privatisation as a form of insanity

There's a rather clichéd definition of insanity that runs like this: insanity is doing the same thing over and over again, and expecting different results. I feel like it is completely apt for Cameron's latest public policy pronouncement, in which he basically states that the private sector should be assumed to be better unless proven otherwise.

As anyone who gives enough of a shit to check can tell you, the history of public sector privatisation argues exactly the opposite. So rubbish (for service users and workers) have these policies been that the assumption should be that they will always be terrible unless proven otherwise.

Do I really need to even list the examples? The railways, 50% more expensive than in the rest of Europe (in 2009), still subsidised and the odd (unprecedented) massive accident. The privatisation of utility companies resulted in rising levels of fuel poverty. The outsourcing of various services in our hospitals resulted in higher costs, lower wages and poorer service provision.

It's a really simple concept to get your head round. If you give a private company 100m to run a service, it wants as much of that money as possible to finish up in their shareholders pocket. If you give it to a public institution it spends every penny on the service. For the private company to turn a profit, it has to spend less on the service or charge more for it. Why, logically, would you expect it to give better value for money? Why?

neoliberals, privatisation and magic

David Cameron: "If you look at the growth of the elderly population, look at the new drugs that are coming on stream, the new treatments, if we keep the system we have now and don't make changes to cut bureaucracy and waste, I think it will become increasingly unaffordable"

Labour, Lib Dems and the Conservatives have spent decades associating privatisation with efficiency, and the public sector with bureaucracy and waste. It is such a well-worn trick that at this point nobody even asks them what the fuck bureaucracy and waste has to do with bringing in the private sector. There's no demand for statistics or proof that the private=efficient, public=wasteful idea is actually true, nor even for some sort of theory as to why it might be. It has become an unchallengeable assumption among the political class that it is true and uncontestable.

But it's a completely counter-intuitive theory if you give it even a moment's thought. Organisations, private or public always have inefficiencies, things that need to be fixed about their management structure, their ways of operating. That's inevitable. There are plenty of large, successful businesses that waste money and time on things that don't fulfil their primary purposes. That's life, we're people, not machines. There's nothing inherent about operating for profit that makes you more efficient at providing a public service for a low cost.

In fact the only difference is that operating for profit really makes is that it changes the goals of your organisation. The goal of a public institution is pretty simple. It is supposed to provide the public with the best possible service, making the best use of the resources available to it. In doing this it should make policy decisions in line with what things that are most important for its service users. So for example, the NHS is not going to spend billions of pounds on deluxe rooms for all its patients that would leave it short of money for important operations.

The goal of a private, for-profit public institution is different. It's aim is to maximise profit. Nothing else. Full stop. Maximise profit. There are no other goals. Now, this does not always result in poor service or high prices, sometimes maximising profit involves attracting clients, which means you have to reduce prices or improve service. But the overall aim of the organisation is that the greatest proportion possible of their income is profit. That is, a private institution will always actively try to take money out of the system, rather than actively trying to spend that money on care.

So, your bet, if you are a privatiser, is that the motivation to make money is so efficient, that not only will it enable the private provider to take as much money out of the system as they possibly can, that competition will make them so much more efficient that this will also reduce the cost of providing the same (or better!) service. It's a gamble that firstly there is so much fixable inefficiency in the system that fixing it will allow the companies to generate a profit, and secondly that the competition for the healthcare market will be so fierce that it will force down costs, without affecting service. Oh, and you also have to hope that healthcare companies won't take the easy way out and just take their cut from workers, patients or by reducing the quality of services.

Now there is not one case of a privatisation of a public service improving service and reducing costs in the history of this country (trains nope, utilities nope). The US system, based on this principle, is much more expensive and much less effective than its European equivalents. So, you'd have to have pretty compelling evidence to present to convince people that there was a case for it here. Which the Tories don't have and aren't bothering to make.

The logical, common-sense thing to do here, if the NHS does have massive institutional problems (also unevidenced by the coalition), would be to fix them in the NHS as it is, without trying to magically find simultaneously both money for profits, money for improvements and efficiency savings all at the same time.