+1

I don't!

Governments have proved time and time again that they couldn't run a piss up in a brewery.
Workers who to are too lazy or useless to work in the private sector head to government work.
The last thing we need is the consequences of government ownership. All we need is a good working plan and suitable regulation, eg Maximum prices set by the government to prevent rip offs etc.

Don't give it to the government then, I'd happily have national infrastructure and ultilities ran by independent not-for-profit organisations, who funnelled all of the "profits" back into infrastructure and increased capacity etc.

Well, it isn't. No private company can keep making losses year after year. Government on the other hand can. If you think that
"private company = profit " you are wrong.

By the definition of free markets there HAVE to be companies in EVERY industry that will make loss and also no company will make abnormal profits forever. Also private companies have to try being as efficient as possible if they are to maximise profits.

Does government owned company have to do that? Do they do tend to be efficient? What is more likely to efficient? Privately owned or public owned company? I am not saying that everything should be privatised, all I am saying is that if one private company that run trains make a loss it doesn't mean that government could do better in the same industry.

All too often "efficiency" means [LIFTED] service, as each company tries to get more and more out of existing assets. If the telecoms in this Country were run by a not-for-profit company then we'd be rolling out FTTH. As it stands BT are shoring-up an outdated and creaking network.

British Rail not only cost less than the current "private" system (which costs an absolute fortune in "subsidies") it was just as efficient (ie. trains on time), if not more so.

Also private companies only cut costs in large markets - out here in the sticks when private companies take over we see both a reduction in service and a massive increase in cost.

'Private' in this case, I assume, means 'owned by shareholders'. In practice, what it means is companies that have boards of directors who have a responsibility to the shareholders. In fact, legally, they are required to have responsibility to and only to their shareholders. Generally speaking, that means providing a dividend every year and that means making a profit. As you say, no public company can continually make a loss year after year. Very few do. Because generally speaking after a relatively short period of low or no dividend, the shareholders vote the board out and get someone in who can do the job properly.

Governments however equally cannot run at a loss forever. A continually increasing GBR will have large and serious consequences, as we're about to start finding out I'm afraid. Devaluation of currency, for example. The idea that governments have a blank cheque book is simply untrue. More than likely, one of the consequences of this government operating beyond it's means is that the 'board of directors' will get booted out by the 'shareholders' just as would happen in a PLC. And in fact a really bad PAC review of a department would have major and immediate consequences on the career of the people running it.

This is all true for PLC's of course. Actually private companies can do whatever the hell they like and don't even need to tell anyone what they're doing.


it's entirely possible in a market sector for every company within it to make a profit, if they are all adequately managed. Equally it is possible for none of them to, if they are not.


Depends on your definition of 'forever'. Microsoft for example have made what by any standard are abnormal profits for the last 20 years or so and that shows no real sign of abating in the near future. I have the assumption that at some point it will but I couldn't tell you when and I couldn't tell you exactly why.


i thought private companies weren't about maximising profits?


A government owned company is different to a government department. The former probably would have to make a profit or suffer harsh consequences - if the government were a majority shareholder, they might also replace the board for example. Or even, as has been the case, nationalise it. A government department doesn't have to make a profit of itself - some public services are necessary but not profitable - but they do have to submit accounts to the PAC and should they have been shown to be lax with the public money there will be hell to pay.

This is what I mean. People seem to assume that government departments just spend money willy-nilly and don't have to account for it. They do. They may not have to make the books public - I think there's an argument they should, but they don't - but their accounts are subject to scrutiny by the elected representatives of the taxpayer. Now, right now that doesn't of itself inspire a great deal of confidence but that doesn't mean the system is wrong, it just means right now we don't have an awful lot of MP's we feel like trusting.


I'm afraid that's a rather vague question. Efficiency depends upon good management and accountability. Both public and private organisations are subject to levels of scrutiny which may or may not function correctly and there's no definitive reason why a manager in the public sector should be less capable than a manager in the private sector (or indeed any more - managers are individuals after all). I have to remind you that a bunch of apparently highly talented, highly paid managers in the private sector (specifically financial services) just about managed to bankrupt the entire civilised world. In the world of economical Top Trumps, no government department has ever lost as much money as some of our banks have. The obvious counter to anyone saying the private sector is by definition better managed and more efficient than the public sector is three simple letters - 'RBS'. It seems the private sector in fact can be just as inefficient and badly managed as any government department.


True, but it doesn't mean another private company could either. The point is, you can't generalise about these things. The last conservative government in it's later stages did generalise about it and made some very bad decisions as a result. The complete dog's breakfast that is the British rail network (to get things back on topic) is among the worst of them.

Jon

I have no idea about what BT does and what FTTH is. Why is BT not rolling it out?



Could government run it more effectively? Could it provide better value for money? How? What can government do that private company can't and it is good thing at the same time? I would love to know...



Reduction in services is a bad thing? Since when? If it is not economical running a service you have these options:
1. cancel it - you''ll see reduction in service that you don't like
2. increase prices- again you don't like that solution
3. get a subsidy to run it - you don't like subsidies either
4. run the service and keep losing money

I bet you would solution 4, private company running your service that you don't want to pay the full price for. So basically would like to get a subsidy from privately owned company so you can keep travelling on cheap.

Cross-subsidisation.

It's why people in remote parts of Britain can post a letter for the same price as someone in a big town, despite the fact that it actually costs 10 or 100 times as much. If you lived in a remote part of these isles, would you be happy to pay £10 to post a letter? That's more like what it actually costs.

It makes no financial sense, but it's lovely and fare (sic).

Compare Broadband. Private Cable and LLU companies have rolled out very high speed services in financially viable areas. No one is offering 24Mb+ services in rural areas. Why? Because it's not run as a public service. BT have provided the best possible ADSL over their existing copper in places that Virgin et al will probably never go. They had to because of regulation, not because it made financial sense.

FTTH = Fibre to the Home, and BT wanted to do it in the 80s. Ironically, where they actually did, it meant no broadband because the old fibre was incompatible with the current copper system. Many people in Milton Keynes will know about Fibre, Aluminium wires, Concrete roads and various other innovative communication technologies... to their pain.

Isn't it Milton Keynes where BT don't operate?

I know it's somewhere up north, just can't remember where exactly!

MK is in Bedfordshire, well south of the Midlands and about 10 minutes north of Watford on the M1 - assuming no traffic jams.

Yeah, that's north.



The furthest north I've ever been is London!

Government can make losses forever. Just look at Island. They went bankrupt and what is different there? Not much I would say...
What will happen when California defaults on its debt? Nothing, just people lose money. California will go on...


Believe me it is not possible. Maybe for a short period everybody can make a profit but companies will keep entering the industry until all abnormal profits disappear.


There are very few companies that enjoy this kind of monopoly, I can think of only one other. In case of the MS reasons for this are not really economic, it has to do more with users unless you throw incredible amount of money into it. I could get into PC vs Mac debate but that would not get us anywhere. It has do with entry barriers, similar like CPU market. There is hardly space for Intel and AMD at the same time due to cost of developing cpu's. It costs so much money and takes so much time that if you get your product wrong you can easily die as a company...


err, I don't get it

Regarding the rest of you post, I would love it if people who run government's companies, railways, hospitals etc. would run them as they were their own. But we know that will never happen. And just because a hospital has a target and budget it doesn't mean that hitting will provide good service to community.

RBS etc: Yes, a massive disaster. But not all banks are this bad. There is plenty of them that did their business well but you don't tend to hear about them. So again, just because some banks made massive losses it doesn't mean that all private banks are bad. If we go deeper we might find that all credit crunch was cause by cheap money provided by central banks. And we all know who run those. But that doesn't mean that some banks very incredibly stupid.


Yes and no. In general private company is more efficient. But not all the time of course.

Given how far south you've gone, that's actually quite remarkable

I know what subsidy does and I never said it is a bad thing. It wasn't me complying about private company being subsidised...

Yeah, I know. I've seen more of Europe and further than I have of England and the rest of the UK. I've never been to Scotland, but I did go to Wales when I was very young. I don't remember much.

I would like to go on a few holidays in the UK. The lake district is somewhere I'd really like to go. So is northern Scotland.