What is the ideaology behind privatisation?

[malificent7]

For example in healthcare is the ideology " it's your fault if you are sick so pay up so others don't have to?" Please explain.

The high level idea is that that private companies can do things cheaper and more efficiently than the state because they have the skill, expertise and financial incentive to do it. Also the idea behind a competitive environment (which obviously can't exist in a state monopoly situation) is that it will drive lower prices/ better services for the end user.

I believe that the profit motive drives efficiency. Without a profit motive and someone benefiting from it at the top, there is too much wastage in the system. This is why costs escalate in state run industries and wages stay low as that is always the easiest cost to cut.

Everyone refers to the US when talking about private systems - we need to look at other countries in Europe for a better model. It is possible, and I am sure preferable, for those that can afford it to pay (via employers insurance schemes) and those that can't to be supported by taxes.

I have lived in countries that offer better systems than the UK. NHS equivalent services are available but most have private insurance cover so are not a burden on the state. I believe it would free-up more funds for much needed improvements to social care.

It is believed that working for a profit will be more efficient

It neglects profiteering ,

It neglects the need for advertising ( which can be 20% of sone budgets - in pharmaceutical the advertising budget exceeds the r&d budget )

It neglects the effect of short termism

It also neglects human nature - once something becomes for profit you lose the altruism that people feel when doing something worthwhile for it's own sake and not the sake of money ( not everyone is like this but actually being money driven is less common than it might superficial appear . But in essence one reason we get away paying nurses so little is that they actually get job satisfaction from making people better not earning big bucks)

Of course the type of people on charge - bankers, PPE graduates are much more driven by wealth and status than most people which is why they think the way they do - whilst implicitly relying on those nurses and bin men

Private insurance doesn't necessarily mean the health systems are private in the way that they are in the US which is profit driven all the way from the insurance to the hospitals

I understand that although there may be private insurance the health service is more like the nhs than people realise - more under government control

Privatisation has been disastrous for every 'publicly' owned service and utility

Foreign investors own nearly every transport service which have declined year on year

Royal Mail still has to try and carry on, even though it has to pass on all post codes to rivals, deliver to routes which are not cost effective (Highlands & Islands, Isle of Man etc) and still provide a daily delivery

As soon as something has shareholders, the customer is gouged for their profits with no investment in infrastructure

When I was doing research on the NHS for my masters in History I found that one driver for a nationalised model is indeed cost. The NHS is the cheapest for what it is. Other European countries finance ministers would love to get away with spending so little. No other healthcare system has such good outcomes for the cost. Apart from Cuba.
I loathe the use of anecdotes personally but it did make me laugh in Bill Brysons works when he said it is almost worth seriously injuring an American on purpose , just so that when they come round in hospital you can tell them there is no charge.
My partner and I often laugh at the number of American TV shows and films whose message appears to be the NHS is wonderful, based on the pure evil that is the US system.

In theory because the company is in private hands making, potentially, profits for those private hands they will invest wisely in their product to make it something that people really want (which only works where there is either competition or effectitive regulation) and thus improves service/product and profits.

If we're talking about healthcare it is easy to fall into the trap of thinking that privatised healthcare blames people for being sick and needing it. If we're looking at the US model, the price-gouging and wildly inflated prices are a result of very light-hand business regulation, IMO. It need not be like that, and healthcare could be partially privatised with good oversight and guarantees of minimum coverage for those who can't afford it. (I'm thinking of the German model because that's the one i know best)

If you're talking about natural monopolies like water and gas? I am so completely opposed to them being privatised (although i prefer efficient regulation and operation - not wildly bloated civil-service type jobs) that i find it difficult to work out a good argument in favour.

The problem we have in UK is that our choices are limited.
On the Continent they have a system that is better managed than ours. Variations from country to country, In France you go to the local doctor, you pay for meds from Dr or Pharmacie and then reclaim 70% back. It works.
People self medicate for minor ailments, don't bother GP.

Yes it’s just a veiled attempt at stirring against free markets.

Posts like these often get ignored by the wannabe hammer and sickle crowd. This is a testimony from an insider, yet the people will say ‘move on, nothing to see here’. It just shows that with publicly owned services, you get hit twice by paying and not getting a good service. And then not being able to complain either, because the the NHS can do no wrong apparently.

there is a wide gap between accepting the bloated officioussness and waste that some public industries have/had (not being able to order the cheapest thing, for example, and having to pay an electrician to replace an overpriced lightbulb for example) and the out and out greed of completely free markets.

We can't have a completely free market in health for various reasons, not least the need to regulate the drugs, the staff's qualifications and so on. There is a balance to be struck between hemming in the people who run the admin and supply side of things (photocopy paper, making appointments etc) and the ability to give the best healthcare. There is a reason that private hospitals don't have ER units.

In theory a publicly owned health service should have joined-up systems so that you don't have to explain to the person you're trying to make an appointment with, every freaking time you go for your monthly asthma check up, that Yes, you have to have it every 4 weeks, and yes, you have to do x, y and z before so they need to account for that.

Privately owned water companies sound great in theory: the invisible hand will lead to excellently clean rivers, beaches, full reservoirs, competitive pricing (somehow that rings hollow - regulated pricing maybe?) and investment so leaky pipes are a thing of the past. We know how that worked out.

As with the railways: there is a reason that the actual network wasn't privatised - nobody in their right mind would take that on as a business proposition. But what you did get instead is cuts to servicees, prehistoric trains on the Trans Penine Express and more cuts to services than even Dr flippin' Beeching could have dreamed of. Instead of treating transport as a Public Good and finding a better model.

And so on ad infinitum.
(as an aside: i buy Greeen energy from wind turbines. My actual supplier doesn't have wind turbines, so they buy it in for me. I am sure my actual power comes from coal or gas or something, but what i pay goes to the wind turbine company. That is one way to handle a natural monopoly. It's not perfect but it's better than nothing.)

I think you have to distinguish between sectors to be honest.

Privatisation has different rationales in different industries and in some industries it makes much more sense than others.

The theory behind it in general terms is that allowing competition helps consumers by keeping prices low and services high. Of course we all know that the gap between theory and practice is huge.

I do think there's a huge difference between privatising, say, utilities and privatising healthcare. In some industries (such as telecoms) privatisation has been a good thing and has created healthy competition. I would never want to go back to telecoms being run by the Post Office.

But privatisation of services which are for the common good is a completely different matter. Privatising the NHS would be suicidally stupid, although I think there are some arguments for more private sector involvement in some aspects of healthcare. For example allowing more effective collaboration between early drug developers and the NHS on clinical trials.

It's not a one size fits all argument.

It's not a one size fits all argument.

yepp

there are 3 reasons for privatization

1. money
2. profit
3. money

there are 3 reasons for privatization

1. money
2. profit
3. money

Actually I'm happy to debate the order

@Brefugee

We can't have a completely free market in health for various reasons, not least the need to regulate the drugs, the staff's qualifications and so on.

Both those can be done in the private sector. Pharmacies are private businesses as are private hospitals and both manage to comply with drugs regulations as do other healthcare providers handling drugs such as dentists, vets, etc.

Likewise qualifications, many private sectors require professionally qualified/regulated staff, such as independent financial advisors, GasSafe plumbers, NICEIC electricians, vets, architects, chartered accountants, liquidators, etc.

That’s not the ideology behind private healthcare. The ideology behind privatization is generally that private bodies are better run and more efficient and so we get better value for money. Also better quality.

many countries in the world do have good private healthcare systems. Ours is a mixed system- for example GP practices are privately owned and run.

Yes I’ve worked in the public sector in finance and they are terrible in my experience at getting value for money.

@Madamecastafiore

You don't get this in private companies, every penny is accounted for, they look into the most efficient way of doing things because they have a bottom line and need to make a profit.

I agree that there's a lot of waste in the NHS but I don't think it's as simple as private companies = efficient, public sector = inefficient.

There's certainly a lot of mismanagement and inefficiency in the public sector but it's a bit of a myth that private companies are always more efficient. I've worked for some phenomenally inefficient and bloated private companies (big ones are usually worse than small ones).

I don't particularly have an ideological dog in this fight but I think some of the sweeping statements made either for or against privatization betray a huge lack of understanding of how economies work. Things which work really well in one sector/company would be disastrous in another. Anyone who argues that either privatisation or nationalization are the panacea for all economics problems is an idiot.

The idea behind privatisation is simply to transfer the financial risk/reward to private companies rather than government.

Using the NHS as an example, the funding is public. This means it doesn't matter to employees or managers whether it's profitable or makes a loss. Even a huge loss doesn't matter - if they run at a profit, their budget will be cut, if they run at a loss the taxpayer will have to pay.

If it's privatised the government and taxpayer would no longer be liable for losses but if a profit could be made that wouldn't come back to us either.

There'd be an initial benefit to the taxpayer because we'd get money from the sell-off, then a regular payment. Depending on the contract and circumstances it might be good for us or bad for us. Might be good for the private owners or bad for them.

Both those can be done in the private sector. Pharmacies are private businesses as are private hospitals and both manage to comply with drugs regulations as do other healthcare providers handling drugs such as dentists, vets, etc.

I didn't say they couldn't. But you still need some form of socialised healthcare for A&E and people who can't pay for whatever reason. Unless we just want people to die, and nobody gets picked up by an ambulance without waving their credit card around.

And currently, as we are seeing with Credit Suisse, and happened in 2008 - the public are bailing out banks (socialised debt) but the bankers are still getting bonuses (privatised profit)

And that is what has to stop.