is BBC Radio Scotland’s flagship morning news programme.
The Friday 24th October edition carried an article about how Network Rail is to assume control of routine maintenance contracts from private contractors. During the article, which was a conversation between the news ‘anchor’ Alex Bell and the BBC Transport Correspondent Tom Simons, the BBC got a chance to show it’s economic illiteracy.
BELL: “I suppose that costs will be reduced because they [Network Rail] will no longer have to pay the profit margin?”
SIMONS: “Yes, but the savings from that may not be that great…the contracts were being negotiated down anyway”
I enjoyed this exchange because it shows the marvellous ignorance from commerce which is key to success as a BBC journalist. That a private company might be capable of operating more efficiently, or with some degree of innovation even in an area like rail maintenance, simply does not come into it. On this basis you have a good argument for the nationalisation of the whole economy, so that you would not need to pay the ‘profit margin’ to companies like Easyjet, Tesco, BP and so on.
Equally strange to me was the fact that any sane person could use the terms ‘cost reductions’ and ‘Network Rail’ in the same sentence not as an obvious oxymoron. Network Rail has overseen truly breathtaking rises in costs (costs guaranteed by the taxpayer), and only a few days ago was censured by the regulator Tom Winsor for it’s wasteful performance – but that’s OK this time as we won’t be paying a profit margin. As you would expect, this point was not made during the article.
Krishnan on Channel4 News at noon, was also excited by the savings from the avoidance of meeting the private company’s profit. An argument for re-nationalisation thought Krishnan.
As Andy points out these media people put forward this argument as if they thought all profit & capitalism was a bad thing.
Are they communists, or more charitably, unthinking economic illiterates? (hope my spelling is right if I am calling others illiterate!)
Just unthinking economic illiterates, I think, with a strong aversion to the profit motive (unless of course, they find themselves making lots of money from a venture of theirs.) Remember, money’s only evil when someone else is making it.
Er, well actually they are probably (only accidentally, of course) right.
The big problem with rail privatisation was that it was accompanied by vertical fragmentation. In other words, the body who owned the track did not (in fact was effectively not allowed to) run trains or maintain the infrastructure.
For reasons that I have not entirely understood it seems that, as far as railways are concerned, vertical fragmentation is far worse than nationalisation. Even private enterprise cannot undo the damage. That is why I favour this re-integration.
One argument I hate that comes from people who hate the private sector is that “Private companies aren’t efficient because they are more interested in profit than providing a good service.” Obviously someone forgot to explain to them how capitalism works, i.e: Profit only comes from customers who pay for your service and so if you don’t provide good services you don’t get customers and so you don’t make profit.
Obviously, it’s not always as black and white as that because in some cases like the London Underground, there is no realistic alternative for some people and so they pay for it whether they get good or bad service.
However, even then, most people do have a choice: they could get a bus, drive, or, in some cases, cycle.