Private Versus Public Enterprise

Privatising, competition and “championing” are said to be the universal cures of late capitalism. Consequently, they blew for the hunt against public enterprises and were busy “privatizing”. Enterprises that belonged to the people – and they should have been called people’s enterprises, rather than state enterprises  – were sold cheaply.

Infra structure enterprises, too, (energy, postal service, railway, health) were converted into profit-oriented private enterprises and sold to anonymous capital. However, they forgot that a state can be blackmailed with infra structure. As long as all goes well, the profit is privatized. As soon as something dire happens, the loss is socialized.

Monopolistic enterprise became the anti-phrase. Regardless of the fact that state monopoly might well make sense. After all, one postal service or telephone service has a potential totally different from several associations competing against each other.
But what they did was focus exclusively on competition. All over the EU, “free competition” was repeated like a mantra and became the only true dogma underlying all decisions.

Now we see the result: diverse communications and telephone companies literally come to blows in order to get customers. They all have parallel infra structures, but cannot supply nationwide.

Just look at mobile communication. How much money do they senselessly spend on advertising? And how much do they invest into having sales points throughout the entire nation? And what irrational and non-transparent price policy jungle do the competing enterprises use in order to try and lure the customers into believing they are the least expensive? Before taking advantage of every chance to exploit said customer.

The postal services are hardly any better. Here, too, the “market participants(!)” fight each other via advertising. “Economizing” means less service and less quality. Transporting packages parallel is not restricted to the last mile. Taken together, this is all much more expensive and less efficient (not to mention less environment-friendly) than if the service came from one provider through a well-organized optimization.

Nor is the energy supply situation any better. Not to mention the health and social services. What about the economic optimization the head physicians of private hospitals are forced to activate, or the imbalance between care quality and the “financial results” in the big care and senior citizens’ institutions?

In these sectors, most of the turnover (the customers’ money!) is spent on sales and marketing. That raises the cost unnecessarily. Of course, the price you pay is eventually poorer quality.

If, however, you disagree with the state enterprise concept, you beat the horse while meaning the rider. There is a simple reason for the failure of state enterprises: they turned into civil servants’ enterprises. And, unfortunately, there is a very negative connotation to the term “civil servant”.

Mind you, originally the civil servant system was a success story: the expectations with regard to loyalty and achievement were very high for the civil servants – and they were met! In return, the civil servants received extraordinary care. As I see it, it was quite a “fair deal”. I saw many, many highly motivated civil railway servants at Deutsche Bundesbahn. It worked well into the 1960ies.

Then the self-awareness of the civil servants underwent a subtle change. Politicians looking for votes – primarily among civil servants – started granting them more and more privileges. They had less and less duties, more and more rights. What used to be an elite became a caste. Today, a civil servant cannot be fired and has a pension claim that is above average. He himself, however, can hand in his resignation from one day to the next.
Public opinion on the civil servant suffered. A distance grew between the citizens and their civil servants. And thus the downward spiral started.

I would like to introduce the following – once again heretic and totally unrealistic (?)  – idea and invite you to discuss it:

Why should a state enterprise managed in a modern way not work just as well as or even better than a private enterprise managed likewise?

And I propose we re-establish state enterprises. With a modern management. But with a new civil servant contract. With reduced job protection. Because, after all, the state is not evil like a private enterprise – as the legislation seems to assume. Why would the state subject its employees to the kind of servitude that the legislation assumes for private enterprises? Nor does it need to do so, because, after all, there is no obligation to make billions of profit for the stock exchange. Consequently, it can pay fair salaries.

To be sure, there might also be things like personal arbitrariness or similar misbehaviour by a boss in a state enterprise. But that would be easier to counterbalance by a neutral conciliation board than by law. Said board would have to be made up of objective persons and decide fairly.

I assume that “private business” would have to “prepare themselves for a rough ride” if they wished to survive against such public enterprises.

And I would even go a step further: I would enjoy supporting these kinds of state enterprises by a monopoly where necessary. Because I am sure: given a modern management, they could solve infra structure tasks much more reliably and cheaply – not to mention more sustainably – than a multitude of competing and profit-oriented private enterprises.

Thinking of nothing other than “the next three months”, the all-consuming motto seems to be “after me the deluge”.

(Translated by EG)

I never even mentioned such still-born inventions as private TV. Is it not also economically a disaster – quite apart from the quality.

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