Wednesday, October 15, 2008
Why stop at the banks? Renationalisation can cure other British failures
This piece of mine appears in The First Post
As the economics pundit Will Hutton put it, "It was only months ago that nationalisation seemed to belong to the world of big band music, ration coupons and nylons."
Now, of course, everything has changed.
The Government's acquisition of Northern Rock in February, and this week's £37bn purchase of sizeable public stakes in three of Britain's leading banks, means that the great nationalisation 'taboo', in force since the Thatcherite counter-revolution of 1979, is finally at an end. Even the Sunday Telegraph has been forced to acknowledge that "nationalisation is no longer a dirty word".
Now that the Rubicon has been crossed, the question that needs to be asked is: If the government can nationalise our banks, why can't they bring our malfunctioning railways, our profiteering utility companies and our widely condemned privately owned airports back into public ownership?
In the standard neo-liberal rewrite of Britain's post-war history, nationalisation is portrayed as an unmitigated disaster. Nationalised industries were - so the narrative goes - inefficient, badly run and a drain on the public purse.
But new quantitative research goes a long way to shattering this myth. It shows how productivity growth in publicly owned enterprises compared favourably to that in the private sector and in the US, where utilities remained in private ownership. And the profitability of the nationalised industries improved too, from decade to decade.
Advocates of privatisation claimed that the mass sell-off of Britain's public utilities, public transport and infrastructure would improve efficiency and benefit the consumer. In fact, the opposite occurred. Britain's railways are by far and away the most expensive in Europe, with fares up to 14 times higher than on the continent - despite the new train companies receiving four times more in taxpayers' subsidies than the state-owned British Rail.
It's a similar story with our privatised airports, which, with their tacky, shopping-mall atmosphere are widely regarded as an international disgrace. Those who hold to the dogmatic 'publicly-owned bad, privately-owned good' mantra should reflect that Manchester Airport, the one major British airport which remains in public ownership, regularly comes out top in surveys of customer satisfaction and was voted Britain's best regional airport last year.
As for Britain's energy utilities, with record price hikes in place and more on the way, is there anyone now prepared to argue that privatisation has benefited consumers?
As opposed to the arguments for privatisation, the case for re-nationalising the railways, utilities and airports is based not on ideology, but on common sense. Natural monopolies such as railways and utility companies are better in public ownership than in private hands where, because of the need to pay dividends to shareholders, prices paid by consumers will always be higher.
To see how different things could have been, we only have to look across the Channel. While Britain pursued an extremist path in the 1980s and 1990s by "selling off the family silver" - to use former Conservative Prime Minister Harold Macmillan's wonderfully damning phrase - our European neighbours preferred to take a more pragmatic approach.
No other major European country has yet followed the British example and sold off its railways. Even Switzerland, regarded by many as a bastion of the free market, has kept its railways in public ownership. And while British householders face record hikes in their energy bills this winter, the position is rather different on the continent where, due to greater state involvement, price rises are nowhere near as high.
The recent financial meltdown has done much to discredit the neo-liberal ideology that Britain has followed - under both Conservative and Labour governments - over the past 29 years. It's time to ditch that ideology and return to the common sense approach to public ownership that Britain followed after World War Two.
Our unhappy experience since 1979 shows that it's privatisation - and not nationalisation - which deserves to be regarded as a 'dirty word'.