Economic policy

The trend to renationalization

John Quiggin9 Comments

The New Zealand Labour government has confirmed that it will renationalise the country’s rail network. The Blair government in Britain did the same thing last year. In both cases, the decision reflected the failure of the private operator to deliver the expected outcomes rather than an ideological commitment to public ownership.

It is becoming increasingly clear that attempts to determine the optimal role of the public sector on the basis of an a priori ideology, such as old-style socialism or neoliberalism, are bound to result in bad policy decisions.

9 thoughts on “The trend to renationalization”

  1. the real economy is some weird corporatist compromise in action that none has yet described in any consensus nor, especailly, any convention, feudalism is as close as the market methinks, and as far away

  2. It’s worth pointing out that privatising British Rail wasn’t a reversal of nationalisation with different proprietors. The final result was a (managerialist) horizontal split, where the earlier companies were vertical splits and essentially focussed on operations. Looking past the veil, everything was under government regulatory control from the First World War anyway, even after this (re)privatising.

    I think I might do a short essay on the recent (canals and later) economic history of transport in Britain and put it in next Monday’s slot, if there’s any interest.

  3. I’d be interested. Always wondered how much the canals cost and how they were financed…

  5. Yes I’d be interested particularly from the point of view as to whether or not you see this early transport innovation as really the quiet beginnings of globalisation.

  6. Maybe you’re not meaning to imply this, but wouldn’t it be wrong to conclude that the failure of the operators of privatised assets necessrily reflects “bad policy decisions”.

    I don’t know if it’s true in this case, but if the government is buying back assets for a lot less than it sold them for previously, hasn’t the public come out ahead (all else being equal) . . . especially if they can be sold off again some time down the track, Kerry Packer style!

  7. Mork, I agree entirely with what you say. For example, just before the NASDAQ crash, I argued that Telstra should sell off its Internet asset “before the bubble bursts”

  8. Hmmm . . . . there’d be plenty of Australians who’d be better off today if Telstra had followed your advice!

    Leaving aside an ideological commitment to public ownership, the willingness of private buyers to overpay for a publicly-owned assets strikes me as a very good reason to sell.

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