When Public Outperforms Private in Services

[Scuba]

http://www.nytimes.com/2013/01/16/business/when-privatization-works-and-why-it-doesnt-always.html

Few corporate sagas capture the virtues and vices of state-owned companies and private enterprise better than the drama of BP’s roller-coaster ride between failure and success. Ten years ago, BP was the darling of the energy world — the unprofitable duckling transformed by privatization under the government of Margaret Thatcher into a highly profitable swan.

The London civil servants of the 1960s and ’70s who all but ignored profitability as they issued directives across British Petroleum’s bloated corporate network were replaced by highly motivated managers who were rewarded for cutting costs, reducing risk and making money. The company’s more incongruous businesses — food production and uranium mines, for instance — were sold. Payroll was cut by more than half. Oil reserves jumped. The time it took to drill a deepwater well plummeted. Profits soared.

But then, in 2005, a BP refinery in Texas City blew up, killing 15 and injuring around 170. In 2006, a leak in a BP pipeline spilled hundreds of thousands of gallons of oil in Prudhoe Bay, Alaska. And in 2010, an explosion on the Deepwater Horizon oil rig killed 11 and resulted in the biggest offshore oil spill in the history of the United States. These days, BP’s stock trades about 25 percent below where it was before the disaster off the coast of Louisiana, about the same place it was a decade ago.

...

While in government hands, British Petroleum paid too little attention to profitability, constrained by its need to please elected officials who often cared more about keeping energy cheap and employment high. But in private hands, it may have cared about profits far too much, at the expense of other objectives. “BP veered from being a company that made sure nothing blew up to one focusing on cost-cutting at all costs,” Professor Fisman said.

Cared too little about profits and too much about keeping the public safe, protecting our environment, providing cheap energy and keeping employment high did they?

Folks, that's the case for nationalization of the oil business (and other extraction industries).

[burnsei sensei]

1. It's not poverty, it's perspective

that's sinking this country.
If we choose not to differentiate between public and private goods, we will continue to suffer.
The demand for government services is high.
There is nothing wrong with re-structuring the economy to satisfy it.
Public goods, public needs, public administration.
That doesn't mean a person can't start a business. If anything it would smooth the way.