Wednesday, 18 January 2012

Pico on Dogma

Dogma is a bad thing. That everything is privatised is dogmatic. The hope is that privatisation stimulates competition and arrests inflation in the public sector or that we move from being the tax payer to being  the consumer. Wellbeing and money shift from the workforce to the net margin for companies.  Waste in the those less motivated public employees out of many who are pretty effective, can maybe be compared to the wasteful process of tendering and tax administrating competing companies.  Here in also lies a problem. All this competition and uncertainty mean that companies give up. A dominant supplier wins out. A barrier to entr develops in experience, resources and motivation develop. The contract value grows by New entrants bidding with tenders which cover vetoing over the barrier and the incumbant supplier will already have moved their margins upwards. Inflation in public services and privatised utilities is often higher than general public sector inflation.

So we come to several outcomes. One a reasonably functioning market developes, and only the employees suffer poorer wages and conditions than they would have had as public sector employees. Two one player becomes dominant and there is a pressure to regulate them more or force a Market

more regulation. Bigger govenment. Thirdly charities start bidding for services and with no need for stock market profits and capital growth, they can pay people a living wage and have modest marketing costs in retendering. The capatilists are locked out and paternal social democracy wins over.

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