32 of 37 people found the following review helpful
A flawed triumph,
This review is from: The Blunders of Our Governments (Hardcover)
In many ways this is an important book, delineating not just many horrible blunders but also the reasons why they have occurred. Two particular examples are the Poll tax and the part-privatisation of the London Underground upgrade, but there are many - too many - others (and that's a criticism of government, not the book itself). Others could have been added, the whole area of "defence" spending being one: from the TSR2 fiasco of the 1960s to the business of the two unneeded and unavailable for years aircraft carriers of the present day; but defence spending blunders could make up a whole book in themselves.
Chapter 14 on the part-privatisation of the Underground (brilliantly and appropriately titled "Down the tubes") is a complete horror-story, and King and Crewe list (pp 207-14) the 13 major weaknesses that led to possibly as much as a £30 billion (£30 billion!) loss on the whole farrago. The two worst of these, in my view, were (a) the crazed decision to adopt the scheme because it would take the borrowing off the (government's) books to reduce (but only nominally) the Public Sector Borrowing Requirement - unnecessary, because LU could have issued bonds for the money and have them guaranteed by the government - and (b) the fact that the whole thing was designed so that the private sector would take the risk, except, of course, that when things went haywire the private sector dumped the risk back on the government. But these two are features of all Private Finance Initiative schemes, and one criticism of the book is that it might, instead of majoring on the Tube PFI, have considered the PFI racket as a whole, as there are so many, especially in the NHS, that have put an intolerable load on their finances.
Going back to the Tube fiasco, elsewhere in that chapter the authors mention another weakness, which should have been No 14: the fact that, although by 2000-2003 the government had already spent a great deal of money on it, but that abandonment at this stage would have not only meant starting again with a U-turn but admitting that Ken Livingstone (then Mayor of London) had been right to oppose the scheme. This petty attitude to Livingstone, incidentally, mirrors exactly Thatcher's attitude to his opposition to her (un)employment policies and subsequent spiteful selling off of County Hall. Not at all pretty.
The authors consider over a dozen blunders, before going on in Part III to try to get at the reasons why they happen, and there are a dozen of these, including the foolish practice of moving ministers around between ministries (they might have said the same about moving civil servants too; an old civil service colleague of mine reckoned that you would be moved on as soon as you'd gained a decent understanding of your current job, and it certainly felt like that) and the utter inability of parliament as it is presently constituted to exercise any element of real accountability on the way things are done by government.
So far so terrific, and the book makes great (though utterly depressing) reading. There is, however, something of a black hole in the middle of it that does rather reduce its value. The authors make clear that they are judging how effectively policy changes were carried out, but not the wider effects of those policy changes, and "the differentiation between them raises, inevitably, fundamental issues of culture and values" (page 5). Well, yes: but there's more to this than simply saying whether something was done well: there is the much bigger question of whether it should have been done at all. They justify this with the example of Rommel, whom everyone could agree was a brilliant and fairly blunder-free general but who fought in an evil cause. But consider the poll tax; that was carried out fairly effectively, but it all came to grief because it was fundamentally unfair. How much of the fact that it was unfair should have entered considerations? This tends to make it difficult to separate the how from the why. And was it the worst of the blunders considered, as they suggest? I would rather doubt that: it contains many elements of stupidity and heedlessness, but so does the whole business of going over to private pensions with all the mis-selling that generated, but with the added dimension of malfeasance, greed and plain crookery for which, as far as I'm aware, no one served a single day in prison. For me, that makes it a far worse blunder even than the poll tax, because the consequences were harm to millions on a very large scale, whilst the consequences of the poll tax were more concentrated on the political, in particular the fact that it did for Thatcher, wonderful though that was.
But where this approach comes most seriously to grief is in the consideration of privatisation. Here the authors blithely state that, although "many sceptics and doom-mongers condemned as a blunder-in-the-making the Thatcher government's privatisation of most of the UK's public utilities during the 1980s ... privatisation is now almost universally-accepted as having been a success." (page 5). These words ring spectacularly hollow now, when the utility companies have turned into appalling rackets for creaming off vast profits for shareholders, bonuses for the top echelons of the companies that own them - and huge price rises for the public. Worse, the companies have loaded themselves up with debt (lending vast sums to themselves so they can pay themselves back with large fees) so that the interest paid can be set against tax so that they pay hardly any at all. If this is a success, I hate to think what a failure would look like. These rackets are virtually all monopolies - this applies to water and power supply the railway companies and all the rest of the corporate brigands, and it shocks me that the authors are able so easily to separate the process of privatisation (which was a success, I suppose) from the wider consequences (which certainly are not). For this reason, I have downrated the book to three stars, despite its many strengths in other respects.
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Showing 1-8 of 8 posts in this discussion
Initial post: 31 Oct 2013 11:11:26 GMT
Last edited by the author on 31 Oct 2013 11:45:49 GMT
But consider the poll tax; that was carried out fairly effectively, but it all came to grief because it was fundamentally unfair. " the poll tax is a flat tax it fulied one theory on tax that everyone should pay the same for services recived, counicl tax based is not nessarily income or wealth based as bases as the tax is based some times on the 31 year ago relative value of an asset someone does not nessarily own. It is neither a flat tax nor is it wealth or income based as a renter pays the 31 year ago relative value (sometimes 1992 value still used or was until recently at least). A renter pays the tax on an assets value they dont own. Although rent may be a function of property value in theory in the long term in 10 years period can be quite seperate as two seperate markets in shorter terms.
fairness is subject, but i would conced it did not appear fair. But more than it not appearing fair it brought people in to tax that had never paid tax before. If they already paid tax but the relative amount had been changed it is unlikly it would have caused such upheavel.
Personally i think it a silly idea and flat tax is unfair but dont think this was biggest problem as lots of unfair things that cause less upheale. A still policy that as you say would be diffcult to implement.
I did agree when reading this chapter that were mixing 2 different things poor policy and delivery as delivery was not that bad given the constraints of such an unworkable policy. Although to a much less extent could consider tax credit an still policy (silly in that at the time not good information sharing and public would stuggle with as well that was likly to have problems in delivery.
To an extent yes it hard to seperate the policy delivery, but have to try. Book did not seel clear enough about distinction always.
"For me, that makes it a far worse blinder even than the poll tax, because the consequences were harm to millions on a very large scale,"
The pension miss selling did have some benefits a lot of defined befits schemes teachers pension civil servants, are completly unfunded, so people that switched saved future generations by actually saving them selves rather than reliing in future generations to pay for unrealtistic amounts the laiblty on public sector pensions, trillion odd may have been a tad more with out the private pensions. Even the private sector compaies sector generous defined pensions often are in effect a tax on future generations, with the penion protection fund of course but much more so as drain on companies that dont go south less competive. from banks to postal workers to autoworkers to british rail these entilements waste over 30 bilion year.
Individually worse of for people that choice to change often. A sensible policy poorly delivered
In reply to an earlier post on 26 Apr 2014 12:15:32 BDT
William R. Woods says:
Privatisation took place because credible politicians from all parties had come to the conclusion that the public sector was not able to run services efficiently & that its agencies could not be reformed to cure the problems. PFI is a classic example of how civil servants are incapable of drawing up contracts which look after the public interest.
In reply to an earlier post on 26 Apr 2014 12:40:25 BDT
Richard Carter says:
Rather than " a classic example of how civil servants are incapable of drawing up contracts which look after the public interest," it's a classic example of how well-resourced private companies and their teams of expensive lawyers can outdo the much smaller-scale efforts of civil service lawyers. The contracts for the Tube PFIs, for example, ran to thousands of pages, hiding all sorts of get outs.
This idea that the public sector isn't to run services efficiently is a hoary old myth that is put about by the private sector and neoliberal politicians, sadly including far too many gullible New Labour pols. Compare the NHS with health care in the US if you want to see what I mean!
In reply to an earlier post on 25 Jul 2014 13:59:44 BDT
Uncle Barbar says:
I couldn't agree with you more Richard Carter!
Posted on 6 Nov 2014 13:06:28 GMT
J. A. Paffett says:
Regarding privatisations, the authors are also mainly silent on the rail privatisation, only mentioning the West Coast Mainline debacle in the postscript. Railtrack collapsed back into public ownership as Network Rail and in the '90s people came from all over the world to visit the Strategic Rail Authority and see how NOT to privatise a railway.
In reply to an earlier post on 9 Jan 2015 01:40:49 GMT
R Rai says:
I think the reality of privatisation is more nuanced. When opting to privatise, you have to consider multiple contextual factors (e.g. levels of corruption and trust in public institutions) as well as structural ones (i.e. the nature of the market and whether competition can effectively be implemented). In some cases, privatisation of public infrastructure has been very successful - broadband in this currently for example is highly competitive and we can generally get decent connection speeds much cheaper than elsewhere.
Where it has been less successful is rail, as one of the commentators has highlighted. This is largely because Rail is akin to a 'natural monopoly' where it's more efficient to run as an integrated system with one operator. Clearly this isn't conducive to competition so attempts at privatisation in the rail industry have led to lots of fragmentation, creating a very complex structure. Arguably, it's the worst of both worlds and if anybody was designing it from scratch, they probably wouldn't come up with the arrangement we have.
Therefore, the decision to privatise really has to be taken on a case by case basis and it annoys me when both sides of the debate take a very ideological perspective.
I also agree that an element of the failure of PFI contracts was the public sector being inexperienced in drafting contracts. The lack of commercial expertise in Government is a widely acknowledged problem which largely arises from the fact that the public sector has to compete with the private sector for these skills. Reducing the pay disparity between sectors in this area would likely attract better commercial talent into Government.
In reply to an earlier post on 9 Jan 2015 01:42:33 GMT
[Deleted by the author on 9 Jan 2015 01:42:44 GMT]
In reply to an earlier post on 9 Jan 2015 23:53:50 GMT
Richard Carter says:
But rail isn't the only example of a failed privatisation! Consider the natural monopoly of water, and the cartels currently running energy: these are outrageous abuses, and powerful examples of failure in privatisation. It only makes it worse that most of them are state-owned: just not by the British state, so profits are leached away abroad.
And health: only today, Circle Healthcare have walked away from their contract to run Hinchingbrooke Hospital. Laughably, in May last year only, Dominic Lawson was boasting about the "success" of their running of the hospital, and complaining that the Tories were silent over the success (http://dailym.ai/1xNsQWh) - but now the useless lot have announced that they're withdrawing from the contract because it's "no longer viable under current terms" - in other words, they've screwed up, though of course they're blaming everyone and everything but themselves. Wow, Dominic Idiot, that really is some success!!
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