And last but not least, we have had a bargain – we have paid substantially less for services than they cost to deliver. How can we be sure about that? Again, it is the collapse that is the proof.
This morning, Carillion announced that it has gone into liquidation. The usual suspects are wailing about how the fate of one of the UK government’s biggest contractors demonstrates the folly of privatisation and outsourcing. The truth is rather less catastrophic for the British taxpayer than they would have you believe. After all, the losses suffered by the firm are, by definition, profits that we have made.
Think it through for a moment. The company has been providing goods and services to us taxpayers. The government has been paying for them. There has been a loss. That is, the costs of providing those goods and services were higher than the revenues received for having provided them. We taxpayers have been paying less than the value of what we’ve been paying for – that’s a profit to us.