,

    “Quoting J. Stiglitz can’t take you off the hook for buying his short-sighted economic analysis.”

    He’s the one with the Nobel Prize.

    “ONLY a privately-owned firm can comprehend whether its efforts have been met with success or not (profit v. loss) and, whether (if profitable) “efficient” or not (by comparing ROI with like figures for similar firms and even with dissimilar firms).

    This is not a special situation peculiar to electrical generation, water supply, or steel production but the inherent incapability (of government) to know what its assets are “worth” (and, thus. what costs have been or are liable to be for any given period of production). ”

    If that is the case, then I hope to live until the year 2018, when the British Government might just release the documents pertaining to the privatisation of the British electricity companies in 1988. If you are correct, Gene, then they should never have been privatised, for the Government would be incapable of getting a fair price for them, as it would have been incapable of knowing how much they were worth.

    Say, let’s surcharge every Tory Cabinet Minister in 1988 who agreed to this! After all, they were very good at surcharging local councillors who they thought wasted money – turns out they might have done the same! Woo-Hoo!

    “Only in fairy-land, Martin: to believe that government accomplishes anything by other methods than violence, deprivation of liberty, and
    seizure of property (or threat of such actions) is, imply, to believe in magic”

    I invite you to read the Electricity Code, contained in Schedule 6 of the Electricity Act 1989, and then revisit this opinion.

    Gene, I’ve read a lot of your comments over the years. You seem like a thoroughly civil person, but you also seem to be extremely dogmatic.

    Paul ILC,

    “At his inquest it emerged the cable, which had come loose in high winds, had not been checked for 28 years.”

    So this negligence was inherited by the privatised company from the state. So not a good example, Martin.’

    ER, cable last examined in 1979. Culprit privatised in 1988. Man died in 2007. Nineteen years of inactivity while culprit being run for profit rather than public service. It’s not just a good example, Paul, it’s outstanding.

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