An odd theory but it's ours and we like it


As a result of a conversation going on elsewhere an odd little theory but as it is ours we rather like it. So, why is it that foreign state owned companies are able to run things rather well in Britain (trains, water, electricity, whatever) while when the same companies were British state owned they were appalling? It's almost as if only the British state is appalling at running things. To which we would say yes: the British state is appalling at running commercial enterprises in Britain. As if the French state in France, the German in Germany and so on. There's a tad of hyperbole there but here's the reason why.

Politicians running something (the definition of course of the state running anything) are going to run it with an eye to politics. The art of getting elected is, of course, to build a large enough coalition to get elected. This does mean pandering to various constituencies: the workforce of that state run business, the unions, the capitalists (for a different flavoured coalition) and so on. That concern over getting elected rather outpaces the single minded focus upon efficiency (and if you're cynical about capitalism, that efficiency can be in extracting profit,) that the private sector at least strives to through competition.

It's not so much that know nothing politicians inevitably screw up whatever they do. It's that the incentives for a politician running something are different given that he's got both the organisation itself to think about and all of those electoral pressures.

But that same organisation, when freed from those political concerns, might be reasonably efficient at doing whatever. So, for example, French politicians don't give a rat's ar....well, no, this is a family blog, ...don't care one whit about the political heft of British unions. In a manner that British politicians very much do. The same is true on the other side of the political ledger. Which way the media plutocrats instruct the populace to vote doesn't matter a darn for a politician in a different media market, in a different language. And no one at all has won or lost a French election on the performance of the 7.15 from Brighton to Waterloo.

The end result of this, we admit slightly odd, argument is that the British state would be just fine running the French railways, as the French state owned companies seem not bad at running portions of the British ones. Simply because being outside the political jurisdiction that elects the politicians at the top the politicians don't have those conflicted incentives and can thus allow the companies simply to run as companies, not as political arms of the state.

Or as we might also put it: by being outside the political jurisdiction that owns them allows state companies to simply be competitive companies.