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Saturday, 13 December 2014

Political Idiocies: Privatisation and Competition

As every user of a traditional open market knows, there are great advantages for the customer if traders in many areas of business have to compete. On a larger scale, examples like Marx and Spencer versus Waitrose [on food] and versus Next [on clothes] are beneficial to customers and healthy for capitalism.

But some manifestations of the Economist-driven obsession with competition are counter-productive. One of the most obvious is the encouragement of competition to Royal Mail. Royal Mail is obliged to meet an obligation to deliver at least five days a week to every postal address in the land [with the specific exception of a few exceptionally remote addresses]: historically this was tantamount to creating a natural monopoly. It would be an insane waste of resources to construct a system that would also have the resources to compete with Royal Mail for every address in the country, every weekday. But in allowing 'competition' in urban areas and their immediate hinterland a huge unfair advantage is conferred on Royal Mail's competitors. And now at least one of them has proved to be under-resourced to meet the current demand: so while Royal Mail is 'rationalising' its service delivery and cutting its workforce, flashy competitors are failing to deliver as promised: but they are not under the universal service obligation, so failing to deliver what they promise to their customers does not draw down regulatory sanctions - as it could with Royal Mail. So in the aggregate the service is worse.

Equally bad is the failure of the National Air Traffic control computer for southern England. By making the 'company' 51% 'private' government has attempted to evade responsibility for notorious under-investment. Yesterday chickens came home to roost, and once such a process begins it can only continue to let down airlines and their passengers - the paying customers for the service. In many cases privatisation has simply allowed foreign owners permanently to tax British consumers: in others, like NATS, supposed responsibility for the false economy of underinvestment has been transferred to a firm; but all users suffer for it.

Well done, political idiots who believe Economists!

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