When the public purse penalises private enterprise
| Date | 01 January 1981 |
| Published date | 01 January 1981 |
| DOI | https://doi.org/10.1108/eb057159 |
| Pages | 5-5 |
| Author | Alec Snobel |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
COMMENT
When the
public purse
penalises private
enterprise
THAT admirable champion of free enterprise, Aims, has
published a booklet in which economist Alfred Sherman,
who is also one of Mrs Thatcher's speech writers, calls for a
Minister for Denationalisation to dismantle the "vast para-
sitic apparatus" of State industry.
In a cogently argued attack, which I fully support, Mr
Sherman says that denationalisation would save the coun-
try billions of pounds yearly in subisidies. It would also
release real assets which, if properly used, could earn for
the country several times as much as they lose at present.
Nationalised industries certainly contribute significantly
to excessive government spending - an important cause of
our economic crisis - and they continue to cause national
impoverishment despite a Conservative government.
Mr Sherman believes that bringing private capital into
nationalised industries is "an expedient to be viewed with
suspicion". While nationalised firms enjoy subsidies,
monopoly powers, or privileges of any kind, bringing in
private partners is "merely to spread corruption".
Information given on the cost to the nation of State
industry is incomplete, tardy, and often designed to obs-
cure.
Declining money values of 10-25 per cent a year,
distort the real sums lost or written off; there are hidden
grants and subsidies; monopoly powers compel the public
to pay whatever prices industries care to set.
In addition, nationalised corporations have holdings in
many other companies. They own vast areas of land, mines,
mineral rights, factories, and so on, worth large sums that
could be used to reduce the national debt. These are part of
the nation's economic potential at present sterilised by
their use in loss-making activities or held surplus to need.
Nationalised industries are bad for industrial relations.
Wages, conditions and employment depend not on
economic considerations but on what can be extracted from
the government. Private employers are deterred from set-
ting up in areas where nationalised industries pay higher-
than-average wages for less-than-average effort.
Economic development is also blighted when national-
ised industries can expand and diversify backed by the
public purse. Private companies are discouraged from risk-
ing money against organisations whose financial resources
are unknown. They expect competition to be unfair and
State-owned enterprises to outbid them for land and other
resources.
True.
All sadly true. But State industry is not our only
problem. I would list others equally intractable. First, the
energy crisis, which has its origin in the power of OPEC and
the political uncertainty in the Middle East, and means
continually rising oil prices.
Then there is the collapse of certain traditional industries
- textiles, steel, shipbuilding, a lower growth in world mar-
kets,
the rise of industry in newly developed countries and
more intensive competition from Japan. Industry is also
faced with the prospect of a revolution in electronics, com-
puters and telecommunications which will change the
office, the factory and the home.
Linked with this is a widening gap between the demand
for work which is growing and the supply of jobs which is
declining. At the same time there are shortages of skilled
employees.
Socially, improved education, increased incomes and
better communications have resulted in higher expecta-
tions and demands for information, and participation in
decisions from people in their roles as workers, consumers
and citizens, so there is tension and unrest.
Thus,
as we start the New Year, we can expect continued
uncertainty and instability arising from increasing energy
prices and uncertainty of supply, static or declining markets
and increased competition both at home and abroad, infla-
tion, fluctuating interest rates and exchange rates, and
dramatic changes in technology leading to reductions in
staff.
Denationalisation itself won't solve these problems. But
it will help!
Alec Snobel, Editor
JANUARY 1981 5
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