Liberalisation of markets if fine, except that is not what these things led to.
I didn't realise we had multiple naval shipbuilders or a thriving marketplace of railway rolling stock manufacturers (and we don't, there are two perhaps three major players, only one of which actually has a manufacturing base on British soil).
It just leads to an oligopoly on the production of these goods with the oligarchs extracting enormous subsidies from states that don't dare do without these thigns but have an ideological hatred of simply doing it themselves.
Except that's exactly what these things have led to. It's just that we need to consider the marketplace on the global level rather than just domestically. You can't state that globalisation has led to domestic manufacturing shutting down and therefore a reduction of competition, as that completely ignores what globalisation actually
is, which is liberalisation of trade between countries, and therefore an expansion of the marketplace.
The fact that there are only three main suppliers of trains in Britain (Alstom, Bombadier and Siemens) seems to be more a result of pragmatism and politics, as those are three companies headquartered (or at least with a very large presence) within the European Union. Capital flow is considerably greater between member states, and so there are barriers against non-EU manufacturers gaining a foothold in the market; thankfully, this is something that seems to be changing.
Domestic manufacturing shutting down shouldn't actually be an issue. Just as people within a society specialise so as to maximise output, so do countries. Britain happens to excel at pharmeceuticals, media output, higher education and high-tech manufacturing. We don't do so much low-tech manufacturing and mining anymore because we cannot compete globally, and so have concentrated our resources in what we're good at. Funnily enough, we're set to become the largest economy in the EU in the next 20-30 years, and so it seems to be relatively successful.
That is an overly narrow frame of reference and you have to consider other factors such as the neccessity of maintaining an industrial capability in various strategically critical fields.
Why do you think the Royal Navy still builds ships on the clyde or Portsmouth or in Barrow (paying ridiculous premiums to BAE for the priviledge) rather than simply ordering naval vessels from the French or Korean yards that can do it cheaper and quicker?
Defence is not comparable to other industries in this and you know it; there are no security reasons for maintaining the manufacture of trains in this country. On the other hand, it would probably be a bad idea to outsource our ship-building to the Chinese.
Your point about BAE is a good one, and that's an example of where a globalised marketplace can be problematic for a small(ish) country harbouring a very large multinational corporation. However, it's pretty unique to Britain: the only other country that has defence contractors of a similar size to BAE Systems is the United States, but they have several of them. Most other countries either have state-owned companies or buy from BAE or the American companies. If that makes you think we should simply buy out BAE, though, then good luck getting them any more foreign contracts. There's very little we can do about that problem, but in the grand scheme of things it's a pretty small one.
Well in the public sector it has been pushed by senior civil servents and ministers who looked at history and realised that if a civil servent made a mistake the minister could be held accountable, but if a private company with a contract did it he was bulletproof.
30 years ago the G4S debacle would have led to heads rolling but now... nothing.
Additionally there is now an ideological commitment to the idea that the private sector is always better no matter what and that the public sector is universally full of lazy incompetents. Having worked in the private sector, including at the sharp end of public contracts I can verify that it is possibly the least efficient thing I have ever seen.
(For instance at my last job I was paid minimum wage with multipel others to knock bits of foam out of larger blocks of foam using biros when a machine I designed in my head could have replaced the lot of us with a half-full-time operator)
That's a pretty major oversimplification of all of it. Granted, in the in the Thatcher years the government was pretty zealous about pushing private over public, but that should be seen in the light of the Three Day Week, the miners' strikes etc. Today, though, the reasons against public ownership is that Britain needs to maintain its competitiveness on the global scale.
Your anecdotal evidence about lazy incompetents in the private sector is just that - what you've seen with your own eyes. That doesn't change the fact that state ownership leads to gross inefficiencies as there is very little profit motive at the top of the chain. Plus, your example of using a machine to replace a load of workers would have the unions up in arms regardless of who was trying to do it, so you can't really place the blame on the companies for that one. I'm sure whoever was running the show would have loved to if they could.
(That's not to say that I don't like unions or that I support replacing low-skilled labour en masse. In fact, I'm just the opposite, but that doesn't change the fact that this example is not an example of 'private sector inefficiency'.)
In the private sector it is partially to do with senior managers wanting rid of the actual work and simply outsourcing it to someone else to make there job easy so they can get on with building corporate fiefdoms.
Or they see these wonderful contracts offered by the outsourcing firm and fail to read the small print and get rings run around them by the outsourcing firm.
They then pay enormous sums whenever they want something that was considered to be "out of the ordinary" by managers who had no idea what work the IT department actually did that was outside its 'official' brief.
It certainly doesn't help that IT in Britain is now dominated by people who believe that a degree in Computer Science makes you a qualified Systems Engineer (and it really doesn't).
So you're saying that the problems arise from the people running the private companies being stupid, essentially? Let's come up with three different scenarios, and see which one should come up with the best result:
1) Everything in done in-house by a government-run entity. See all the problems I've mentioned above, but it can still run reasonably well without too many issues.
2) A private company outsources work to other private companies. There is a direct profit motive to make sure that they're getting the absolute best deal possible, and if any problems occur then the individuals responsible for it can be found and replaced. If a company is run by incompetents and massively overspends because of all of this, it goes bankrupt and the market vacuum means that it is quickly replaced and market equilibrium restored.
3) A government-run entity outsources to private companies. There is little profit motive on the state-owned side, meaning there is little incentive to make sure they're getting the best deal. Costs spiral, and the government has to bankroll everything.
Currently we've got situation 3), and situation 1) is unviable for all the reasons I've already stated. Therefore, why don't we merge ROSCOs and TOCs so that they can actually buy stock as and when it's actually needed rather than the complete mess we have at the moment? The government should retain track/infrastructure ownership, but the current situation is mental.
Assuming we are referring to the railway fleet in the United Kingdom, ATOC puts the current fleet of passenger rolling stock vehicles at 12,691. Lets just round that up to 12700 for the sake of simplicity.
If we assume a revenue lifetime of 25 years (it might be slightly longer than this but we also have to account for increasing passenger numbers that will mean more vehicles will be needed than simple one-for-one replacement).
That translates to 508 carriages every year.
Since that is comparable in manufacturing rate to the IEP order, which is apparently enough to justify an whole new manufacturing plant in itself, I find it hard to believe that is too small to benefit from all practical economies of scale in rolling stock production.
And then there is the fact that the cost that we paid for constructing the rolling stock would be the actual cost, rather than including profit margins for the plant's operators (as it would be the British people that operated it).
Unless you want the government to set-up several competing railway manufacturing companies that can all fight for contracts, then we have all of the same issues that I mentioned previously. There's a very good reason that domestic manufacturing went out of business (and by god it was given all the chances it could have ever wanted), which is that they're uncompetitive.
Do you really think that Alstom shut down Metro-Cammell's site out of spite, or because they weren't being profitable? The reason they weren't profitable is that they weren't offering good enough deals to customers because they couldn't produce trains cheaply enough. The government are not just outsourcing because they can, which is what you seem to think. They're doing it because they can get things at the best price, and British manufacturing just wasn't offering that.
This is not going to change anytime soon, as specialisations become more pronounced.
I am not entirely sure what you mean?
Are you saying that British workers are inherently less efficient than German ones?
Or that the magical market will somehow make the products cheaper, all else being equal, than the state owned facility that has access to lower cost capital and all that?
Not at all. I'm saying that if British manufacturing wants to compete with German companies, then they're going to have to produce things at a competitive price. As we're apparently incapable of doing that when paying workers similarly to what they might get in Germany, then wages would have to decrease.
And yes, the magical market does bring the prices down because of a little thing called
competition. Currently we're getting the worst of both worlds as I said above, but that doesn't change the fact that this is not the private sector's fault.
Competition actually brings the cost down when you have a functioning marketplace.
The rolling stock market is not a functioning marketplace since it has a small handful of significant players and the barriers to entry are absolutely enormous.
(Siemens, Bombardier, Hitachi and maybe Alstom in Britain).
Which is what I've been saying the whole time. Your objection seems to be to the private involvement, and mine is to the state. Either way, the market's not functioning.
Thats a stupidly absolutist position and you know it.
The choice is not between complete acceptance of globalisation and out-and-out autarky.
If we must either embrace globalisation utterly or suffer a collapse into North Korean esque poverty (which is what you are implying) then perhaps we should buy all our defence technology from the Russians since they can clearly do it more cheaply than we can?
Why spend huge amounts maintaining the capability to build warships in Britain, or anything else for that matter?
Why does every government on earth (apart from the British one apparently?) maintain an industrial policy that attempts to fight against many of the effects of globalisation - just look at the American system?
Is it, though? I'm not implying that we're going to descend into North Korea if we don't immediately embrace complete free-flow of capital and labour, and that we should completely disregard the social and cultural effects of this. However, what I am saying is that protectionism and state manufacturing must be used sparingly, and only in cases where the economics cannot be the only consideration at hand. You keep using the example of defence, which I agree should not be outsourced abroad in some cases (although we already buy large amounts of technology from the Americans). On the free-flow of labour, I'm hardly advocating open-borders with the rest of the world, although I'd probably support us joining Schengen.
It's also a myth to argue that every other country in the world employs protectionism and fights outsourcing. It's been as much an issue in America as it has been here, and they've only managed to maintain some semblence of domestic low-tech manufacturing because of individual states enacting protectionist policies or emergency federal bail-outs in times of nationwide economic crisis (and if you'll remember, we had the latter here, too). However, if you want to see the results of that, then I'll point you to Detroit's recent declaration of bankruptcy.
What I'm warning against is the idea that foreign manufacturing and trade need to be some sort of threat to Britain. The objections to the EU from many circles often have the caveat that they still want the free trade, so it's not like this is a politically taboo position or that it's somehow unviable.
Regulation doesn't force tendering
How exactly do you plan to have a marketplace without tendering for orders? Should companies just pick one manufacturer and stick with them? Monopsony breeds Monopoly.
See above.
No, it proves that there are several fields in which attempting to maintain a functioning marketplace is impossible because the barriers to entry are too high, the demand for items is too small and the benefits of standardisation are too great.
Standardisation is entirely possible without state-ownership. It's inoffensive and unobtrusive regulations that mean we don't get the ridiculous situation that most of our rolling stock cannot couple together.
However, saying that there are large barriers to entry and that therefore we should have state-owned manufacturing is a complete non sequitur. I do not understand why you'd take state inefficiencies and all the problems that entailed over at least some form of competition - all of these issues did not magically appear with privatisation. NR's spending has soared because of increased passenger numbers and massive infrastructure investment, and not because of rolling stock tendering.
