The Taxpayer Just Bailed Out Private Rail. Again.

The Taxpayer Just Bailed Out Private Rail. Again.


So you may have seen the relatively
minor, inconsequential news this morning of the British government effectively
nationalising the entire rail network. You can imagine how that may have gone at
the Department of Transport, “how was your morning?” “Okay we just nationalised the
entire rail infrastructure of this country.” “What was that?” “Nationalised the rail
infrastructure – the trains.” “Why would you do that? Markets after all are so
rational it’s the optimal way of allocating resources…” “Well we don’t
really believe that it’s all for public consumption the shit’s hitting the fan so
we’re gonna get the state to administer what is a vital piece of national
infrastructure.” That was the case by the way before Covid-19 happened in the
instance of rail as elsewhere. Now why has that happened? Well it’s because
the rail operators, which are private companies, they have shareholders which
run particular networks, particular lines whether it’s South East, Southern…a range of them –
two of them are already in national ownership by the way – public ownership –
East Coast main line and Northern, they are about to go bankrupt because of
course, quite rightly, passenger numbers are in freefall as a result of the
Covid-19 pandemic and of course we have ‘free market capitalism’ which means that
in the good times you get to privatise the gains, you get to privatise the profits –
there are shareholders of these companies who make money from these networks which
are actually subsidised by the taxpayer billions of pounds a year. But in the bad
times you aren’t going to go to the wall you won’t go bankrupt – we’re gonna socialise all
the losses. What person wouldn’t invest in that kind of business? What kind of
person would not invest in a rail operator? We will get profits bolstered by
taxpayer subsidies and if things go badly wrong, like a public health crisis,
don’t worry we’ll be bailed out. Does that sound reasonable to you? And it’s
the exact same story we saw with the Global Financial Crisis and the banks
after 2008 – you privatise the gains, you socialise the losses. The agreement
that’s been put out there seems that it’s got buy-in from pretty much
everybody who needs to buy into it, is that there’s going to be a small payment
given by the Department of Transport to the rail operators 2% just so they have
the incentives to carry on business as usual and all the losses, all the
revenues, of course there aren’t going to be revenues there’s no profit made when you
know passenger numbers are tanking will be paid for by the taxpayer.
How is this free-market capitalism? And then of course somebody will say
look it’s a vital piece of national infrastructure. Yeah that’s right which
is why it should be in public ownership. Which is why it shouldn’t be subject to
the maximisation of shareholder value. This is I think a supreme
example of how the economy as it’s run for decades isn’t a ‘free
market system’ by the way there isn’t really such a thing as a free market
system because the second it comes up against the limits of reality like a
financial crisis…bailout, health pandemic …bailout, climate change…bailout. It shows the limits of this way of doing things. Trains both now and before and in the future are a critical piece of public
infrastructure they should be publicly owned it is an absolute outrage that
once again these market fundamentalists who think the market is always right, the
state is always wrong, have decided to privatise those profits and to socialise
the losses if they really believe in the merits of capitalism and free markets
why don’t they put their money where their mouth is and let these companies
go to the wall and just outright nationalise every single operator. Why
because the game is rigged.

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