Fri Apr 6th, 2007 at 12:17:13 PM EST
Neoliberalism preaches that the Private Sector is always more "efficient" (efficient in what?) than the State, and thus privatisation and deregulation is the suggested solution to every problem (including those arising during/after privatisation and deregulation). I like to counter that the State is least efficient at privatisation.
A nice example is what happened to my own company and what is about to happen to my unit in it. I expand an earlier comment of mine here, but for those who already read it, you'll find the update at the end, with an example that for me captures the essence of capitalism.
Once upon a time, there was a state railway company. It functioned with some chronic problems and was making some loss, but at the same time, public opinion was not friendly to the idea of its privatisation, and no prospective buyers were on the horizon.
What can governments advised by neoliberals/adhering to neoliberalism do?
Until they don't dare a direct attack, the company can be subjected to
- denial of investment funds (except for projects co-funded by the EU, and those are done with lack of system awareness), while rival transport modes get major funding (highways, airports), so that there is only depreciation;
- further centralisation of decision-making, especially on those involving appropriation of funds: ostensibly for cost control, but in practice putting sand in the gears, and stifling own initiative of the lower ranks;
- constant alibi reorganisations: ostensibly towards a 'more rational' or a 'market-oriented' constellation, but in practice achieving a situation where people don't know who is responsible for what (sometimes not even what organisational unit they belong to), and workers are demoralised (you can live better even in a bad system if you can at least get to learn it);
- reductions of the workforce: ostensibly to raise productivity, in practice achieving the loss of the best people (who retire or go into a different business), operational problems where key people were spared, and of course mid-level bosses protecting their favourites and firing able men instead.
With this practice, a merely loss-making state company can be run down into a ghost of its former self in a few years. And then the hyper-hypocritical arguments can come: it is hopelessly loss-making despite our best efforts, so let's cut it up and privatise its parts!
They best leave a further few years between the cutting up (into, say, Passenger Transport, Cargo, Infrastructure) and the sell-off, because cutting up brings further de-coordination and broken-up dependencies.
This is the macro view, now for the micro view.
Despite all prior difficulties and one re-organisation a year, my small unit within the state railway company managed to mostly stay together, make a profit by also taking industry orders, and be highly productive.
But two weeks ago, we learnt of some decisions made without even consulting our low-level bosses:
- we have been transplanted from one big branch to another,
- our new owners are eyeing us for their quota for further workforce reduction (ordered by the government as part of their 'austerity programme').
The new mid-level bosses wanted us to cut workforce by a third. It didn't count that after prior reorganisations and retirements, we already reached the minimum practicable level of workforce (i.e. where for many tasks there is no replacement man), in fact we'd need more to do more contracts in parallel.
They also dismissed the argument that we make a profit – what's more, originally, with the nice manager-talk argument of streamlining the company profile, they wanted to take away our right to take on outside orders. Now that would have done wonders to company productivity... Fortunately, it now looks that after intense lobbying by our low-level bosses, the mid-levels now seem convinced that it is better for them if we make profit than if they can starve us and later dissolve our unit completely.
But dark clouds still loom over (the remaining of) us, because our new branch is an endangered species. Any sane railwayman (which today excludes all of the private-economy-imported managers and policy-making politicians/government bureaucrats) can deduce that after the other branches of the cut-up company will be privatised, they will discover that they aren't functional without parts of ours. So sooner or later, our branch will be cut up between them, and a rump will remain. Which is then an easy candidate for dissolution.
But we who remain are the lucky ones. Here is how our numbers were reduced by 30%.
Just the one working group that worked only for internal orders (yet still made a profit) was practically handed over as present to a private maintenance company (one also making profit), a former unit of the state railway long privatised. Two more guys have to go, neither of whom did our core activity, but they did some essential stuff for test runs we don't (yet) know how to do... but back from us to them, they are the unlucky ones. This week, they met their new 'owner', and were told:
- their wages will be much less than in the state company (where it wasn't too high either);
- all special privileges/aliments are gone: no domestic and foreign railway freecard, no railway hospital access, no above-salary internet and food subsidy;
- but, the new boss said that this working group asked for too little in their past contracts.
I am confident you can deduce on your own who'll benefit and how much.
I note that for my soon-to-be-former colleagues, the surprise was not in anything said, only in exploitation being so much out in the open. We already know this private company well.
The one big asset of its boss is: good connections among his former colleagues in the hierarchy (and not just in Hungary). Those connections ensure that the firm wins tenders before they are announced, even if it isn't the cheapest. While he can lease state railway facilities for beans or even for free (something we can't hope for would we be privatised). Because those involve the facilities we too use, we met and knew his workers, who often complained of their treatment (both in financial and personal terms).
As a final exercise, calculate the benefit for the State in cutting off an internal part that doesn't make a loss (and could even make profit abroad in the future) and then order its services for more than before.
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