George Monbiot
@georgemonbiot.bsky.socialHow privatisation works (and Thames Water is just the latest example).
1. A government takes a national asset built up with taxpayers' money and the work of public servants over many years, and hands it, for a fraction of its value, to a private company.
2. In doing so, it creates a monopoly.
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3. Because this is an essential service, we have no choice but to pay for it. The monopoly has us over a barrel. It can therefore charge “entry fees” (also known rents) over and above the costs of delivering the service. It’s a form of coercive private taxation.
4. The company’s primary (fiduciary) duty is to its shareholders, not its customers, let alone to rivers and aquifers. Its directors and execs, on performance-related pay and bonuses, have a powerful incentive to invest as little as possible in works, and pay as much as possible in dividends.
5. Outside “investors” note that the company is a juicy little earner and buy into it. Soon it is owned by private equity companies, by invisible entities based in tax havens and – oh, hello! – by sovereign wealth funds owned by other countries.
6. So it ends up back in the hands of the state. Only, not our state. It is part owned by the governments of China, Abu Dhabi, Qatar etc. The only state that has not been allowed to buy up our privatised utilities is our own state.
7. These “investors” (a term that should very much remain within inverted commas) work out that if they load the company with debt, they can extract the same money in dividends. Shareholders get even more payouts, and the debt remains with the company.
8. Now the key issue here is that privatised utilities cannot be allowed to fail. If water stopped coming out of the taps, voters would be unimpressed. So the “investors” know that it doesn’t matter whether the debt drags the companies under: the state (our state) will have to bail them out.
9. So eventually the company is taken back into public ownership, as a shell of its former self, beset by crumbling infrastructure, a decades-long backlog of investment and a mountain of debt. Oh whoops, sorry chaps, not sure how that happened. Toodle-pip!
10. Peter Hutchison and I explain the deeper background to how all this works in The Invisible Doctrine, in case you're interested. But you get the general idea.
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How privatisation works (and Thames Water is just the latest example).
1. A government takes a national asset built up with taxpayers' money and the work of public servants over many years, and hands...
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