Bookblogging: The final instalment

I’ve finally completed a near-final draft of my book, although some bits, such as the following ‘Reanimation’ section of the chapter on privatisation are still a bit rough.

I’m getting some good comments from readers here, and through more conventional academic channels, which should help me sand down the rough spots a bit. Anyway, thanks to all for the comments I’ve received. It’s made a huge difference to me, and made the production of this book a much less daunting undertaking than laboring alone.

Remember, before pointing out stuff that is missing, that an earlier draft is online here and may be worth reading to see where I’m coming from.

Some zombies can be killed once and for all, and it seems that the global financial crisis may finally have buried the idea of comprehensive privatisation. Throughout the world, the need for governments to act as the ultimate guarantors of economic and financial stability has consigned advocates of a minimal state to the fringes of debate

Even groups on that fringe, such as the Tea Party protestors in the US, are deeply ambivalent, as is evidenced by the famous statement of one such protestor ‘‘keep your government hands off my Medicare’. While most on the right have tried to avoid such obvious self-contradiction, they have, as Paul Krugman has noted, abandoned serious attempts to scrap or privatise the key elements of the welfare state such as Medicare and Social Security.

And what is true in the US is true internationally. The British Conservative party, once the standard bearer for privatisation under Margaret Thatcher, have announced plans to allow public sector workers to set up cooperatives to run services such as primary schools and jobcentres. While some have expressed concern that this might be a backdoor route to privatisation, the central point is that the idea itself can no longer be defended in public, even by the party that did most to popularise it.

Elsewhere in Europe, the crisis has hit hard at the countries and governments that embraced the ideology of comprehensive privatisation most enthusiastically. Iceland, which hosted a triumphal meeting of the ultra-free market Mont Pelerin society only a few years ago, is now trying desperately to avoid national bankruptcy. Ireland is not much better off. The Baltic States are basket cases. Even in cases which seem, at first sight to involve a simple excess of spending over tax revenue, as in Greece, it turns out that a variety of quasi-privatisation measures helped to disguise the problem until it was too late to fix.

With the national exemplars of comprehensive privatisation in disarray, and its advocates in full retreat, it seems unlikely that this zombie idea will return from the grave any time soon.

That does not mean that we will see no more privatisation of government enterprises, nor, unfortunately, that silly and long-refuted arguments will be brought forward to support such measures.

In my own home state of Queensland, for privatisation the government is attempting to sell a range of income-generating assets, and claiming that the proceeds can be used to finance the construction of schools and hospitals. The fact that, unlike the enterprises being sold, the schools and hospitals will not generate profits to service the associated debt seems to have escaped their attention.

Sensible proponents of the mixed economy have never argued that privatisation should be opposed in all cases. As circumstances change, government involvement in some areas of the economy becomes more desirable, in others less so. In cases of the second kind, the appropriate response may well be to privatise existing government enterprises. And, unfortunately, whether or not any particular privatisation is justified, politicians will always be tempted to rely on superficially appealing, but spurious arguments of the kind being put forward in Queensland.

The crucial condition for the stability of a mixed economy is that shifts between the private and public sector should, broadly speaking balance out. Privatisations may take place, but they are balanced by extensions of government activity through the establishment of new public enterprises, the expansion of existing ones or, where private ownership has clearly failed, the nationalisation or renationalisation of private firms.