Why nationalisation has fallen out of favour in Britain - Thoughts
I recently came across an article titled "Why nationalisation has fallen out of favour in Britain" in the Economist and thought I'd share my thoughts on it.
The article discussed the impact of nationalisation in Britain in the past, citing examples of Jeremy Corbyn’s policy to renationalise the rail network and the labour party following Margaret Thatcher's lead to sell off stakes in Britain's air-traffic control system and nuclear-energy industry, even attempting to do the same with the Royal Mint. It explains how in the 19th century, supporters of nationalisation argued that it boosted economic efficiency. Their argument suggested that having a large single company rather than many smaller privately owned ones, would increase productivity through economies of scale.
There were significant improvements in nationalising the postal system and the telegraph network, but nationalisation of the 20th century were much less successful. This was in part due to the rise in trade unions and the move towards a fully democratic political system. Politicians in the 20th century started abusing state-owned firms - cutting taxes to win elections by holding back investments in state-owned firms. A lack of competition and protection from it also meant they could make sharp wage rises in order to help governments achieve full employment in the economy.
Between the 1940’s and 1970’s when nationalisation was at its strongest, the British economy grew more slowly than its major competitors, but since the 1980’s, supply side reforms such as privatisation has accelerated economic growth.
The essence of the article suggests that privatisation benefited Britain more than nationalisation did due to the increased efficiency and innovation that competition between firms forced out. Consumers also benefited from this since prices were driven lower. I more or less agree with the article but still believe that state-owned firm’s still plays an important role in economies but mainly in industries which are natural monopolies eg.water, electricity, railway systems etc.
Link to article: