Why We Should Not Privatise Royal Mail

I spend a lot of time travelling by train. I have experienced first-hand the way the railways have changed through my lifetime from being a public service to being a private business.  This has brought many subtle changes but it has also brought some significant reductions in service which are relevant to the decision about whether to privatise Royal Mail. Here I consider three ways in which we, the service users, will lose out by, analogy with the railway: through the transfer of costs to the individual; increasing stress for the individual; and the gaming the market.

As an individual traveller we are unsupported and receive barely any personal service from the skeleton staff employed by the private rail companies. They used to sell us tickets, check our tickets, and give us information about rail services. Now we do these things ourselves. As they make their pricing structure more complicated we struggle to keep up and reduce our costs. As a Professor of Economics I have enough money not to worry too much about this but I am obviously mean as well as principled and I try to hold my local company First Great Western to their advertised pledge that they will help me find the cheapest ticket. I also ought to have the mental agility to split my ticket and use cards and discounts to reduce my travelling costs but it astonishes me how much time and mental energy this takes, making me physically sick when juggling so many variables.

So how might this transfer of costs work in the postal service? The process has already started with parcel deliveries that are not delivered but left at a distant sorting office, cost savings having led to the centralisation of services in fewer locations. This may be efficient for Parcelforce but it is deeply inefficient for the individual who is waiting for a package especially if, like me, they don't own a car, and the parcel is heavy. In future we can expect to see a more complex pricing structure with the universal service, let's say around £1 per letter, so long as you are prepared to have your letter carried by donkey and arriving after a long delay. The services that make money, the services used by bizniz, will be efficient, rapid and competitively priced; the services used by you and me will become residualised.

The ticket barriers are a classic example of the attack on jobs that privatisation always brings and the way that stress and effort are transferred to the 'customer' and away form the corporation providing the service. Because I travel on railways across Europe I am sensitive to how offensive these barriers are compared with the personal service of a ticket collector. Such an individual also implies that there is some degree of management and control of the rail system as a whole and, in most European countries, rail staff are proud of the national service they work for. What a contrast to the precarious, deskilled workers found throughout our rail system and who our postal workers will soon resemble.

One of the conditions for a free market to work efficiently is that there needs to be what economists call 'perfect knowledge'. The farce of this in the case of rail travel is plain to see: most rail staff themselves are unaware of how to travel for minimum cost and what the validity and availability of the various tickets is. In the case of Royal Mail the removal of the cost from the face of stamps was a classic example of undermining the passengers' knowledge. I bought a huge batch of second-class stamps before the latest exorbitant price increase and was recently horrified to find that a second-class stamp now costs 50p. Hidden charges and subtle price changes will no doubt become a feature of the future postal service, causing us wasted hours and vertigo unless we give in and allow ourselves to be exploited.

Oyster is part of the Transport for London system and so because of its ownership structure does not return value to shareholders. Yet even there money is taken from you without your knowledge. Sometimes the machines fail to register you touching out and you are charged the penalty fare. It is your responsibility, I am told, to check a print-out of your use every evening to ensure that you have not been over-charged. If you notice that something is amiss it becomes your responsibility to stand in a queue and request that it is resolved. Time and stress passing to the passenger again.

I travelled to Brighton this morning for Green Party conference. I travelled in what is defined as 'peak time', a self-defined period that keeps extending with no apparent relationships to the way we travel or when we work. It was immediately apparent that the Brighton-to-London peak works in that direction only. My evidence is that the train I was travelling on was nearly empty and of the dozen ticket barriers only three were open in my direction. People travel from Brighton to London to work but very few travel in the reverse direction so there was no justification for my having to pay £20 extra and being prohibited from using my Network Card.

This is an example of gaming the market that is inevitable when there is a natural monopoly and profit-seeking executives pit their wits against under-resourced regulators. How might such an impulse express itself in the case of the postal service? The most important target of gaming is sure to be the universal service which, like the concept of 'peak travel time', will be used by politicians to limit outright profiteering. As soon as Royal Mail is free of the constraint to serve the public interest the finest minds will be turned to stretching and undermining the meaning of a 'universal service' whether by reducing frequency or geographical extent. Perhaps old ladies in the Hebrides will be required to walk a mile to a neighbour's house to collect letters, or will be offered a weekly rather than daily 'universal service'. Or perhaps clever young men will find a way to redefine what daily means. You get the idea, and you also see that I am not cut out for that sort of game.

I have grown tired of discussing whether there is any economic theory to support the privatisation proposals of successive governments. In the case of natural monopolies like the Internet and sewers there is no reason why we might expect efficiency rather than profiteering from the companies that run them. The same applies to the railways and the post: services fundamental to a functioning society are committed to the tender mercies of profit-seeking executives. We will be conned and over-charged and the value we lose will pass to the same shareholders who gave us the financial crisis. We would be made to vote for this, and madder still that people we voted for are imposing it on us.
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Taxpayer as Shareholder

A guest post from Gerald Hartley, local green activist in Stroud and south-west regional elections co-ordinator

The British tax payer is a ‘shareholder’ in the state enterprise in all its many forms.  Over the decades this ‘enterprise’ accumulated assets worth billions of pounds. Coal mines, railway stations lines and rolling stock, power stations, steel works, canals, bus companies, lorry fleets, a national grid of gas pipelines and electricity lines, telephone lines, water mains and sewage pipes, pumping stations and treatment plants, council houses, hospitals, health centres and clinics, town halls, fire and police stations, roads and bridges, libraries, schools and colleges, elderly persons and children’s homes.  Why did it do so?  Because the private sector failed to provide all the things needed for the common good.

The Thatcher era began and governments ever since have continued, to sell those assets cheaply to the private sector and use the cash to make their financial performance look better than it was.  But now it is also a cover for the lack of revenue caused by the financial crash brought about by the very people that fund and support the Tory party.

Where asset sales cannot be justified, such as schools, pseudo-private organisations are constructed to eliminate democratic input and maximise elite structures. This is the very serious underlying aim of the Tory party – an elite society with everything owned and run by their friends and supporters to protect their common interests, untroubled by the rest of us.  They can see that financial crisis may come and go, but privatisation only gets reversed in a revolution.

So we the tax-paying shareholders in the UK state, have lost most of our assets, suffer reduced services, but pay the same tax and receive no dividends.  When the Tories crow that they have kept the council tax at the same level for 3 years, do you laugh or cry?  But it’s the kind of propaganda that keeps them at the helm.

In the 18th Century, there was little that the peasants could do to oppose the Enclosures of common land.  This saying, from that time, seems strangely apt all this time later.

‘The law doth punish man or woman
Who steals the goose from off the common
But lets the greater felon loose
Who steals the common from the goose’ 

Geese are not very bright.  So maybe it’s time for the ‘have nots’ to demonstrate that they are brighter than that and stop blaming Europe, immigrants or anything else handy and take the trouble to understand just how the globalised financial system is designed to benefit a tiny minority at the expense of the planet and every species living on it.

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Thatcher is Dead: May Thatcherism Follow

This is a guest post from Chris Hart of Lancaster Green Party

It has been a slightly surreal week, partly because a fifth week of dry, sunny weather making Lancaster look more like a desert than the waterlogged swamp it normally resembles. Primarily though, it is surreal for the events surrounding the death of Margaret Thatcher. The praise and tributes that seem to be coming in from all sides have made me start to question my own sanity and memory. The deification of Mrs T is starting to resemble that of Lady Di. Thank goodness for George Galloway who against the general gushings maintained an outspoken surety that the fires of hell are well stoked and will be well fed this week.

By a strange coincidence our local cinema was holding a rare morning film showing on the day following her death. The film was Ken Loachs' Spirit of 45 , as perfect a piece of aversion therapy as one could imagine. It is lovely and poignant film, showing how the will of people and Parliament were able to completely redirect the devastated landscape and economy after the Second World War.
Spirit of 45 showed starkly through the voices of working-class men and women of the time just how incredibly ambitious and visionary the nationalisation of the previously private health, energy, transport, housing and education systems was. That it was done in five years and transformed the lives of millions - and all at a time of the greatest national debt. It also showed in contrast how tepid in comparison our attempts at transformation seem today in response to the rampant neo-liberal agenda.

After 70 minutes of documenting the changes in people's lives from the 1930s to the 1950s the film suddenly cut to Margaret Thatcher outside Number Ten giving her inauguration Francis of Assisi speech: 'Where their is hatred let me show love', a sentiment that I am not sure the 'enemy within' of the miners or millions of others thrown out of work were able to appreciate the irony of. The film then embarked on showing the dates of the re-privatisation of industries. It largely missed out on the greatest failing of Thatcher though, the deregulation of the financial markets that led to the inevitable collapse of the banking system
Spirit of 45 showed the need for a new 'post war economic revolution' to follow the end of credit wars, but this time that vision and passion is put into a demand for a more collective ownership of the creation of finance, the means and outcomes of production and the commons of the Earth. It needs to be one that transcends the state-led nationalisation ideal and the individual-led privatisation ideal.
Margaret Thatcher probably died happy: she lived 7 days long enough to see the end of the NHS and the basic right of the welfare state to provide for those in need. Let's hope though that Thatcherism has died with her and new ecologically aware and socially convivial society rises where she saw there was none.
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Explaining PFI

Scandals about the extortion of public money by private companies seem to arrive daily, as the decade of corporate governance begins to unravel. The political conclusion is clear: we need to keep the public and private separate.

This morning's news is about the disastrous economics of the PFI policy. Money that was created from thin air in the private sector was loaned to the public sector to build hospitals. Over time the interest on that money will have to be repaid from the public money that is taken from taxation and paid to hospitals to support patient care. The quality of health services will decline so that the financial interests of private corporations can be served. According to Department of Health figures, 22 trusts face bankruptcy because the payments on their PFI contracts cannot be met.

The fact that the PFI contracts the private companies who loaned the money became obvious when they started to be sold in a 'secondary market' - the companies who set them up were selling the income stream on to other investors. Serco has been assiduous in keeping its investors up to speed with the growing concern in government about the disadvantageous PFI contracts entered into by health authorities and the possibility of renegotiation. Dubbed by the Guardian as, the biggest company you have probably never heard of, Serco is all over the public sector, profiting at the public expense.

The PFI deals are just the most obvious example of how the claimed efficiency of private sector arrangements to provide public services were a front to enable the embezzlement of public money. The most charitable interpretation is that corporations and consultants have used politicians' ignorance about finance and about IT to profit at the public's expense.

When the operation of private values and private finance in the public sector has been so devastating it demands one to question why this has happened. The answer appears to be simple greed, the chief motive of the private sector, and which privatisation allowed to swamp the public sector too. Most seriously, we can observe the greed of ministers who foresee their own nest-eggs as directors on the boards of the companies who have destroyed the public interest they were supposed to serve.
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Subversion Lures

Bristol folk-hero folk-artist Banksy has returned to his roots to transform the city's Art Gallery and museum into a living exemplar of the best of modern art. Thought-provoking, wise and hilarious, it has been attracting throngs of visitors of varying shapes and sizes, ages and classes. It is a pleasure to be at an exhibition where rather than wondering what they should think or feel about the art people are just spontaneously laughing out loud. The show is on until the end of August and should not be missed.

The photo above is typical of Banksy's style - witty, provocative and challenging to contemporary culture, in this case the cheap flight. It is a prepared version of Claude Lorrain's Flight into Egypt, entitled 'Flight into Egypt: Budget Version'.

Amongst my favourites was the dildo that had been sneaked into the display case of stalactites and stalagmites, the gleaner who had skived off for a fag break, and 'the angel of the north' as a classical statue transformed into ladette. Banksy's history of run-ins with the law is a recurring theme - Mad-Max style riot police are found riding children's playground toys and skipping through meadows.

Start the Week this morning included a rather tame discussion about what civilisation means, which degenerated at one point into a sterile debate about the value of modern art. For me, the Banksy exhibition answered the question about what art is for, although questions of its monetary value continue to be problematic. While Banksy now sells internationally at a premium we cannot know how he spends his earnings. He has paid for all the costs of this exhibition, including the many additional staff needed to police the largest crowd seen in the Museum in a generation. Banksy himself obviously has little time for the mass-produced and unimaginative work of commercially focused artists such as Damien Hirst. One of his canvases is a spot painting attributed to 'Local Artist and Damien Hirst'. The spot painting is being covered with grey by a mouse with a stepladder and paint pot.

This rather poor photo illustrates Banksy's take on one of my favourite themes - the measurement of the unmeasurable. It is a graphic apparently illustrating crime data on the number of examples of street art experiencing a rapid increase.

The conservative minded commentator on Radio 4 was criticising the lack of nobility of modern art, its failure to show discipline and inspire higher thoughts. His female colleague was presenting her findings on the privatisation of formerly public space. Banksy seems to answer both their arguments. In an era when the complacent consider that we have reached the perfect apotheosis of humanity - the end of history - while children starve in their thousands every day, what could art do other than force us to question everything? And in an era of privatisation of everything from urban space to water supplies, one might well expect to find these questions raised by an artist who uses stolen public space as his preferred canvas. Tweet

Money, money everywhere

I had another horrendous train journey yesterday - I was facing the prospect of a two-and-a-half hour delay on a two-hour journey when I took direct action and cadged a lift. The explanation was 'incidents in tunnels' which has made me think about 'leaves on the line' and, more relevantly, 'the wrong kind of snow'.

Perhaps this is what Marx meant by the contradictions of capitalism? During the floods, which were our local learning experience of last year, we found ourselves deluged and yet short of water. This year our economy is short of cash because of an excess of credit. The recession that we are jointly embarking on has been the result of the uncontrolled creation of the wrong kind of money: debt money.

The link between rail disasters and monetary disasters is that we should not allow control of the most fundamental structures in our economy to be in the hands of privateers. Railtrack, at least, is now back in public hands; the money creation system should follow. This is not to argue for the abolition of private banks, just to suggest, as James Robertson and Joseph Huber do in their excellent book Creating New Money, that they should perform a standard retail function rather than being allowed absolute power over the extent of credit in our economies.

Such a system would not only stabilise the money system, it would have the added benefit that the value of the money created would be in public, rather than private, hands. It would be available to be invested in public projects or used to pay off the national debt and generate tax cuts, depending on the preferences of the government in power.

The debate is now focusing on whether or not the carnage we see around us representss capitalism working or failing. All I can say is that if this is a system working, it just isn't a very good system. Tweet

The Lean Economy?

David Fleming, one of my many illustrious predecessors in the role of Green Party Economics Speaker and inventor of the Domestic Tradable Quota, likes to use this phrase to refer to a post-carbon world where we are more careful with things. I dislike the phrase and can't help thinking it displays his cultural origins in the 1950s and probably a mother who saved margarine tubs. I remember clearing out hundreds of these and similar junk when my grandmother moved into a home some years back. Ok they were, in relative terms, highly useful items, and had considerable embodied energy, but in the high-consumption world we live in today they were just pointless clutter.

Perhaps that is partly Fleming's point. In response to a similar concern with ever-increasing consumption that does nothing to add to human happiness I wrote an article called 'Sen and the Art of Market Cycle Maintenance'. It was published in the same issue of the FEASTA Review as Fleming's piece but an editorial decision was taken to retitle it 'The Freedom to be Frugal'. I was distressed by the taming of what I considered a swash-buckling title, but more so because I just don't think leanness or frugality will sell well. The convivial economy is far more appealing, suggesting better relationships, more music and dance and sharing of meals; in short, more fun; less stuff.

The point I was making in my article is a simple one: the relative definition of poverty is itself a contributor to the cycle of economic growth, as it colludes with the advertising industry to persuade us that we are deprived if we do not have the latest consumer gadget. Poverty is measured in terms of lists of consumer goods, ignoring the most important aspects of the deprivation we face as we see our natural world devastated and the quality of food and other essentials deteriorate.

In the Thatcher years leanness was considered a laudable quality of 'efficient' companies, by which was meant companies who had removed as many jobs as possible from their operation and exported the remainder overseas to countries where poverty wages and Dickensian employment conditions are still acceptable.

The private sector was keen to slim itself down; the public sector, where unions were stronger, less so. Modernisation was called in to do battle against flab, leading to the agencification of the civil service and more swingeing destruction of jobs. Even before the disastrous evidence of incompetence emerging from HMRC this week it was obvious that the ever-shrinking number of public employees, downskilled and demoralised, were simply not doing an adequate job. Complex phone-switching routines and elaborate computer systems can never substitute for personal interaction, especially where, as in the case of so many government services, intimate and sensitive issues need to be discussed.

So, while the population grows ever fatter our workplaces are becoming increasingly lean. Could we perhaps suggest a relationship between the two? Might the days spent in lean and fit working conditions lead to such despair that we can find no comfort until we reach the relative safety of our homes to slump onto our sofas with fatty meals and cream buns? Ideas merchant though I am, I don't expect to find myself selling 'frugality' with much enthusiasm. I think have more of an affection for a little bit of slack.

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