Sunday Morning Links

Assorted content for your Sunday reading.

- James Meek writes about the UK's privatization scam, and how it's resulted in citizens paying far more for the basic services which are better provided by a government which actually has the public interest within its mandate:

Privatisation failed to demonstrate the case made by the privatisers that private companies are always more competent than state-owned ones – that private bosses, chasing the carrot of bonuses and dodging the stick of bankruptcy, will always do better than their state-employed counterparts. Through euphemisms such as "wealth creation" and "enjoying the rewards of success" Thatcher and her allies have promoted the notion that greed on the part of a private executive elite is the chief and sufficient engine of prosperity for all. The result has been 35 years of denigration of the concept of duty and public service, as well as a squalid ideal of all work as something that shouldn't be cared about for its own sake, but only for the money it brings. The magic dust of the market was of little use to the bosses of the newly privatised Railtrack in the mid-1990s. They thought they could sack people with impunity – not just signalling and maintenance staff but expert engineers and researchers – and carry out a massive line-upgrade cheaply with the most advanced new technology. Unfortunately the people who could have told them that the new technology didn't exist were the people they had sacked. As a result, the company went bust in 2002, and had to be renationalised.

Privatisation failed to make firms compete or give customers more choice – said to be the canonical virtues of privatisation. Pretty hard, you would think, to privatise water companies, when they are all monopolies, with nobody to compete with, and can't offer customers a choice – neither the choice of which supplier to use nor the choice of whether to take a service or not. And yet the English water companies were privatised, and in such a way that customers have been overcharged ever since. The privatisers loved competition, but the actual privatised competitors hate it. The competitive vision of those who designed Britain's electricity privatisation – a rumbustious, referee-supervised free-for-all between sellers and makers of electricity old and new, large and small – has degenerated into an opaque oligopoly of a handful of giant players.
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A tax is generally thought of as something that only a government can levy, but this is a semantic distortion that favours the free market belief system. If a payment to an authority, public or private, is compulsory, it's a tax. We can't do without electricity; the electricity bill is an electricity tax. We can't do without water; the water bill is a water tax. Some people can get by without railways, and some can't; they pay the rail tax. Students pay the university tax. The meta-privatisation is the privatisation of the tax system itself; even, it could be said, the privatisation of us, the former citizens of Britain. By packaging British citizens up and selling them, sector by sector, to investors, the government makes it possible to keep traditional taxes low or even cut them. By moving from a system where public services are supported by progressive general taxation to a system where they are supported exclusively by the flat fees people pay to use them, they move from a system where the rich are obliged to help the poor to a system where the less well-off enable services that the rich get for what is, to them, a trifling sum. The commodity that makes water and power cables and airports valuable to an investor, foreign or otherwise, is the people who have no choice but to use them. We have no choice but to pay the price the toll-keepers charge. We are a human revenue stream; we are being made tenants in our own land, defined by the string of private fees we pay to exist here.

- Meanwhile, Paul Watson compares Norway's well-planned savings and use of oil resources for public benefit to Canada's increasingly reckless rush to give away every resource a multinational corporation can rip out of the ground:

They’re succeeding because Norway holds an unshakable principle, one that has survived political shifts to the right and left since huge offshore oil reserves were discovered in 1969.

The canon was set four decades earlier in a national debate over ownership of hydro-electric projects, and it bridged a generation, from waterfalls to oil wells: Norway’s natural resources belong to the people.

“International companies resisted the model very much, but they had no choice. They had to accept it,” says Terje Hagen, an economist at the University of Oslo. “I think the agreement in parliament was quite broad.”

Norway’s current Conservative-led coalition government justifies one of the world’s highest tax rates on oil company profits this way: petroleum and natural gas are finite resources that generate higher profits than other enterprises and therefore command higher taxes.
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Norway’s government takes 78 per cent of oil company profits in tax, which quickly runs to billions of dollars a year. The fund multiplies through investments in stocks, bonds and property holdings.

It is quickly closing in on $1 trillion, just 18 years after Norway made an initial investment of around $345 million in 1996.

The government spends a portion of the profits each year on improving people’s lives while staying true to the earlier generation who decided it would be wrong to splurge on themselves.

By Norwegian standards, Canada has squandered a lot of its resource riches instead of locking up the royalties and taxes oil companies pay into long-term investments and enjoying the benefits of steadily growing profits.

A small but growing group of policy analysts think Canadians should overcome their history of provinces often jealously guarding resource revenues and do more sharing for the long-term, national good.

- The Vancouver Sun reports on BMO's study into the cycle of debt and stress facing younger Canadians.

- And speaking of gratuitous stress on workers, Don Pittis recognizes the fundamental unfairness of allowing Quebec's government to wriggle out from under agreed pension benefits at the expense of employees who have counted on what they've been promised, while Honour Our Deal has an update on the similar attack on Regina civic pensions. But the CP reports that the New Brunswick NDP is taking a stand to protect needed retirement income from other parties who would gleefully legislate it out of existence.

- Finally, James Surowiecki discusses the economics behind the development of prescription drugs - and how the lack of incentive to develop effective new antibiotics may prove just as deadly for us in the future as the similar neglect in combating Ebola is in the developing world today.