Vince Cable has been grilled by members of a parliamentary committee about the selling off of the Royal Mail. He has been accused of selling off the Royal Mail on the cheap and costing the tax payer millions of pounds.
See the report here.
What isn’t addressed seems to be that the whole point on privatisations is for politicians to sell off national assets and enrich those in the city. This has always been the case. The scam is simple, and can be summarised by the following steps:
- Tell the public who, via the government actually own the assets that it needs investment of the sort that only the market can provide.
- If that doesn’t work then tell people that they can make money from the sale by being able to buy a few shares in the floated company.
- Bring in some consultants from the city to advise you about the sale. Take their advice on the price that you can expect to get. Remember that at this point you will be enriching the consultants because you will be paying for the consultation.
- Accept the price that you are told, and go ahead and float the company.
- The shares will be massively successful on the first day and the companies that acted as consultants will block buy shares enriching themselves hugely. The public that bought shares can make a quick buck, selling their shares to the companies that are hoovering the shares up knowing that they will be able to collect dividends in the long run as the company is either asset stripped or made more profitable by upping prices, demanding subsidies from the state or by massive shrinking of the workforce (or often all three).
The game has been repeated over and over again, and in the long run the only real winners are the city. As a nation we are at the whim of companies from other countries who have bought up companies that they knew were being pushed into a ‘market environment’ but where the market was captive. In cases like this (energy, telecoms and public transport) the choice is little more than a façade.
The classic example of this idiocy will always be the railway privatisation. The UK has some of the most expensive train services in Europe, and yet the industry not only continues to receive subsidies despite being privatised, but the amount of subsidies has climbed enormously. The melange of companies that now make up the train and network operators all need to make a profit. This fact ended up meaning that investment in safety suffered, and major train accidents resulted from the scrimping on safety.
And to think, I used to think Vince Cable was the one with integrity…