Unhelpful things lefties shouldn’t say part 1

Here’s the first of three blogs on three arguments I often hear people on the left make and why I think they are unhelpful. An example of the first argument comes from today’s Guardian in a piece by a columnist whose work I like a lot. 

1. Government has taken on some additional debt and this means we all owe an extra £x each. In this piece, Aditya Chakrabortty uses the argument as a way to draw the reader’s anger about the way the UK’s railways are run, and in particular Network Rail, whose £34bn debt was this week officially put on the Government;s balance sheet. Chakrabortty explains this means we now all owe an extra £539 each. This may be a successful way to provoke our outrage about rail privatisation, but is it a good way to frame the argument? 

I’m not sure it is. For starters, it’s exactly the argument those on the right often use to scare us about government debt with the aim of getting us to accept austerity. Here’s an example of this. Repeating this line just reinforces people’s fear of government debt. In what sense does each UK citizen ‘owe’ a portion of the national debt? When people think about their own debt, they know that they need to keep up the repayments or they may have to forfeit goods (or even their home) to repay the debt. Failure to pay could even lead to bankruptcy. This is not true of government debt though. There is no burden on individual citizens to repay this debt. We pay taxes, but this is not linked to repayment of government debt, and if we lose our jobs, we don’t have to keep paying tax at the same level as before. Government debt is also a private asset. Holders of government debt tend to be pension funds. So anyone with a pension is also ‘owed’ government debt. So that £539 you owe for Network Rail is owed partly (or mostly or wholly depending on the size of your pension) to yourself. Doesn’t sound a lot like a debt in the commonly understood way. 

In deploying the image of the national debt being a burden on each and every citizen, Chakrabortty is using the framing of those who want to move more resources from the public realm to those at the top. This what he is arguing against, but the framing is the same as those on the other side of the argument.

The issue around rail privatisation is one of who is best able to run the railways to serve to public good. Chakrabortty goes on to argue that the debts built up by Network Rail are a product of the discounts it gives to private rail companies to use the track it owns. This transfer of resources from public to private is sufficient to get angry about. Talking about how much money this mean we now each owe as a result just muddies the waters, and isn’t even true.

So how should we frame the issue of rail privatisation? Suggestions in the comments are welcome, but I would be talking about how the railways are a natural monopoly, that competition is non-existent and that in those circumstances it’s better for the public sector to run the railways to avoid a fragmented, high-priced rail network. It’s certainly crazy that public money is being used to subsidise private local monopolists, but the issue is who the money is going to, not the ‘debt’ that results from it. 

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9 thoughts on “Unhelpful things lefties shouldn’t say part 1

  1. Look at the East Coast Rail Line, which is still owned by the public – it’s making a profit. Look at the rest of the privatised railway companies and see how badly they are performing.
    Maybe by starting with that kind of opening will lead to other questions that do not come across as “debt” owed by each person. I think we have enough of the government going on and on about “our austerity” and “our debts”, when they mean the poorer people and not the rich. I’m sick of it all.

  2. The appropriate way to run any privatisation is for the state to maintain the assets (buildings, rolling stock and people) and for the operating company to lease those assets. That way they make a profit if they operate the assets better than the state can – taking into account their cost.

    In this design there must always be a state ‘operator of last resort’ to take over if people go bust.

    That is the aim of privatisation – better operation of assets by removing the rigidity of centralisation and bureaucracy.

    The problem is that privatisation morphed into the nonsensical idea that private companies have better access to ‘capital’ than the state does. Clearly that is a myth given the currency issuer can command any real resource priced in its own currency.

    If the state deals with the ‘expensive’ parts then theoretically you should get more bidders for the operating part since there is no cost risk there – other than the lease costs. And that should lead to increased competition and better prices.

    Of course it won’t because every outsourcer out there wants the assets more than anything else – because their business plan is rent extraction and corner cutting, not improved operational efficiency.

  3. “I’m not sure it is.”

    It’s not sure. It’s certain.

    If the company was in the private sector last week and now is in the public sector then by definition both the liabilities *and* the assets moved across. And they balance!

    The problem with a lot of lefties is that they can’t seem to see the left hand side of any given balance sheet.

    They spend far too much time obsessing with the right.

  4. Given many of our ‘privately owned’ railways are actually owned in whole or in part by foreign governments, perhaps those governments should be providing any subsidies required?

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