The myth of greater private-sector efficiency (2)

Seamus Milne is the latest Guardian columnist to take on busting the myth of privatisation - vital action now that the Government has effectively privatised the NHS: 

"Central to the corporate-driven ideology that dominates this government and public debate is a myth: that the risk-taking, entrepreneurial private sector drives technological innovation and industrial advance, while attempts by state bureaucracies to "pick winners" are a recipe for disaster.

That myth is exploded by Sussex University economist Mariana Mazzucato in her book The Entrepreneurial State. Even in the US, heartland of "free enterprise", the public sector has taken the risk to invest in one cutting edge sector after another: from aviation, nuclear energy and computers to the internet, biotechnology and nanotechnology.

The private sector has come in later – and usually reaped the reward. So the algorithms that underpinned Google's success were funded by the public sector. The technology in the Apple iPhone was invented in the public sector. In both the US and Britain it was the state, not big pharma, that funded most groundbreaking "new molecular entity" drugs, with the private sector then developing slight variations. And in Finland, it was the public sector that funded the early development of Nokia – and made a return on its investment.

The lessons should be clear. States such as Germany, South Korea and China are now spending far higher proportions of national income on research and development into green technologies. Even some Tory ministers understand that only state intervention can drive the new motors of growth – but dare not say so publicly.

That's hardly surprising. But the government's economic strategy isn't working. If Britain is going to rebuild a broken economy, its political class is going to have to learn to turn its back on three decades of clapped-out myths and bankrupt ideology."

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Get the Blessing - So It Goes / Yes I Said Yes I Will Yes. 

The myth of greater private-sector efficiency

On the basis of my experiences in the Civil Service prior to ordination, I am fully with Aditya Chakrabortty who writes in today's Guardian "that the myth of greater private-sector efficiency in doing public works is just that: a myth":

"There is one problem. Time after time, these public-private partnerships (PPPs) have turned out to be a great deal for the companies, but a terrible bargain for the taxpayer. And on occasion, as with what happened on London's tube network just four years back, they can lead to outright collapse of the services involved.

How could it be anything but a bad deal for the British taxpayer? The private sector can't raise money more cheaply or easily than the government. According to an FT analysis done towards the end of last year, paying for PPPs with private-sector cash costs taxpayers well over £20bn extra. The public sector calculated this as "the equivalent of more than 40 sizeable new hospitals".

Or is there some magic private-sector dust that means whatever company executives do is just far more efficient than those Soviet realists in public service? Not a bit of it. The typical PPP experience is of a multiplication of middlemen and transactions designed to benefit the private sector."

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Quantic - Ticket To Know Where feat. Ohmega Watts