There's no doubt that since privatisation the old nationalised industries have sacked colossal numbers of workers and brought in new technology. If efficiency is doing the same job or better with fewer workers, many of the privatised firms are more efficient. But this simply suggests some or all of the nationalised industries should have been commercialised – that is, had their subsidies shrunk and been removed from direct government control, obliging them to borrow money at commercial rates and operate in a world of market prices without making a loss.The first operative word is colossal, acknowledging as it does that there was massive inefficiency in play, in some of the very largest industries of all. This is no trivial matter and, given that many of them including the biggest were monopolies, his flippant 'solution' - should have been commercialised - is laughable. No economy can be sanguine about monstrous systemic waste in vital sectors unless (as, say, the French sometimes claim) it is a conscious part of employment policy. Even then, quantified justification in terms of a proper cost-benefit analysis would be a major challenge: and we capitalists already know what we reckon the outcome would be.
For this first riposte, and particularly for those too young to know these things from first-hand experience, harken to one of Old Drew's tales ...
Back in the early 1990s, the opening-up of the gas market had only just got properly started. (The 1986 privatisation per se had been an empty gesture because ther old British Gas Corp was sold off as a de facto monopoly, a privilege it guarded and enforced with commercial brutality.) But things were gradually changing for the better, and one day an experienced US gas company obtained regulatory approval to do something that had never been done before: an independent company was going to build an entry-point for gas going into the BG grid system. (Previously, BG built them all.) Obviously the new entry-point needed to be compatible with BG's existing infrastructure, so the newcomer was given BG's technical specifications, one of which was for provision of metering, a very necessary aspect.
The metering spec was for three densitometers be installed (for measuring gas density - one for use and two for back-up), and likewise three gas chromatographs. For those who don't know, a GC analyses the molecular composition of the gas very accurately, and simple A-level chemistry allows things like calorific value - and density - to be calculated quite precisely from the results.
Now both these pieces of equipment are standard, robust, and very reliable. It is entirely reasonable to provide for a back-up (which will probably never be used) because continuous accurate metering is vital: but a single back-up meter is universally considered to be adequate - universally, that is, excepting for BG in 1990. So the US interloper - a company well-recognised for its expertise in such matters - refused to install the third meter.
It gets funnier. BG's operating procedure was for the GC density calculations to be compared with the densitometer readings at all times: and in the event of discrepancy, the GC calculation would always prevail. In other words, no densitometers were required at all !
So the newcomer refused to install any. BG resolutely insisted on 3 of each: the regulator was invoked, and wisely ruled in favour of just two GCs and of course no densitometers at all.
But here's the sting. Obliged to accept that the newcomer needn't install a third GC, or any densitometers, BG itself installed the utterly redundant 4 pieces of kit ! - 'at its own cost', which needless to say meant at the cost of all gas users everywhere. We may be 100% certain this accurately reflected gross inefficiency the length and breadth of BG's extensive systems.
And lest we forget, that ladies and gentlemen is why monopolies must be resisted everywhere: and, when they are found to be inevitable (as occasionally they are), they must be watched over night and day. It is to the various attempts to resolve this problem that we will turn in later pieces.