James Wickham: The terms of reference for the ‘Review Group on State Assets...’ are about ‘asset disposal’ in the public sector. What do we know about the sale of state assets?
1. The impact on efficiency is debatable. If state enterprises provide services of general interest they have to be regulated, and the costs of regulation can be very high. Often the requirement of competition can produce duplication and/or lack of transparent information to customers. The privatisation of public transport provides plenty of examples. It’s also worth noting that when politicians believe that only privatisation can provide efficiency, they abdicate responsibility for enforcing improvement through other means. Thus we still have no publicly responsible authority for Dublin transport, because of course eventually there’s going to be privatisation...
2. What we do know is that privatisation increases inequality. Most obviously, because it leads to lower wages for the weaker employees and higher remuneration packages for senior managers. In the worst case, managers behave somewhat like the nomenklatura of Russia, appropriating to themselves a massive share of what was public property. Less obviously, what was public property becomes private property in the form of shares, and shares are the most unequally distributed forms of personal wealth. On all this see especially Florio (2004), The Great Divestiture (Cambridge, Mass.: MIT Press).
3. In some cases, privatisation destroys the public sphere, the non-market area where citizens meet as citizens not as consumers and not as members of a particularistic group, such as a family or an ethnic group. The obvious case is public broadcasting. One of the differences between most countries of Europe and the USA is that we have public broadcasting, they have Fox. We may not appreciate the impact of this on public life, others do. Read for example the American Steven Hill’s book Europe’s Promise on how European public discussion is broader than that of the USA, partly because of public broadcasting. Even the apparently mundane service of public transport also has this sort of public element.
4. Privatisation weakens trade unions. It’s probably the major reason for the collapse of British trade union membership between 1979 and the 1990s. Again see Florio’s study for starters. So privatisation reduces the most effective countervailing power to private wealth: it probably narrows the range of public debate and undermines effective democracy.
Of course, many people want more inequality, many people want weaker trade unions, many people want to live in a more privatised and individualistic world. There are even people who believe that the wealthy should have more political power. We could have a serious democratic discussion about these values. It would be rather more honest than a discussion about ‘asset disposal’.