Great Western Coffee Shop

From the BBC: (https://www.bbc.co.uk/news/amp/uk-politics-45609604)

Not while they support Brexit it won't happen

It will never properly renationalised (i.e Intercity, Regional, South East etc) it will just be publicly owned.

That indeed is the definition of (re)nationalisation. Owned by the State. It does not need to return to its original state

So to Labour I ask.....ooooze gonna pay for it????

And I say that as no fan of the current shambles of a set up we have now but most of that comes from the nationalised department that is the dft. Why would you want to give them even more power when they can’t even run a train set properly?

A question Labour were unable to answer this morning - as usual - along with how all the other wonderful things they are promising are going to be paid for  ::)

Labour have giving general costings for their nationalisation plans. More detailed costings would come in a manifesto.

There will, I expect, be modest increases in tax rates for middle and higher earners, and large businesses. Better enforcement of tax collection is needed too.

The difficulty will come from doing this during the prolonged depression after brexit.

They have said that rail renationalisation would be cost neutral. The 'profits' that the TOCs make will completely cover the costs! Yeah, right

It's the usual Labour economic illiteracy.

To be honest however, for as long as Corbyn is Leader it's all immaterial, he & his acolytes make them unelectable. Quite easy to promise the Earth in those circumstances.

There is no reason why a phased renationalisation should not be cost neutral.  

Network Rail is already in the public sector, and the franchises can be put in the public sector like LNER as and when they come up.  

Rolling stock leasing is another matter. They are already paying many of these charges through the TOCS. Potentially new stock could be purchased outright rather than leased as TfL have started doing. Similarly existing  stock could be bought back. In both cases the interest charges on a government loan will be lower than those paid by a leasing company so their costs should be less even without profit (Many recent rolling stock delays have been caused by manufacturers not being able to get finance, which suggests it will have been expensive).

I have not heard what they were going to do about freight and open access passenger services, but potentially those would be the only ones they need to buy that they are not already paying for in some way.    

 

If the definition of nationalisation is "Owned by the State", then I think there would be a debate to be had were we get to a state where every "franchise" were either a direct award or an LNER-style arrangement and Network Rail were effectively in the public sector, as to where "privatisation" ends and "nationalisation" begins.

Labour economic illiteracy. Oh look not so. Labour have spent less and repaid more than the Tories. You don't hear that much in the Tory press though. Here are the figures.
http://www.taxresearch.org.uk/Blog/2016/03/14/labour-have-borrowed-less-and-repaid-more-than-the-conservatives-since-1979/

Cost ? Well we know that many franchises are in trouble. What happens when they become unprofitable ? They hand them back to the state (because of course the Tories can't have private business taking risks that's only for the tax payer as per the IET purchase). So many franchises will cost nothing to renationalise. In fact the Tory model of reprivatisation with few private sector bidders left is far more costly.

So no, Labour is not proposing huge expenditure, is not economically illiterate and not unable to put large parts of the rail network back into the public sector. Lets remember that many of the private franchises are in fact public sector state railways of other EU nations that are simply charging us a premium to run our railways. Even the US has a state run railway.

In the 70's despite all the under investment we still managed to be a world leader in rail engineering with the HST (and would have been with the APT if Maggie hadn't cancelled it). Now after years of neoliberal policies from both New Labour and the Tories we have lost that - and we now see the result. Poor quality products, the loss of engineering ability in the UK, a poor and unreliable service with some of the highest fares in the world.

Yep - the Tory model is a disaster - and the people still voting Tory need to realise that most academic economists did not back the Tories austerity economics. They correctly predicted it would lead to a lot of needless suffering for the vulnerable with low growth for a decade. That is precisely what it delivered. The economy is NOT a corner shop with a necessity for a balanced budget. The fiscal system is a deficit based debt money system where 98% of all new money into the economy is created as debt. It is utterly impossible to pay the debt back under such a system - a point which seems to be not understood by many Tory voters.

Yes that is it exactly.  The current government's model is based on corner shop economics.  A corner shop does benefit by buying the cheapest product wherever it comes from. A corner shop must cut its costs to match its income or grow its income to match its costs. 

Macro-economics is slightly different. 

When I go to my local corner shop and spend £10 then and £5 is spent on wages and profit, then most of that £5 is spent in the local economy and much of that oes to pay more local wages of which most is spent in the local economy .... and so on.

So £10 spent actually grows the economy as a whole, but that does not feature in the corner shop's books.

When a government decides to buy the cheapest from abroad at the expense of its own industry then all that money goes somewhere else and it does not benefit the national economy. What is more if that results in unemployment then government will end up paying the workers to do nothing as well. So it is out of pocket!

Did I make all this up? No, I learnt it at university from a Professor of Economics. This is classic macro-economics. 

Of course this is no reason to prop up dead industries, but it is a factor that should be taken into account in procurement. Indeed - before anyone tells me it is not permitted by EU public sector procurement laws - it is permitted provided that criteria are clearly set out in the call for tenders! It is just that the UK Treasury who controls government procurement does not let departments do this! It just goes for cheapest.

Now in Preston Lancs the local council has got together with other local public sector purchasers to promote buying local where possible (e.g. school and hospital catering etc) working within the rules. And they have been able to demonstrate a benefit to the local economy, just as classical macro-economic theory suggests. 

Government stimulating the economy with public works is nothing new. One of the reasons that new road and rail construction was so popular in the 1930's and now was that it is highly labour intensive, so almost all the money is paid out in wages and so gets recycled. 

The reason that tax cuts for the rich are less effective is that they tend to keep the more of the money or spend it on imported luxury goods.

It has suited Conservative politicians from Thatcher onwards to try and present government like a Corner Shop. It does however help sell the idea of small government and that austerity is a necessary evil. But as you will see this is not good macro economics. Of course you can go too far and wreck the economy, but most countries where this has happened it was due to corruption and/or a national culture tax avoidance and evasion.

Puts hard hat on

Whilst public finances are not directly comparable to a corner shop, IMHO government spending financed from borrowing or by printing money should not be too excessive or inflation will result.

We do not want to end up like Zimbabwe, Venezuela, Argentina, and other workers paradises. All have suffered from rapid inflation.
It is an article of faith among the leaders of such countries that inflation is caused by wicked capitalist profiteers, and not by government policy.

I know that not everyone in this forum uses Twitter, but for those that do/are able to, here's an interesting debate/thread from "Rail" magazine


https://twitter.com/RAIL/status/1043886719844659201

(Click on the box with Nick Brown's name)

Perfectly highlights the mistakes of the past. Woodhead closure, Serpell Report and the close call for the Settle & Carlisle, which all came under Tory administration.

It's interesting to note from that twitter thread that there's plenty of voices who disagree with Nick Brown's sentiment.

The most pertinent response being:

"Why, and what what possible causal link would this have for the action of any future state-owned operator? Political will of a future government is not, and cannot be, determined by action in the past..."

21st century nationalisation doesn't have to mean repeating the mistakes of the past.

Absolutely agree - though the question is always how much is too much.

However, the countries you quote though the economic crisis has had other probably more important factor factors such as corruption (Transparency International Publishes a Corruption Perception Index for 180 countries for 2017 it ranks Venezuela 169, Zimbabwe 157, though Argentina is only 85 - A high number means more Corrupt). So the argument about wicked capitalist profiteers may have some substance, though sometimes those saying such things may, paradoxically be the ones doing the profiteering!

While it is true that a future government could run the railways under different policies, it will still be difficult to make radically different investment decisions unless it is willing and able to challenge the Treasury and the transport appraisal methods used to inform those decisions.  Transport appraisal is supposed to be objective, so is regarded as the Truth, rather than being a matter of policy, which is why it is very hard to change  it. However, a lot of the assumptions within appraisal,  such as how lives saved by safety improvements, or values of time savings, involve decisions that are not scientific truths but involve value judgements about society's priorities, and are therefore very political.  Appraisal is a very useful tool when comparing similar kinds of schemes, but should not be our master when deciding what sort of society we want to live in.

......or in the case of Venezuela, as our esteemed Shadow Chancellor suggested, they just weren't socialist enough!  ::)

Yes but that makes no difference whether it is private or public sector. They use the same assessment methods now. 

Yes that is what the headline in the Daily Express (https://www.express.co.uk/news/politics/910326/Davos-2018-John-McDonnell-Labour-party-Venezuela-Jeremy-Corbyn) (I know such a reliable newspaper) said, but if you actually read the article its says something quite different


Still it might not have sold as many papers if they had put that as a headline. And if they had been seen to suggest that John Macdonell was anything other than the personification of evil then would have lost their whole readership. 

They are preaching to the converted though, so it's very easy to fool them.

Thanks for that - I'm sure it wasn't (both of your) intentions to come over as quite so patronising or to make assumptions about people based on their opinions/choice of newspaper, I know it's (depressingly) the "go to" argument for certain congregations these days however I don't read the Express. I do follow a range of media and I'm able to make up my own mind.

I've seen McDonnell's comments interpreted in the same way elsewhere (you will note my use of the word "suggested") and I interpreted his speech at Davos in the same way - that Chavez wasn't "socialist enough" as he didn't sufficiently institutionalise or embed what he was doing for the long term, and instead sustained short term populist policies & used the oil reserves as a piggy bank. Different interpretations are available elsewhere.

Ultimately of course, the money ran out. It was good (for some) while it lasted - Not uncommon in these scenarios. He'd probably have liked your corner shop analogy. . I'm sure the closed factories, & the empty clinics and schools are a great comfort to those poor souls who are now eating their pets.

I don't think that too many people regard McDonnell as the "personification of evil", that's rather melodramatic .most people are more sophisticated than you give them credit for, they understand nuance, and their opinions will vary along the scale.

I don't think he's "evil". He's an idealogue. That's not evil, just naive. That's in the economic sense of course, he does/has had a somewhat problematic attitude to terrorism, but that's par for the course in the Labour leadership these days, and not for here.

However I'm one of those people who trusts and respects others to have the intelligence to weigh up differing points of view and make up their own minds, rather than label them based on their choice of media.

The great thing about opinions of course is that everyone can have one!  :)

Have a great week.

Just the other day I came across the phrase 'mic drop' - literally meaning 'to drop the microphone'. Apparently it's something that 'rappers', a kind of modern musician, do when they have performed a piece so perfectly that the microphone will no longer be necessary because all that is to be said on the subject has been said.

Sorry if this seems a bit ad hom, but "Have a great week" does sound a bit like a dropping the mic.

I'm afraid I don't have a clue what you're talking about, but next time I'm in da 'hood with my homies I will ask them if they know any MCs who can enlighten me.............before the 5-0 turn up and we scatter, naturally.

(...............if it's singing you're referring to, I can assure you that most who have heard my efforts would be urging me to "drop the microphone", even before I pick it up)  :)