Thu 17 Oct, 2013

ONE of the classic dividing lines in politics is about the role of the state, and whether people think it should hold things in public ownership, or let the private sector run everything.

At the most extreme, some people would want to abolish private sector businesses altogether, while others would let markets dominate everything. Most people are somewhere in between.

But wherever you sit on that public-private spectrum, we've seen some pretty odd paradoxes recently.

First we had the UK Government hyping up its Royal Mail sell-off.

Back in the 80s, right-wingers used to argue that privatisation was necessary to turn lifeless state businesses into dynamic and successful ones, but the Royal Mail is one that's already delivering (if you'll forgive the pun).

In fact its profits jumped from £201 million to £324 million this year.

Owned by the public sector, run in the public interest, and returning all that profit to the public purse.

Then came the Scottish Government's announcement of a public buy-out of Prestwick Airport.

Yes, the public sector will step in and take ownership of this loss-making business, specifically because no private buyer was willing to.

Now it's possible that Prestwick could eventually get back into the black, and its scale is of course vastly less than the bail-out of the failed banks back in 2008.

But there's something odd going on when the only assets the state will buy are those which promise to lose taxpayers' money, and the ones which are paying us a tidy sum are handed back to the spivs and speculators.

Royal Mail and Prestwick aren't the only current examples.

The East Coast rail line, which has been run in public hands since a string of private sector failures, just announced £209 million profit for taxpayers last year, yet the UK Government remains stubbornly committed to privatising it again.

And while political parties and the public alike complain about high energy prices, we're missing out on the huge potential for the public sector to make profitable investments in renewable energy.

One report last week, Repossessing the Future by the Jimmy Reid Foundation, makes the case for an energy business which serves the public interest.

AS I write, the Royal Mail's new shareholders have raked in almost 40% profit on Day One alone.

The rest of us, who used to own it collectively, are left hoping the moneymen will think our universal postal service is worth providing.

It's time we struck a new balance in the public/private debate, and recognised that there's an important place for economic activity which serves the public interest.

The state's not just there to act as a safety net when the market fails us.

From Patrick's Evening Times column

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