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More mood music on ‘selling off the silver’ of the public sector… July 29, 2010

Posted by WorldbyStorm in Economy, Irish Politics.
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In Prospect magazine – the issue dated July – Tim Leunig of the LSE writes about how public sector workers in the UK must work longer [though no longer than private sector workers] and their pensions shouldn’t be awarded on the basis of ‘final-salary’ in order to subsidise their pension provision. As it happens I’m not that exercised about the second point there. ‘Career average’, perhaps weighted slightly upwards somewhat, seems reasonable enough. But more interestingly in light of the debate on the cuts here are some of his thoughts on the situation more generally.

[George] Osborne needs to save a decent amount of money: we are hugely in debt and must pay back enough of it so that the economy can be bailed out next time it crashes. (there will be a net time, after all – capitalist economies are like that)… and [the measure(s) suggested] delivers big enough savings that we might just be able to rescue our economy from the recession of 2022 as well.

Three thoughts seem to me to follow on from that analysis.


Firstly what a curious creature capitalism is in this phase of its development that it is now seen as subject to cyclical rebooting.

Secondly that those reboots are underwritten by the state – or more precisely by all of us who pay taxes, and those who don’t either but depend upon the state for services of one sort or another. Surely this flies in the face of the precepts of capitalism, even in a mixed economy. Where now the concept of failure in a system where failure is no longer an issue, assuming that the entity is ascribed ‘systemic’ importance?

Thirdly the obvious question that arises, if you allow me to descend into the near-bathetic, were we apply this to our own finances – and no lesser mortal than Margaret Thatcher was fond of this sort of an exercise. If I sell off my assets – particularly assets that generate revenue – to pay off my current debts, but I know that future debts will inevitably arise, then surely I am simply piling up worse troubles for myself in – say – 2022 or whenever.

Curiously enough much the same point is made by Richard Curran in last week’s Sunday Business Post where he notes that:

Businesses such as ESB are highly profitable and highly cash generative. They could be worth billions to the exchequer if sold off. However that would bring about a single one-off financial gain to the state coffers. The exchequer needs every euro it can get, but one off boosts might not mean a lot when the exchequer is borrowing €20bn per year.

And there you have it.

But consider that McCarthy Committee and see what way the wind is blowing. Tom McGurk writing in the Sunday Business Post writes a remarkable piece which is fascinating for its lack of reference to the economic environment which saw the genesis of the semi-state sector. He writes…

The 28 semi-state bodies currently under review have all been carefully shaped over generations by pragmatic Irish political and social demands.

They were never just state-owned companies established within the largely private market-place, they were carefully structured to deliver votes or jobs or promotions where necessary.

The Irish ‘semi-state’ has been a unique type of commercial vehicle, subtly designed to carry the burden of the unique relationship we have developed between the Irish state and its citizens.

Note the key missing word in his first sentence. He doesn’t for a second discuss why the semi-states were established, their ‘economic’ function, but attempts instead to position them in some sort of supposedly ‘unique’ social and political relationship… one which he continues…

They were once the place to get a ‘safe job’ to avoid the emigrant boat.

Working for one you would have a job for life, with a good pension at the end.

What impact did they have on the commercial and employment life of the country? Did they dim ambitions? Did they attract only the least ambitious, since they were regarded as ‘safe’ career places?

Sadly this is a risible analysis.

The semi-states from ESB onwards were in the main established because private capital wasn’t up for the job in this state – and indeed wasn’t up for the job in most countries (the REA in the US speaks of the difficulty that the private sector, and even to use that term is to be needlessly anachronistic given how that sector has developed, had in stepping up to the plate on large scale infrastructural tasks. A difficulty that as we’ve seen with the gloomy history of more recent public/private partnerships remains entirely extant). It was also a means in a society profoundly antagonistic to the concept of socialised enterprise to allow the state to exercise some control and authority without seeming to tip towards outright statism.

But not for McGurk any of that…

In many ways they have become relics of another economic age, great dinosaurs floating around in the seas of free marketism.

Guaranteed to some extent by the fact that they enjoyed various state monopolies, they were commercially fire-proofed from the economic realities other companies had to face.

Really? Is this even credible. Is it true of a profit generating ESB, one so profitable that Richard Curran writing in the same paper as McGurk notes its ‘highly cash generative’ nature?

Perhaps it would be if other states not dissimilar to our own didn’t have semi-state companies. But of course they do. Furthermore many of the ‘monopolies’ are precisely the the sort of ‘monopolies’ that private enterprise has been loath to take on. He says it himself…

Whereas one can imagine there may be interest in the airport authorities – though their debt pile is a problem – it is difficult to see how attractive our tiny rail and nationwide bus services could be.

Who in their right mind would want to buy CIE, when the market is so tough and even private bus operators are finding the pickings very small? The various port authorities are also under review, but are surely of limited interest.

Indeed he positions all this explicitly in the context of the free market…. ‘pickings’, ‘market is… tough’… etc.

And then he focusses on a certain sector.

The principal area of interest must be energy, with the ESB, Bord Gáis and Bord Na Móna all potentially available.

The wider political row over energy policy is already under way, yet can one imagine any potential overseas buyers or investors in Irish energy getting involved with a state where apparently nuclear power generation is, strictly speaking, illegal?

Since our future energy policies – as the fossil options run down – are destined to become a major political debate, what potential energy investor wants to get into bed with Irish governments who will simply not consider the nuclear option?

Now, this is interesting. McGurk appears to believe that the Green Party is the focus of some dreadful conspiracy in our politics, so I find it near-entertaining that he should alight on the area where the GP has a Minister in the relevant Department. What, one wonders, does the Minister make of this following observation by McGurk?

Our future energy needs long term political nous, the very thing our political classes have shown they simply do not possess.

Anyhow, McGurk, also considers his former employer RTÉ…

RTE is also on the list and with McCarthy already a self-confessed opponent of the licence fee, there is going to be much nervousness in Donnybrook.

There may be a very real possibility that some of the more profitable parts of RTE radio or television services could be sold off, at a time when that organisation is already facing huge costs to rebuild and restructure to provide for the digital age.

Does that make any sense? Wouldn’t it make more sense for those costs to be defrayed by a continuing revenue stream rather than a once off sale into an already far from clement market? And given that McCarthy is an ‘opponent’ of the license fee, and that RTÉ already raises revenue through advertising what does that tell us about the shape of our public broadcaster in the future? No license fee, presumably massively increased dependence on advertising or sponsorship. But we already have commercial channels pitching for precisely that funding. Which leaves RTÉ where exactly? And what does that mean for ownership.

But here’s the interesting thing. He doesn’t say. He assumes an air of studied neutrality.

When this McCarthy committee reports, probably early next year, it will trigger a significant political and economic debate.

For example, whereas Fine Gael has already signalled they support semi-state sell offs, where is the Labour party on the question?

Will Eamon Gilmore for once have to take a position on something?

Will Tom McGurk do so on this issue, although his sentiment is clear enough…

Is it a good idea?

The debate will start now and it is possible to argue passionately on either side of the debate. In the end, our needs may well supplant our opinions.

Bit by bit, this state has being picked down to the bone and now the very bones themselves are exposed for our consideration.

Who out there is brave enough to think we might even have any choices left about what McCarthy will suggest?

But he concludes with this…

Oh for the old days, and the luxury of ideologies.

But what McGurk discusses is profoundly ideological. It is the stripping away of state provision and state enterprise and its appropriation by the private sector. He acknowledges that that private sector will only take what it wants, leaving the remnants for the state to retain.

And the idea that these are ‘luxuries’ beyond the scope of the Irish state to finance is something that would have had the truly impoverished administrations of the 1940s and 1950s when many of the semi-states were established gazing in astonishment.

And what happens in 2022 or whenever when the next crisis of capitalism overwhelms us with our slimmed down state, so slim the bones are now showing? What precisely do we do then locked into a low tax low provision model?

Mood. Meet the music. And consider what the outcome of the reports soon to hit tables are likely to be.

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Comments»

1. EWI - July 29, 2010

“RTE is also on the list and with McCarthy already a self-confessed opponent of the licence fee”

On what supposed grounds, I wonder? And who made Colm McCarthy emperor while no-one was looking, by the way…?

WorldbyStorm - July 29, 2010

Isn’t there that? It’s a remarkable situation. Since when did major social and economic policy decisions default to him?

propositionjoe - July 29, 2010

Seems to me there are plenty of reasonable grounds to oppose the license fee.

Isn’t it just as regressive as across-the-board water changes?

Also its unfair to anyone who only uses their TV to watch DVDs or, God forbid, the amoral programming from across the water ;)

WorldbyStorm - July 29, 2010

Well, count me in the DVD/internet camp re TV viewing. I don’t look at the channels through satellite or cable any longer.

But of course a television license isn’t just about the TV or the individual uses that we put them to. Citizen’s Info makes it clear that it is part of the funding for public broadcasting on both TV and radio.

http://www.citizensinformation.ie/categories/consumer-affairs/media/tv_licences

Could it be better? Would I like cost according to ability to pay, or better still see it folded back into general taxation? Surely, on both counts, but it’s an odd thing to be ‘opposed to’ in and of itself and I’d be interested to hear his motives. And more importantly what he sees as the way to replace it.

EWI - July 29, 2010

Seems to me there are plenty of reasonable grounds to oppose the license fee.

Isn’t it just as regressive as across-the-board water changes

Would McCarthy really be especially concerned with whether or not something is regressive? News to me, and I suspect to many people.

I have a strong hunch that opposition to the licence fee is a trojan horse for opposition to public service broadcasting (as in the UK), full stop.

WorldbyStorm - July 30, 2010

It’s difficult not to arrive at that conclusion EWI. A similar process is evident in the UK.

2. Michael Taft - July 29, 2010

It must be interesting to live in Tom McGurk’s world. Safe, career jobs for the least ambitious, all to get votes. Oh, to return to the salad days of lean, ambitious, risk-taking competitive markets – such as existed prior to the establishment of the ESB, where there were over 100 members of the Electricity Suppliers Association. Now that’s a liberal market. Never mind that only 15% of buildings in the country had electricity. But, then, maybe Tom is right: industrialisation, modernisation, bringing light-bulbs to people’s houses – that probably was a vote-getter.

Or take the ICC and the ACC – what’s the point of having those unambitious, cushy, jobs-for-life companies. They were set up at a time when indigenous SMEs were having difficulties accessing credit. ‘Sell-by-date’ and ‘past’ comes to mind. If we flog them off we won’t have to go after pensioners in the next budget (oh, I forgot – we did sell them off . . . and there’s that little matter of SMEs and credit and ‘starved’).

This debate over privatisation is going to be so much fun.

3. Hugh Green - July 29, 2010

McGurk: ‘What impact did they have on the commercial and employment life of the country? Did they dim ambitions? Did they attract only the least ambitious, since they were regarded as ‘safe’ career places?’

Maggie Thatcher’s hero Hayek was writing 70 years ago in the Road To Serfdom about how ‘our young men’ preferred ‘the safe, salaried position to the risk of enterprise after they have heard from their earliest youth the former described as the superior, more unselfish and disinterested occupation’. As long as ordinary people retain some degree of security in their jobs, this is an eminently reusable idea.

CMK - July 29, 2010

‘The Road to Serfdom’ was published in 1944, if I’m not mistaken. Many young men, at the time, were engaged in exceptionally dangerous and low paid work public sector jobs. That included tens of thousands from Ireland. It was work, moreover, that any rational self-interest maximizer would well have avoided.

I think it’s safe to assume that once that work was finished they wanted the safest, and steadiest possible employment and not to be throw into the hurley-burley of Hayek’s unregulated ‘free’ market.

The neo-liberal disconnect from any remotely coherent sense of how real people and communities actually live obviously has a long history.

4. CMK - July 29, 2010

On the broader point that McGurk raises about the nature of semi-state jobs over the past fifty or so years.

What seems to be forgotten is that these jobs offered a measure of dignity to hundreds of thousands of workers would either have been pushed further into the clutches of the gombeen men or onto the emigrant boat.

They also afforded some small degree of class-consciousness and, being heavily unionised, allowed some element of working class power to be exercised within the Irish economy. I don’t want to oversell the latter point, but I think it’s true to some degree.

Where I grew up the contrast between those of us whose fathers worked in semi-states (CIE in my case) and those who occupied the only ‘private sector’ jobs available in the area (agricultural or construction labour) was immense. The latter were by far the more exploited.

Also, the nonsense we’re subjected to about how high air-fares were in the 80′s obscures the fact that Aer Lingus at the time kept tens of thousands of families going through hard times. OK you couldn’t nip over to Malaga or Milan for a stag night, or do your Christmas shopping in New York or commute to London, but I’d swap all of those for the thousands of jobs Aer Lingus have shed over the past fifteen years.

Despite all of the benefits the semi-states brought to those who worked in them I’m certain McCarthy will recommend a sell-off and, when the 2022 recession does hit, we really will be in a difficult position with no state owned industries, and a bank sector to bailout, again.

Tim Johnston - July 29, 2010

Your point about dignity is interesting, CMK. One wonders though how much dignity is associated with Keynes’ suggestion of paying one man to dig a hole and another to fill it in?
There’s the assumption (on all sides of the debate it seems) that state or semi-state companies are characterised by having too many employees. This is not in fact necessarily true, however widely held it is. From a market perspective, someone occupying a position of employment that would not exist under market conditions may temporarily benefit that person, but that person is being prevented from doing something else that may prove to be more productive for her/him.
Job security is one thing but getting stuck in a crap job is another.

CMK - July 29, 2010

Tim, you raise several very interesting points on which I doubt we’ll agree. But they raise important philosophical questions that divide, to put it in crude dichotomy, neo-liberal capitalism and social democracy/socialism.

Many jobs under neo-liberal capitalism serve no useful social purpose, but a market for them exists and so people are employed in them. Wide swathes of the PR, advertising, management consultancy, legal and accountancy industries are solely devoted to serve a tiny elite of wealthy individuals. The ‘productivity’ of these activities, and the philosophical worth of the efforts of the individuals engaged in them, would be very hard to defend. Yet, in the minds of our commentariat, these occupations serve as the benchmark against which more worthwhile jobs like teaching, healthcare etc are judged.

Regarding your last sentence: there are hundreds of thousands of people stuck in crap, private sector, jobs with no job security, deteriorating conditions and wage cuts.

Tim Johnston - July 29, 2010

CMK, instinct forces me to agree, and when it comes to shiney made-up jobs, Ireland during the boom was on top of the game. I was raised to think in terms of ‘proper’ jobs versus that type of employment (my dad is as working class as fish and chips) and still do to a large extent. although I do think to put too much weight on it is to fall into “authentic” vs. “inauthentic” man type thinking – there’s a lot to be said, economically, for jobs that actually create something rather than, well, nothing.
I’ve always admired engineers over stockbrokers, but there comes a risk of romanticising labour – which can be a form of oppression too, as in the USSR.

I absolutely agree that to see the professions you list as some kind of benchmark is ridiculous – but it raises interesting philosophical questions.
I would rather place law, and certainly medicine, in the essential worthwhile industries list, however, despite being largely middle class professions.

5. Tomaltach - July 29, 2010

CMK

Regarding your point about Aer Lingus: if over the medium or long term you are advocating large, inefficient state protected monopolies such as the 1980s Aer Lingus over more efficient, competative businesses, then you are calling for economic suicide. As a small member of an economic block with free trade and movement of people, and in a world where trade and investment are increasingly open, to promote inefficient government sponsored employment purely for the sake of jobs is utterly self defeating. Long term it would destroy jobs since we could hardly propel our economic well being with such a policy. As an industrial policy it would push Ireland back two generations.

I am not arguing for a moment that there should not be state involment in the economy, nor am I arguing against state ownership per se. In my view, using state promoted or state owned businesses is the best way to deliver some services equitably and on a large scale. And some projects involve outlays and risks that private business simply wouldn’t be prepared to take. A good example is the ESB already mentioned.

McGurk’s rant is – like most of his output – pure rubbish and should be ignored. The knee-jerk proposals by government to sell state assets right now is so wrong headed it wouldn’t be believed if it didn’t originate in a goverment bereft of ideas and with a terrible legacy of incompetence. But the proposals aren’t driven merely from incompetence and desperation, they smack of ideological opportunism on the part of some parts of the government. For the most part I consider members of our government to be economically illiterate, but that doesn’t prevent them from harbouring deep ideological biases in matters economic.

Looking at the mix between government and market, it would be ironic – and regrettable – if the great failure of the market, primarily in America, were to ultimately result in a large rebalance in favour of the market in Ireland. On the other hand, that the market failed badly shouldn’t make us say, banish the market. We know government often fails badly, yet neither should we say, abolish government. The challenge must be to find a way of improving both – and yes, adjusting the balance between them where necessary. I don’t think that a universal, optimum template exists, but we sure as hell won’t improve matters by lurching for quick, once-off fixes that are likely going to make matters worse.

6. Roger Cole - July 29, 2010

Why should they stop at the semi states. McCarthy, Matthews & Co. will soon be advocating the selling off of the Irish Army. After all, it is a body of well trained 10,000 stong military force that could be used to win over the “hearts and minds” of the Afghans just like previous Irish soldiers did in the 19th and early 20th century when “liberal” economic values were the norm and we were members of the British Union. It certainly would be an advance on the 7 soldiers we have there at the moment and we could save on the €800,000 we are spending on Irish Army training with the EU Battle Groups this autumn. After years of upgrading their weapons to NATO standards via €1 billion per annum, it is only fair to say we would get a good price for it. After all 2016 is not that far away. What better way to celebrate the values of the the state that grew from it, then making some money by selling off the army so they can help substantially reduce the population in Afghanistan

EWI - July 29, 2010

McCarthy, Matthews & Co. will soon be advocating the selling off of the Irish Army.

Don’t give them ideas! Actually, PwC gave them a good go at transforming the Army into what they want they want the rest of the public sector (and all workers, it has to be pointed out) with the creation of the ‘yellowpacks’ as I remember them being labelled at the time: highly-trained professionals stuck on rolling contracts and with no guarantee of not being turfed out before middle-age with no pension and most with no transferable skills (outside of less-savoury work).

7. CMK - July 29, 2010

Tomaltach,

The problem I have with your analysis relates to what exactly we mean by phrases such as ‘inefficient state protected monopolies’, ‘efficient competitive businesses’ and ‘economic suicide’.

Is it really self-defeating to advocate state sponsored jobs in an open economy? Because openness cuts both ways – as we’re currently witnessing. State jobs are one source of economic security for many in the current economic climate, and without them we’d we in a much worse economic state. Maybe I should rephrase that: state employment is slowing down the inevitable implosion that will result from deflationist mania.

In the long term, as Keynes noted, we’re all dead and no economic policy can provide certainty over more than a couple of years. All that can be said is that the 50 or so years that the semi-state sector has been extant has not bankrupted the state or led it into economic oblivion. The cumulative worth of all the subsidies extended to the semi-state sector over the past couple of decades are probably a fraction of the eventual cost of the bank bailouts. The point is: the semi-states, and their practices, have been good for this country and for the hundreds of thousands who’ve worked in them. They’ve contributed more, and have cost less to taxpayers, than the banking and construction sector here.

A final point: regarding ‘efficient competitive businesses’. I read a recent article in the New York Times (25 June 2010, ‘Industries Find Surging Profits in Deeper Cuts’, by Nelson D. Schwartz – can’t find the link, sorry) which dealt with the growing phenomena in the US where company profits are soaring during the recession but employment is being drastically reduced. And, moreover, the companies concerned were adamant that those laid off would not be rehired, ever.

That, to me, is ‘economic suicide’ where you have profitable business predicted on mass unemployment, all in the name of efficiency, competitiveness and cost-cutting. It cannot provide a sustainable economic model for the future. And there is no way to guarantee that the sell-off of semi-states won’t produce the same results. The jobs will be gone forever, but the profits will remain. The consumer spending that has it foundations in semi-state employment will be completely undermined when the venture capitalists and hedge funds start asset-stripping soon after privatisation. As has been mentioned, here and elsewhere, the gombeen men and their media chatterboxes seem to have learned nothing whatsoever from the Eircom disaster.

8. Tomaltach - July 29, 2010

The point is: the semi-states, and their practices, have been good for this country and for the hundreds of thousands who’ve worked in them. They’ve contributed more, and have cost less to taxpayers, than the banking and construction sector here.

I am not seeking to minimise the contribution and importance – in different ways at different times – of our semi-states. But the construction boom and banking failure are at least as much (in my opinion more) a result of a public failure, i.e. government, as a private failure.

Regulation and the regulatory culture were created by, dependent on and driven by government.
The zoning and planning fiasco is again, government’s fault.
Fiscal policy – especially how construction, housing etc are taxed – was an utter disaster and is a government failure.

The behaviour of senior bankers was despicable. We certainly have a problem with our corporate culture. But we also have a problem with how we regulate corporate governance and how we enforce transparency and compliance with various other aspects of company law. None of this hides the fact the banks were simply too powerful and too greedy.

My point is that our predicament in banking and construction is as much a failure of government as of private business. (And it will in the end be government measures that put it right – if that in fact happens – or will government fail us again?).

Your point about the jobless recovery is well taken. But in general when businesses begin to detect more solid ground under them and are able to make longer term plans they will recruit more people to expand. In the end, there is no capitalist model yet that doesn’t require labour as an input.

Where that Labour might be recruited is a better question. I suspect that the recent shock will accelerate moves to low cost locations – in the same way as the dot com bust accelerated the offshoring of tech jobs to Asia. That issue is another days work.

WorldbyStorm - July 29, 2010

I actually agree with your first comment almost entirely, where I would diverge is with your second. I think it’s not useful (and I’m sure you’re not doing it deliberately) to elide state sector enterprise with government. They’re two fundamentally different things, even if government has an oversight role. The failures or successes of one or the other are more contingent on themselves than each other – if you see what I mean. Clearly government failures didn’t dim ESB’s or ESBI’s track record over the last ten years. As for corporate governence surely, but much of that is as much a factor of a far far too close and uncritical approach to the markets by government.

Tomaltach - July 30, 2010

CMK began talking about semi-states and then intermittendly wove in ‘state employment’.

I think the point about governance is critical. It is no less important in state organisations than in private ones. I wan’t to restate that I am opposed to a knee-jerk privatisation of the semi-states. In fact, I believe that state organisations can work very well, and in some cases better than non-state firms. I’m not ideologically opposed to privatisation however. I believe many businesses should be left to the private sector.

On the point about semi-states doing well. While ESB appears to be well run, we also know for years that electricity prices in Ireland have been among the highest in Europe.

But overall, in terms of employment, we shouldn’t overstate the importance of the semi-states. Only about 1 job out of every 5 is a state job in Ireland, and of those, only about 1 in 10 are semi-state.

EWI - July 30, 2010

While ESB appears to be well run, we also know for years that electricity prices in Ireland have been among the highest in Europe.

Yes, I saw Cormac Lucey rolling that one out last night on PrimeTime (along with the State being a ‘weak employer’ because it paid a decent wage in some areas! Revealing, I’d say, on the larger agenda).

Do people not know, or just not care, that high ESB prices are because they have been told to do so in order to make profit possible for private sector generation companies? This isn’t exactly a secret.

CMK - July 29, 2010

I’d second WbS’s comment linking failures in corporate governance to an uncritical enthusiasm for markets and an overconfidence in just what markets can deliver and what they can’t. The fact that an individual like Charlie McGreevy was allowed run-riot with fiscal policy for nearly seven years points to the real nature of our political failure: that a small minority of the population keep voting for gombeen men, for a whole raft of reasons which suggest that said voters don’t or can’t or possibly won’t ever think too deeply about wider society.

The fact that there are almost certainly at least a couple of dozen embryonic Charlie McCreevy’s incubating in FF cumain should be a source of real fear and concern. One of them, at least, might make it all the way and repeat Charlie’s mistakes all over again.

Your last two paragraph encapsulate the dilemma for capitalist economies and for here in particular. Endemic outsourcing will leave bigger and bigger employment gaps; a relatively thin layer of ‘smart economy’ workers might support another relatively small support sector, but the large numbers of jobs that multinationals brought here will never be repeated, and as they leave one-by-one over the coming years, they won’t be replaced.

Ergo, the only entities capable of taking up the slack are the state and the semi-state sector. If the latter is in private hands, well they won’t be able to do anything. The circle is tightening here as regards where future large scale employment is going to come from. Selling off the semi-states will tighten it further.

Tomaltach - August 3, 2010

@EWI,

Yes I do know that, indeed it’s kind of my point: in a market where there is still little competition, a company in a monopolistic position with prices deliberately set even higher than the monopoly price, is that company not bound to look good?

9. Tim Johnston - July 29, 2010

Again with the idea that the job of semi-state companies is to give employment – it isn’t, it’s to supply electricity, gas or whatever. The trend with privatisation has tended to be downsizing of jobs, but this is not necessarily the case. If they fired people they needed, the companies would fail.
I remember when BGE was created and, er, ‘incorporated’ elements of Irish gas (which was effectively nationalised); there were more employees before than after. I know because they retired my old man and a lot of other people they inherited.
One of the reasons industries go into decline is because their time has come; mining is the best example. An industry (that used to be a steady source of employment for ten year old boys) is propped up for whatever reason and has its life extended for the sake of providing jobs (think England in the 1980s), never mind that those jobs are dangerous and environmentally destructive.
Of course that’s not the same as working for ESB or whatever, but we do assume that people aren’t going to stop wanting electricity any time soon.
There is a balance between looking after employees and providing the service that the company is supposed to be providing. After all, providing cheap electricity (and yes, even flights to Malaga) is beneficial to people too.

10. Tim Johnston - July 29, 2010

McGurk is peddling some defunct myths for sure, WbS. The idea of the state sector as the employer of last resort, where the incompetent go to enjoy a life of semi-importance? oh please. This is a feature of ALL large employers, public or private – it’s just that in Ireland the large employers have tended to be publicly owned.

The three-point analysis is spot-on, and is particularly relevant. The answer to all three is ‘yes’. What is explained as simple Austrian Business Cycles is deemed to need a re-boot by the prevailing Keynesian ideology. But be aware – most freemarket thinkers are very unhappy about this. Of course, actual capitalists think its great – free money and the democratisation of risk? happy times.

If you do ‘re-boot’, you store up greater problems for yourself because a) you’re just rewarding failure, and b) you’ve created more debt. Selling the ‘family silver’ is pointless when you have a systemic financial problem – what are you going to sell off next time?

And, yes, the stripping of state assets is profoundly ideological, in a way that creating them in the first place wasn’t. One who sees semi-states as a coherent unit for sale is guilty of vast oversimplification and even short-sightedness. I would see, for example, the flogging of RTE and Aer Lingus to be on a completely different ideological level than selling ESB. There’s a different (in my mind, at least) between having your government sell you electricity or gas, and having it fly you to Paris and decide what you watch on tv. But we all have our ideological biases :)

I may only disagree with you on one point – that the state had to intervene because capital wasn’t ‘up to the job’. One feature of large enterprises is the necessity of riding somewhat roughshod over private property, particularly for building pipelines, roads and railroads, etc. and this is just something the state finds it easier to do. Which is not to say private enterprises haven’t resorted to getting governments on-side to do the same, just that people are more likely to yield their rights for “the public good” rather than private capital. Although maybe, when it came time to electrify the nation, the government did look for private investments, I don’t know.

WorldbyStorm - July 29, 2010

I’m trying to recall re your last point, it’s a long time since I read the McDowell/Manning(?) history of the ESB, I seem to think that there was an attempt to corral private investment that wasn’t very successful.

Cue a debate about Aer Lingus! I genuinely don’t know what is the best way forward there. If it were a case that the state retreated from – say – airlines, into areas that its competence was more clearly useful then I might be convinced. On the other hand…

On the RTÉ issue, I think a public service broadcaster, such as the BBC, is important. We of course live in the shadow of the BBC which by any serious reckoning has to be one of the finest public service broadcasters, indeed any broadcaster full stop, in the world. That does make RTÉ pale by comparison. Again, on the other hand, it’s not the worst, particularly given it’s curious hybrid nature private/public funding model.

It will be very interesting to see where this leads us.

In a way I’d much prefer a conversation (in the national political discourse) as to what is ring fenced and what isn’t, and a conversation starting with ‘this, this and this’ can not be privatised etc. Then it might seem more like an effort to preserve than to strip away. And a truly honest conversation on those lines would be one which accepted that in a market economy, yes there areof course areas that markets can do well with proper oversight, and yes there are areas that semi-state can do equally well (particularly in a commercial vein).

ejh - July 29, 2010

The state doesn’t decide what you watch on TV. It merely offers an option in that field.


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