Two Guardian Stories on Fake "Privatization"

A couple of good items by Mario Huet on the Libertarian Alliance Forum, both stories from The Guardian on the kind of phony "privatization" favored by the ASI and its fellow travellers. Sean Gabb has blasted such fake "privatization" as a more sophisticated form of corporatism.

[The ASI] sells market solutions to statist problems....

The old statism was at least mitigated by incompetence. The people in charge of it were paid too little to feel really important; and much of their energy was absorbed in disputes with stupid or malevolent union leaders. They presided over a system that was never very strong, and that failed to weather the storms of the 1970s.

As reconstructed in the 1980s - partly by the Adam Smith Institute - the new statism is different. It looks like private enterprise. It makes a profit. Those in charge of it are paid vast salaries, and smugly believe they are worth every penny....

But for all its external appearance, the reality is statism. And because it makes a profit, it is more stable than the old. It is also more pervasive. Look at these privatised companies, with their boards full of retired politicians, their cosy relationships with the regulators, their quick and easy ways to get whatever privileges they want....

As with National Socialism in Germany, the new statism is leading to the abolition of the distinction between public and private. Security companies, for example, are being awarded contracts to ferry defendants between prison and court, and in some cases to build and operate prisons. This has been sold to us on the - perfectly correct - grounds that it ensures better value for money. But it also involves grants of state powers of coercion to private organisations. All over the country, private companies are being given powers of surveillance and control greater than the Police used to possess.

....There has been no diminution in the economic power of the State, only a change in its mode of operation.

And Nicholas Hildyard similarly dismissed such "privatization" in "The Myth of the Minimalist State."

While the privatisation of state industries and assets has certainly cut down the direct involvement of the state in the production and distribution of many goods and services, the process has been accompanied by new state regulations, subsidies and institutions aimed at introducing and entrenching a "favourable environment" for the newly-privatised industries....

State industries [in the global South, under Structural Adjustment Programs] were sold off; public services were "contracted out"; development projects "franchised" to private companies; social spending slashed; user charges for basic services introduced or increased; and markets "deregulated" [emphasis added--keep these phrases in mind when considering the details of the so-called "privatization" in the stories below]....

Moreover, "states are still massively present in the processes of production, distribution and exchange", not least through framing taxation policy; setting interest rates (where independent central banks have not been introduced) or interest rate policy; directing subsidies to sectors of industry; farming out government procurement contracts; awarding franchises for privatised industries; setting pollution and health standards; and funding infrastructure projects [again, emphasis added]

Within those sectors that remain under (albeit looser) state control, education and health, for example, new state structures have grown to train or retrain personnel in private sector business methods, to institute new accountancy and management techniques and procedures, and to instil market discipline....

As with regulation, public spending has not necessarily been reduced, but directed elsewhere... Public funds [in the Third World] have instead been made available to foreign companies which have been offered generous terms to set up production facilities or extractive industries....

Such "privatization" leaves a larger share of functions under nominally private direction, but operating within a web of protections, advantages and subsidies largely defined by the state. When the state sells off assets to "private" companies, it sells them for sweetheart prices to crony capitalists, usually after actually investing more taxpayer money than the assets sold for in order to make them "saleable"; and the purchaser's first order of business, naturally, is systematic asset stripping that yields far more in revenue than the price he paid for the state property. In other words, these "private" firms are "private" in about the same sense that some medieval duke was the "private" owner of half the land in his country. In any case here, without further ado, are the stories:

£64bn NHS privatisation plan revealed
Adverts gaffe exposes move to hand over management role to companies

A secret plan to privatise an entire tier of the NHS in England was revealed prematurely yesterday when the Department of Health asked multinational firms to manage services worth up to £64bn. The department's commercial directorate placed an advertisement in the EU official journal inviting companies to begin "a competitive dialogue" about how they could take over the purchasing of healthcare for millions of NHS patients.

The advertisement should not have appeared until after ministers announced the policy next month.

Unison called on the TUC to convene an emergency meeting to respond to the government's "fundamental breach of trust". Frank Dobson, the former health secretary, said: "If this is not privatisation of the health service, I don't know what is. It is about putting multinational companies in the driving seat of the NHS."

Apparently he doesn't know what it is, then. "Putting multinational companies in the driving seat" of state-owned property is damn near the direct opposite of any legitimate form of privatization.

Lord Warner, the health minister, defended the policy in a statement to the Guardian at 3.46pm yesterday but had changed tack at 6.05pm. He said he was withdrawing the advertisement to correct "a drafting error", but insisted the contracting out of NHS management would go ahead [emphasis added].

The advertisement asked firms to show how they could benefit patients if they took over responsibility for buying healthcare from NHS hospitals, private clinics and charities. The plan would give private firms responsibility for deciding which treatments and services would be made available to patients - and whether NHS or private hospitals would provide them.

Under the present system, this commissioning work is handled by local NHS managers employed by primary care trusts. Under the new system, the PCTs would contract out the commissioning to big healthcare management consortiums with greater purchasing muscle [emphasis added].

Contenders for the contracts are likely to include big US companies such as United Health and Kaiser Permanente. They may be joined by British insurers such as Bupa and PPP and their EU rivals.

The advertisement, in the Official Journal of the European Union, said the NHS was making a "step change from a service provider to a commissioning-led organisation" [emphasis added].

In other words, the state agency would continue to control the entire framework of rules in which the "private" contractors operated. The state would just "contract out" the right to make profit off of taxpayer-funded assets. As Brad Spangler once put it, the state would still hold the gun, but would contract out the function of bagman to favored "private" corporations that collect the loot for themselves.

Lord Warner said: "The government has no plans to privatise the NHS."

Indeed. Just the profit from it.

Union anger over WH Smith deal to run post offices
· Closures denounced as 'blatant privatisation'

Julia Finch and David Teather

The Post Office has agreed a deal to transfer crown post office outlets to the news and books chain WH Smith. The move was immediately condemned by the Communication Workers Union as "blatant privatisation". The initial agreement will cover six crown post offices but if successful many more are likely to follow....

The trial will get under way in the autumn. Outlets affected will be closed and up to 120 staff will be offered voluntary redundancy or other jobs within the Post Office. Alternatively, they will be able to apply for jobs as counter staff with WH Smith. Branches of WH Smith will then take up franchises [emphasis added] to offer the full range of post office services, including car tax, foreign exchange, passport applications and cheque cashing facilities.

A Post Office spokesman said the directly owned network lost £50m last year "and clearly that is not sustainable. They are in expensive high street locations and operate on very low margins. They simply don't work and, increasingly, we have been looking at partnerships with retailers. Smiths is a great fit because of what we offer and what they sell."

For WH Smith, which operates 542 high street stores and 127 travel outlets at railway stations and airports, the post office counters will utilise excess shopfloor space. The business has already opened coffee bars in some 20 outlets in a partnership with Costa Coffee.

Uh huh. Just like the USDA pays big agribusiness "farmers" to idle their excess land, in effect providing a government-subsidized return on the real estate investments of giant landowners. So I guess this "privatization" is a sort of price-support program for WH Smith.