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Now here’s an interesting thought

No they don’t. Taxpayers have got nothing to do with footing the bill.

When the rail industry, the coal mines, the steel industry, the road transport industry, and other industries were all nationalised post the Second World War because the economy required their output and they were left in a dire state, by the consequences of that war, the owners were paid for the value of their businesses.

And they were paid with government bonds. Government bonds are simply a statement of a loan with the government. The government said “We owe you the money that this bond represents and we’ll settle it with you in 30 year’s time” – that was the normal figure used at the time by the way – “and we’ll pay interest on it in the meantime of say 3%.” That was the normal figure used at the time.

And the consequence was that they paid market value because the businesses in question could generate a surplus sufficient to cover that interest cost.

Back then 3% was 3% real. So, did those nationalisations make 3% real returns?

Even, when we flogged them off, did we pay off the national debt that we’d taken out to buy them?

And the bonds themselves were not paid for out of taxpayers’ money. Let’s be clear that even if there is such a thing as taxpayers’ money, and I doubt it, what happened to those bonds when they came to be due for payment in the 1970s was that the value was extended. In other words, the original bonds were replaced with new bonds for another 30 years. And what happened when we got to 2005 and those bonds ran out? They were replaced with new bonds which ran for another 30 plus years.

Ah, no, we didn’t. Therefore we didn’t make 3% real, did we? For we’ve not got the companies but we do have the debts still…..

Sometimes those activities did not make revenue surpluses but that was because of the choice that government subsequently made to improve the quality of the services to meet the needs of the people of this country. And that’s an entirely separate issue.

Or, the other way of putting that, government’s crap at running such activities. Meaning it does cost taxpayers’ money. QED.

13 thoughts on “Now here’s an interesting thought”

  1. He seems perfectly happy with the fact that the original shareholders were denied the use of their capital for a period of 30 years whilst getting a measly 3% interest per annum. I’m sure they had better uses of the money than the government. He truly is the man who believes “All your money belongs to the state”

  2. At a seminar the speaker argued that (i) the nationalised gas and electricity companies had been incompetently run, and (ii) that their “privatisation” was handled badly.

    A questioner suggested that the obvious conclusion was that they should never have been nationalised in the first place. The speaker was taken aback, seemed about to argue, and then deflated somewhat and tentatively agreed.

    How could someone make himself an expert on this topic and yet never have considered the idea that they should never have been nationalised? Are the actions of the postwar Labour government always to be treated as holy writ?

  3. This distant vague memory intruded when I was reading his piece suggesting Br Trans dated were 2½% bonds. Redeemable 65/75?

  4. Chestertons fence – why were all these utilites flogged off?

    Badly run and underfunded for decades and requiring massive amounts of money to keep them going, never mind upgrade them.

    Plus a few mates in the City and the legal profession got to make out like bandits too.

  5. Leaving aside all the rest of his bollocks, his argument seems to be: governments declare wars, they run them very badly, so afterwards they have the right to steal people’s hospitals.


    He reveres the only people able to wage war and kill millions at a cost of trillions.

    He masturbates over power, basically.

    I bet he has a micropenis.

  6. “Sometimes those activities did not make revenue surpluses but that was because of the choice that government subsequently made to improve the quality of the services to meet the needs of the people of this country”

    So how exactly did running the mines at a massive loss meet the needs of the other 99.x% of the country who weren’t miners? Ditto shipbuilding, railways, steel making, car makers etc etc .To be honest it probably didn’t even do much for the miners themselves, given they’d have lived longer if they’d have had jobs in a factory or warehouse instead of screwing their health up working in sh*tty conditions hundreds of feet underground.

  7. Surely nearly all government money comes from tax so why should it not be called taxpayers’ money?

  8. I’d like the people of Bradford to get back control of the reservoirs that our Wool Baron forefathers built from “Yorkshire” Water…and charge the rest of the West Riding through the nose!

    Then I wake up and remember what morons run City of Bradford Metropolitan District Clowncil

  9. “Banking services to be changed in accordance with the demands of the time. Nationwide credit to be made available to enterprises large and small. Capital to serve the productive life of the country, and interest rates to be reduced. Unsound speculation and too much reward for too little work to be stopped.”

    From the manifesto of the Norwegian Nasjonal Samling (Quisling’s grubby little Norwegian fascist party).

    I know we’ve played “Murphy or Mussolini” before, but I think we can now have a Scandinavian variant, which must be more trendy.

  10. We are still suffering the effects of the awful Attlee government. The claim that the egregious nationalisations were economically based is false, it was ideology that decided. And saw no limits to what it could steal (the compensation arrangements being very unsatisfactory. More at one time than could possibly be absorbed by the economy of funded by the nation.

    And yet, they still can’t see it. Calls for nationalisation are still heard daily.

  11. Tim,
    The 3% was 3% nominal so less than zero real: the only year of Attlee’s government when inflation was below 3% was 1949 when it was 2.8% (it was also 2.8% in 1945 when Attlee only ruled for part of the year after 2.7% in 1944 – Labour inherited a low-inflation environment). Over the six years 1946-51 inclusive cumulative inflation was 37.4% while the 3% rolled up would have reached 19.4%. That implies that the real intetrest rate was MINUS 2-and-three-eighths%.
    The normal *expectation* in 1946 was that 3% meant 3% real because war-time inflations had historically been followed by post-war disinflation but Attlee’s government changed all that with a major post-war inflation. (BoE inflation tracker shows that prices were nearly one-third *lower* in 1912 than in 1812). They may have conned people who were expecting it to be 3% real but it just wasn’t.

  12. “Ah, no, we didn’t. Therefore we didn’t make 3% real, did we? For we’ve not got the companies but we do have the debts still…..”

    It’s not possible to conclude that, since if we had made, for example, 5% real then the successive governments would have squandered it and still left a big debt. Remember that there is no limit to how much money a government can spend.

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