On the privatisation of public services: An objection on principle

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Amidst all the excitement surrounding the recent privatisation of the Royal Mail, the delivery of public services has been on my mind*. It’s long given me a sense of unease watching the current government increasingly privatise our public services, and up until now I’ve been unable to put my finger on why. I’ve begun to realise that it’s essentially the contrasting bottom lines upon which private and public these sectors operate that troubles me.

Fundamentally the bottom line for private business is profit maximisation, rather than provision of quality services. To some extent the two go hand in hand, but it is crucial to acknowledge this motive for profit, because it prompts decision-making all the way down. Public services should be, as the name suggests, a service for the public, not a service provided to maximise private profit. Don’t blame the people at the top of corporates for making decisions with profit at heart, blame the legal business model (company limited by share) which means they are legally obliged to maximise shareholder profit. They’re just doing what they must.

You can see the problem in other public services e.g. provision of healthcare. There is no money in prevention, and from a business point of view prevention makes no sense – if successful enough you put yourself out of business. In contrast, there is a lot of money in pharmaceuticals though – a point made by a healthcare professional in a seminar I went to recently. In order for these pharmaceutical companies to survive they need to sell more drugs, it would be bad business if they prevented health problems from arising in the first place as they would soon find themselves out of business. There’s a real tension there between what is good for people and what is good for business.

A justification for privatising services is that competition drives up quality, and so the market naturally filters out all but the best services. There is truth in this, but it is a blinkered perspective. The market also favours companies with the best advertising, who are the best at making people feel inadequate without their product/service. The market favours companies manufacturing products with a short lifespan, so that people have to keep replacing their products every year irrespective of whether they are actually still adequate for the job (iPhone 11 anyone?). The market favours companies who use whatever methods they can get away with to maximise their shareholder profit, including exploitation and tax evasion. The market is not a barometer of what is in the best interests of the public, and a blunt tool when it comes to ethics in decision-making.

There is also the question of ownership to consider. Public services remain in the hands, in theory at least, of citizens. How do we feel about the Government of Singapore being one of the biggest shareholders in the Royal Mail?

Of course, I am in danger of taking a blinkered anti-business view myself. The private sector is less susceptible to the political infighting and jostling that can so harm public services. And it does open it up to competition, which drives up innovation and efficiency. Without this the quality of service can stagnate. Another advantage of using business to provide service for the public, is that if it is an effective service then it stands a good chance of making profit, and thereby growing as Michael Porter points out in this talk, and CSR is gradually becoming a much more fundamental part of how we do business. It is also important to acknowledge that government is responsible for regulating industries too, although it is debatable where the power of balance really lies here.

Public services have weaknesses too. They can end up as government cash cows, as occurred with our eastern rail services. The government, like business, is concerned with its economic turnover and operates each year with a budget deficit. The loans they attain from banks to make up this deficit grow in interest every year, increasing the pressure and forcing them to compromise around their implementation of public services.

In my view, social enterprise could have a crucial role to play here in the future in terms of providing a better balance of service. Community Interest Companies are worth keeping an eye on, as they balance public interest against economic goals. However, the social enterprise sector is not yet generally big enough to take on large public service contracts. B Corporations are also opening up the opportunities for business to serve the public.

Public sector, social enterprise and charity all have their flaws, but to me all are preferable models when it comes to delivering services for society compared to for profit business, simply because of the bottom line. So my objection is a philosophical one. Public services at least are somewhat democratic, and if the public are not happy they put pressure on government to improve. Charities will likely die out unless they are having a significant and demonstrable social impact now, likewise social enterprise. However business, at the moment at least, has one bottom line – maximise shareholder profit. In my view, that’s not a good enough motive from which to create a service for the public.

*This article has a good debate on the pros and cons of privatisation: http://www.independent.co.uk/voices/debate/royal-mail-privatisation-the-pros-and-cons-8814217.html

Reflections on a future free of aging

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On Saturday I attended an insightful talk by Russian scientist and aging expert Alex Zhavoronkov at Birkbeck College. The talk was titled ‘Biomedical Discoveries and the Ageless Generation’.

 

Alex talked us through the scientific breakthroughs taking place in aging research at the moment, drawing attention to successful experiments that have significantly extended the life spans of mice and house flies. He explained that our understanding of the factors that cause aging has come a long way, and that this is one of the main reasons he is so confident that the current generation of 20-40 somethings will go on to live healthy lives until 150 years old.

 

Yes, you did that right – 150. A bold prediction, but one that Alex confidently believes will come true and I’d pay attention too – he’s the expert and is really at the leading edge of this research at the moment. I won’t go in to much detail about the scientific context, but you can find out more by reading the book that Alex has recently released.

 

What I would like to do is share a few reflections I had following the talk on a possible future in which our lives are greatly extended. I’m always a bit sceptical of technological breakthroughs and all the potential they promise to transform our lives for the better. Technology has long promised this ‘life of abundance’ in which we have lots of time for leisure and family, and we are free of suffering. If anything though, I see our lives getting more stressful – indeed in Andrew Simms’ book Cancel the Apocalypse he highlights the fact that in the UK our working weeks have actually grown since the 1980s, despite all the technological development supposedly making our lives easier. The techno-optimist perspective seemed to be the dominant one though amongst the attendees. I feel that now it is more our cultural mindset and economic system that stand in the way of this easier life, rather than the technology itself. I’m not sure we’ve made much progress in these areas over the past few decades. So like any technological development, I believe prolonged lives will solve some problems, and create others.

 

First reflection: Any discussion of extending quantity of life should include a discussion of quality of life. We live in a time where ‘more is better’ is a dominant philosophy. What will we do with all these extra years? What new possibilities will they enable in our lives? A couple of friends I spoke with afterwards turned their noses up at the prospect of living an extra fifty years just to spend it all working – and this is what our economy would demand.

 

Second reflection: As someone who is rather concerned about our current overshoot of environmental resources and the consequences this will have for the future, the idea of us living longer brings some obvious worries. Of course technology could come to our rescue, but at the moment we are using up 1.4 Earths to sustain ourselves and so far technology seems to be enabling this to worsen. Ultimately, the effects of overshoot will be felt in poorer countries first, who would not be the beneficiaries of any breakthroughs in aging science. The rich will benefit, and by living longer put more demand on resources, with the impacts of this felt first in poorer countries. My concern therefore is that breakthroughs in aging science will likely increase global inequality, which is not something I am a great fan of.

 

I have to say though, I love the idea of having an extra 70 healthy years. What would you do with that time?