Tuesday, January 6, 2015

Bill Mitchell — Privatisation failure – the micro analogue of fiscal surplus obsessions

Our business leaders are amusing themselves at the moment sailing large and expensive yachts in various summer regattas and races and lecturing us on how our democratic choices (to elect parliamentarians) is holding back the country – “ill-equipped for life after the mining boom” is the code words used (Source). Apparently, we should not elect parliamentarians that oppose their conservative agenda to transfer increasing volumes of real income to the top-end-of-town (that is, them). Their mantra never changes – its all about them not us. This article in the New York Times (September 26, 2014) – The Benefits of Economic Expansions Are Increasingly Going to the Richest Americans – not only promotes the excellent work of MMTer Pavlina Tcherneva but is apposite to the message of today’s blog. Which brings me to a recent decision by the UK government to allow rail fares to rise well in excess of the inflation rate and the growth in wages. 
The UK Guardian article (January 2, 2015) – Fare rises show why British railways should be renationalised – was one of those recurring narratives that tell us about the on-going damage that the early stages of neo-liberalism wrought.… 
Privatisation, franchising, outsourcing, PPPs, PFIs, and all the rest of the devious transfers of public wealth and funds to the private sector have systematically failed to deliver on the promises made by the consultants. 
The stockbroking and legal companies and economists who advised governments in these public robberies have all done very well. 
Many private firms have done very well – enjoying the best of both worlds – a captive infrastructure, ability to gouge consumers via excessive fares, no real need to keep the quality of service up to acceptable standards, and increasing public subsidies. 
The microeconomic failures that have accompanied neo-liberalism are the analogues to the macroeconomic failures that I normally write about. 
The two are linked of course. One of the principle justifications for the sell-offs was the alleged need to resolve fiscal crises. 
Both the claims about fiscal crises (the need for fiscal surpluses) and the promise of superior services etc are erroneous. 
Attacking both levels of myth-making has to be a core part of the progressive agenda.
Bill Mitchell – billy blog
Privatisation failure – the micro analogue of fiscal surplus obsessions
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the Charles Darwin University, Northern Territory, Australia

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