NB, I am not Davy

The failures of privatisation, often revered by socialists as providing great examples of capitalism failing, may seem at first like evidence that the public sector can do a better job than the private sector in certain instances, but when we look deeper into the issue we find out that this so-called ‘privatisation’ is nothing more than a bastardisation of real free enterprise, and actually allows us to reinforce our proof that state-controlled industry is only ever woefully wasteful and inefficient.

One such recent example of a national industry going ‘private’ is the rail industry in Great Britain. In the 90s the service went from being nationalised to privatised. In the time since ‘privatisation’ the quality of service has gone down, accidents have gone up and taxes have been increased too, yet despite all of this ticket prices continue to rise. So that’s the case solved then surely? Privatisation has failed us, it’s time to nationalise the service again, right? Wrong.

Privatisation hasn’t really seen the government step away from controlling the industry, what they’ve done is actually far simpler than that. Instead of controlling the company that runs the rail service, they now sanction contracts to various private companies, a process of franchising services. Most people are familiar with franchises in chain stores such as fast food restaurants. Franchising is a clever way of operating a business in an area by allowing a private individual or company to run it. The franchisor sets the provisions by which the franchise must be run, and must also calculate the costs and benefits of allowing the franchisee to run their business. In private industry this works effectively because the franchisor has to make sensible decisions, or else face the prospect of their business failing. Not only that, but all interactions between the franchisor and franchisee are completely voluntary, they both enter into the agreement freely. When a government privatises an industry this is not the case.

The government has no incentive to run an efficient company. They have a monopoly on the industry; they decide who gets the contracts and if the service is failing they face no competition due to the coercion they use to maintain control of the industry. As well as this they also absolve the responsibility of the failing industry by allowing their franchisees to take the brunt of the blame for the business model failing, thus providing all the justification that those who call for nationalisation need. We can now plainly see that the private interests are not to blame here.

One of the greatest challenges we face is how to convince people that the mindless waste and inefficiency in our society is because of government intervention, not in spite of it. We have the facts and evidence, but people don’t seem to want to hear it.

- Buckley