Trains, Banks and Public/Private Ownership - Prev.Predict UK Gen.Election Result

[Tamas]

So basically, socialism is a great idea, as long as the country in question 1. finds a source of natural resource that has an absolutely massive value compared to the number of population. 2. has enough social cohesion and cultural history of shared ownership to avoid the whole project just falling apart 3. avoid the mistakes of Venezuela, 4. avoids the mistakes of Saud Arabia or Iran. 4. manages to save enough of the income from the natural resource that interests on it will keep the welfare state going strong once the resource runs out.

Sound easy enough. Let's nationalise the shit out of everything!

[Josquius]

I'm thinking you don't have much experience with belgian state-owned railwaycompany... :p

When I visited they seemed quite good. Not the best, but certainly better than the British mess.

[Zanza]

Even classical economics (e.g. John Stuart Mill) sees a role of the state in the economy to prevent natural monopolies and counteract the tragedy of the commons. So the question is just which economic activities should be organised by the state and which by private actors. As there is no clear-cut criterion, the question whether e.g. railways are better operated in a more or less tightly regulated private form or in a state-organized form is a political question that depends on your own preferences.

[Tamas]

I'm thinking you don't have much experience with belgian state-owned railwaycompany... :p

When I visited they seemed quite good. Not the best, but certainly better than the British mess.

I know we discussed this before, and I'll take your word for how horrible the British train service is outside of the London area, but over here, it is generally excellent (when not disabled by industrial action for guards not wanting to relinquish pushing a button). Sure there are delays a times but have you actually stopped to consider the insane amount of trains going about? The coaches are almost always clean etc

[Richard Hakluyt]

The train service was rundown and terrible in the 1970s. But that is so long ago now that I'm not sure that helps us with the public vs. private debate.

There was some talk about (if Labour got in) the state taking over franchises as they expired. If that was the case then there would be a chance to compare state ownership with private ownership on a level playing field. The profits made by the private rail companies are not that high. My big concern with state ownership is cost control; it seems to be a fundamental part of human nature not to worry too much about costs when someone else (especially a remote entity) is footing the bill.

[Richard Hakluyt]

I would also add that, because train services are so political, there may be pressure on private operators not to make too much profit; in which case they could be getting slack about costs too.

[Zanza]

Maintaining the rail network and train stations seems a clear-cut natural monopoly. You can't build a competing train network and investing into this kind of infrastructure is also something that I see as a public good. So this should be state-run.

Actually running the trains seems to be something that should be left to private actors and open to competition. It needs tight regulation for timeslots and using tracks though.

[celedhring]

Spanish rail system was split into a state-run company that builds and maintains the infrastructure, and another company (still state-owned) that actually runs the trains, with a view to privatise train operation some point in the future.

However, I can't see it. The train company (RENFE) has now become profitable, but mass transit is a money pit, while long distance trains make money. If we privatise the company, and good old "market discipline" gets applied to mass-transit to make it less of a drag, it will be a disaster for mobility in Spain's cities. I see a good case there for the state retaining control and running it at a deficit. I guess we could just privatise long distance trains - but building up those has been one of Spain's largest (and slightly controversial) infrastructure investments of the past 10 years, and handing the service to private actors would be politically poisonous.

[Tamas]

To be fair, both models can be done right and wrong.

However, when the trains are run privately, the state is in the role of regulator (in part due to deciding who gets which concession), and the only danger is how effectively the private actors can bribe the regulator into accepting sub-standard deals. There is a practical limit tot hat (especially in a developed country), so there is an incentive for the private owners to keep at least a semblance of efficiency AND quality, as they will have to convincingly argue that they have the best offer, while they bribe the decision makers in the background.

When you have state-run trains, there are no such concerns. Trying to enforce efficiency, from your workforce, has all the risks (of trying to tackle the strong union of an essential service) and no benefits, since there is no actor in the system, who gets a financial incentive to save money and/or increase quality of service, because the service will not be let to fail, and there is no competitor to raise his hand and try to take your concession away.

[Solmyr]

People talk about mass transit, but what about the constant push by the right to privatize things like health care, which basically has no business being run for profit?

[Tamas]

People talk about mass transit, but what about the constant push by the right to privatize things like health care, which basically has no business being run for profit?

Why is food production run for profit? Surely that is even more critical to survival than health care. Yet we don't mind people earning a profit from selling food.

[grumbler]

Why is food production run for profit? Surely that is even more critical to survival than health care. Yet we don't mind people earning a profit from selling food.

Because the buyer in food is pretty well-informed about both food needs and about the quality/price tradeoff in buying food.  There's no such informed consumer for health care.

[garbon]

To be fair, both models can be done right and wrong.

However, when the trains are run privately, the state is in the role of regulator (in part due to deciding who gets which concession), and the only danger is how effectively the private actors can bribe the regulator into accepting sub-standard deals. There is a practical limit tot hat (especially in a developed country), so there is an incentive for the private owners to keep at least a semblance of efficiency AND quality, as they will have to convincingly argue that they have the best offer, while they bribe the decision makers in the background.

When you have state-run trains, there are no such concerns. Trying to enforce efficiency, from your workforce, has all the risks (of trying to tackle the strong union of an essential service) and no benefits, since there is no actor in the system, who gets a financial incentive to save money and/or increase quality of service, because the service will not be let to fail, and there is no competitor to raise his hand and try to take your concession away.

Yeah, I think that in the case of British trains, it is a bit of a mistake to focus on re-nationalising the train services which will thus make them better. I think there needs to be actually focus on why the government doesn't give two fucks about the state of the train services. That isn't going to miraculously change if they are state run.

[Josquius]

The only example I can think of a privatised system working well is in Japan, which isn't really something that can be copied elsewhere as it rests on the original railway companies still being in existence with large land holdings...
And these companies operating in certain areas is linked with the formerly nationalised now quasi privatised JR that provide essential services around the country.
If you want to argue the British rail system should never have been nationalised in the first place then that is a valid view to have.
But the re privatisation has just been a disaster.

Where's the idea there is no competition for state enterprises from?
This is grossly untrue. Even within private organisations you get competition.
Do your job right or be replaced applies no matter who your employer is.

[Josquius]

I'm thinking you don't have much experience with belgian state-owned railwaycompany... :p

When I visited they seemed quite good. Not the best, but certainly better than the British mess.

I know we discussed this before, and I'll take your word for how horrible the British train service is outside of the London area, but over here, it is generally excellent (when not disabled by industrial action for guards not wanting to relinquish pushing a button). Sure there are delays a times but have you actually stopped to consider the insane amount of trains going about? The coaches are almost always clean etc

... Haven't you just basically said nationalised rail services are better than private ones there?
London is a model for what I'd like to see done elsewhere in the country.