the fallacy of private sector efficiency

Privatisation equals efficiency, according to its greatest exponents.  An efficient organisation is a successful organisation, delivering value for money.  The public sector is inefficient in comparison to the private sector, ergo, public services must seek to increase their efficiency, reduce waste and cut costs.  The key to achieving this is competition, the introduction of markets.  The market will drive out waste and reduce costs.

This argument contains many fallacies but before addressing them it is worth noting that it goes largely unchallenged.  It seems to be generally accepted that the private sector is as a rule much more efficient and the public sector languishing in a mire of 'non-jobs', good benefits and astronomical waste.  There is a little or no evidence to support this view.

The central fallacy of this theory is a fundamental misunderstanding of the role of public services, though the clue is in the name.  The private sector is more efficient at generating surplus income (i.e. profit), because that is its primary aim.  The bottom line of all private sector organisations is profit; service is a mere by product of the quest for greater profits.  If the private sector can generate profits while delivering poor service, it does.  The moving of call centres to the Indian subcontinent despite their near universal derision is clear evidence of this.

The bottom line of the public sector is service, not profit.  It’s a huge distinction and shapes public sector organisations from top to bottom.  Surplus income should it exist is merely reinvested into improving services and it’s an obvious truism that service can always be improved for someone.  This leads to a cash hungry public sector, often able to spend its full resources and find a home for much more.  I doubt there is a single school or hospital in the UK that cannot be improved with the influx of more resources.

This is not to say that there aren't needlessly inefficient and wasteful practices in the public sector - there are - but the same is true of the private sector.  'Non-jobs' exist there too, the PR and marketing agencies employed by big business to distort the truth perform no beneficial function to anyone but shareholders, unlike those employed to encourage equality and diversity in the workplace (often picked out by public sector critics).

If we seek high quality public services then privatisation is not the only answer.  Reform and improvements can be delivered without resorting to the enrichment of shareholders at the expense of service levels.  The utility companies are an excellent example; artificially inflated prices, confusing bills and a lack of competition.  In the days of public ownership the utilities may well have been less efficient at generating profit, but the prices were not inflated and service was similar to what it is now. 

One of the more self-defeating criticisms of the public sector (which also feeds into the myth regarding its fundamental inefficiency) is the level of pay and benefits.  Less skilled jobs may be better paid than the private sector, but there isn't scope to earn a million pound a year working for the local council, unlike a financial service provider. 

Further, the truth is that compared to our European neighbours we work the longest hours for the least pay and we are relatively inefficient  in comparison (this includes the private sector, which means on average European public sector workers are more efficient than our private sector).  It’s those in the private sector that are underpaid and granted too few holidays and effort would be better placed in campaigning for a levelling up of benefits, not down.

Sadly this particular fallacy is politically convenient and provides cover for the Neoliberal policy of shrinking the state and mass privatisation.  In this way its much like the narrative formed concerning benefit cheats (who cost the Treasury some £1 to 2 billion a year or so); they are the scum of the earth yet major corporations that can afford to pay tax but instead find ways of avoiding it (to the tune of £25billion a year) are left to continue undisturbed.

Shattering these myths is incredibly difficult; it requires a balanced and subtle analysis and a willingness to question perceived wisdom.  Just because some areas of the public sector are inefficient does not mean that they all are; the same applies to efficiency in areas of the private sector.  Just because final salary pension schemes are hard to justify, it doesn't mean that all public sector benefits cannot be.  Private is not always better, but neither is public.  In modern liberal democracies there needs to be a mix of private, public and third sector organisations.  Crucially, we must remember that profit is not everything, every time.

Tyranny of the minority: A vote for AV is a vote for democracy

For those that want a more democratic Britain, a vote for the Alternative Vote on 5th May is the only option

The campaign for the Alternative Vote has continued to sink into the mire in recent days, becoming bogged down in disputes over funding and personality clashes.  As Paddy Ashdown points out, its mudslinging at its worst, attempting to distort the real debate that should be taking place.  Electoral reform is a hugely important issue that should arguably have been passed without referendum; it’s about making politics fair.  Britain has a long way to go in this area; from the monarchy to the House of Lords; AV represents another small step along the path.

The motivation to mudsling is obvious; the Alternative Vote is indisputably more democratic than the current First Past the Post system (FPTP).  Despite this, the ‘yes’ campaign have struggled to get this deceptively simple message across, instead focussing on ‘clearing up’ politics and other appears to the ire of the public in the wake of the expenses scandal.  

The ‘no’ campaign have resorted to scaremongering and smear as their arguments for FPTP cannot withstand vigorous examination.  Before considering why they are so weak, it’s important to point out the virtues of AV as an improvement on FPTP, but also note that it is far from a panacea to the ills of democracy in Britain.

The classic justification for representative democracy (whereby you elect someone to make decisions on your behalf) over other forms of government (such as dictatorship) is that it is the least worst system.  Democracy as we know it is imperfect, the best of a bad bunch as it necessitates the ‘tyranny of the majority’.  Simply, a majority of people impose their views and or beliefs on the remaining minority.  It’s an unavoidable and undesirable consequence; in a perfect pluralistic world everyone’s viewpoint and beliefs would be acknowledged and implemented.  Practically, this just doesn’t work.  But most can agree that majority rules is probably the best system available, utilised as it is in homes, playgrounds and workplaces on a daily basis across the Western world.

Sadly, FPTP actually helps to deliver a ‘tyranny of the minority’, a situation whereby a minority impose their views and beliefs on the remaining majority.  Minority rule is clearly not the best of a bad bunch.  The Labour landslide of 1997 was achieved with 43% of the popular vote; therefore 57% - a clear majority – did not vote for Labour but were saddled with Tony Blair and Gordon Brown for thirteen years. 

Under FPTP only one vote per person is counted, so more often than not where there is a plurality of candidates the vote is split so that no one person receives over 50% of the votes in any one constituency.  Therefore, the candidate with the largest minority wins, the overall majority lose. 

AV changes this; by counting second (and third, and fourth etc) preferences it ensures that over 50% of the electorate – a majority - have had a say in the result.  Their ‘say’ may be a second or third preference vote, but it is still influence over the result and some form of endorsement for the winner.  Admittedly this is not a perfect system or as fair as Proportional Representation (PR), but it’s certainly fairer than FPTP.

FPTP is an outdated system that is designed for elections in which the majority of individuals vote for two major parties.  That stopped happening in the UK from the 1980s onwards; where once 90% voted for Labour or Conservative now it’s just 65%.  It discriminates minority parties at a time when more and more choose to vote for them.  Some have derided Liberal Democrat support for electoral reform as mere self interest.  That may be the case but it is also true that a party that wins 20% of the popular vote should have 20% of the seats in parliament, not less than 10% as they currently do.  AV would not fix this anomaly entirely, but it would redress the balance at least partially.

One of the chief criticisms of AV is that it could deliver more hung parliaments and coalitions (this is a fallacy, FPTP has delivered several hung parliaments in the UK and more in Australia than AV has).  Somewhat comically, this has left David Cameron arguing against something he proclaimed barely a year ago to be positive.  The truth is, coalitions are often fairer as they consider a wider range of views; a majority of the UK voted for Conservatives or the Liberal Democrats.  Therefore a majority of the UK have been able to shape government.  And the idea that coalitions are unable to push through policy has been debunked by the success of Michael Gove’s potentially radical education policies, for example.

Supporters of FPTP also claim that cost should prevent us from implementing AV; we shouldn't switch to a system that costs more than the current one.  What they fail to point out is that having a dictator would be cheaper than FPTP, but that doesn't make it desirable. 

The other draw backs of FPTP include its ability to create MPs for life, who sit in safe seats with a comfortable largest minority.  Although AV won’t eliminate this situation, it will reduce the propensity for it to happen.  FPTP also creates an adversarial dynamic in British politics which at worst precludes and at best discourages multilateral approaches to policy.  AV will at least encourage candidates to consider the views of their opposition’s supporters in the hope of collecting second preferences.  Therefore policy will hopefully be more nuanced and considered and require robust justification.

The history of constitutional and electoral reform in Britain stretches as far back as the Magna Carta and has been a journey of incremental change for the best part of a thousand years.  The Alternate Vote is far from perfect, but it is another small improvement and a further step toward a fairer way of conducting politics in Britain.  The AV referendum should be elevated above petty concerns of giving Nick Clegg or David Cameron a kicking; the consequences of the referendum will still be reverberating long after both of their careers have ended.

What is the role of government?

Reaction to the leaked US diplomatic cables reveals an uncomfortable truth in the attitude of those elected to represent us

The perceived roles of government are diverse and differ depending on to whom you speak.  For some the role of government is to provide jobs and a stable economy, for others it’s there to support the disadvantaged and vulnerable via the welfare state, for others its simply exists to provide a stable environment in which the economy can grow and private organisations can profit; by producing a growing consumer base, a suitably educated workforce or in extremis defending the realm.  For most, it’s probably a mixture of all of the above.

On a more fundamental level the role of government is much simpler, defined by a basic principle, upon which competing interpretations of its functions and priorities compete.  For those fortunate enough to live in a representative democracy (the overwhelming majority of Europe and the Americas) the primary function of government is to represent and serve those that have elected it.  The clue is in the name and it is ultimately answerable to the electorate.  For those executive functions and personnel that are not directly elected such as civil servants, their role is to serve the elected members who appoint them to assist in the service of the electorate.  This can be viewed as a linear relationship; at the top the electorate, below them the elected members (government ministers et al) that are elected to serve their interests and directly beneath the them at the bottom are the civil service that serve the government.  It’s a simplistic model, having no place for the private sphere, but it serves to illustrate the basic structure on which modern society is built.

The leaking of US diplomatic cables and Afghanistan files by Wikileaks during recent months have called into question the nature of the relationship between citizen and government.  Government officials, media and citizens from across the US, Europe, the Middle East and beyond have sought to criticise the leaks on two fronts; that they put lives in danger and that some information should not be shared with the public.  Diplomats and civil servants should, according to this analysis, be free to operate in secrecy above and beyond the knowledge and concerns of the citizens to whom they are ultimately answerable.  This represents a significant shift from the linear structure of the relationship between citizen, government and civil service described above to something considerably more ambiguous.  This new structure more clearly resembles an inverted pyramid; the electorate at the bottom and elected officials and the civil service above, side by side.  This structure illustrates that the  government and its unelected functions operate on an equal footing and in cooperation, neither directly responsible to each other or the electorate that serve them. 

To claim that this structure exists in reality rather than in the minds of those that have sought to criticise the leaks is actually a moot point.  More importantly the whole affair demonstrates that an attitude pervades both governments and media that free sharing of information is undesirable, that those in power should not have to adhere to principles of transparency nor be answerable to those that appointed them, to whom they are responsible.  This belief that ordinary citizens are incapable of understanding nor have the right to this information betrays an inherent arrogance and more than a whiff of authoritarianism.

This attitude has been further demonstrated in the pressure applied to private organisations that have provided support to Wikileaks.  The image of the internet as independent and beyond the power of governments has been utterly shattered as state pressure has been used to prohibit the actions of citizens, specifically from gaining knowledge of those appointed to serve them.  The United States has blocked access to the Wikileaks website, Mastercard and Visa have denied their customers across the globe the right to choose whether or not to spend their money supporting an independent organisation, knowledge of corrupt practices by Pfizer and Shell, which are undoubtedly in the public interest, are viewed as state secrets that should be hidden from the public.  That much of the information leaked is of little surprise or in many cases much tamer than expected, is inconsequential.  The image rendered is of insecure governments clinging desperately to as much control as possible as it slowly ebbs away.

Sadly the shift from in attitude from the linear to the inverted pyramid model described above may never have occurred.  It is perhaps more evident that the last century represents a shift toward a less authoritarian stance as education and knowledge continued to diffuse throughout societies and across national boundaries.  The post 9/11 authoritarian tendencies were a  reaction – that have since lost momentum - to external threats of a once in a generation magnitude  and the Freedom of Information act highlighted the desire for those in power to illustrate their transparency and good intentions (though Tony Blair’s confession that he now considers it a huge mistake is perhaps a hint of how power can breed arrogance).

That progress has been made toward the synchronization of what we are lead to believe and what actually occurs in reality is simply not enough; these insights into the machinations of power only serve to highlight that much more progress must be made.  If knowledge is power, then it is imperative that these leaked documents continue to pour into the public domain.