Friday, January 07, 2011


"Private sector" always does things better than the "public sector".


BC Mary comment: When you've read this, tell me if you can see (as I did) where a Public Inquiry might do things better than the BC Supreme Court's rendition of the BC Rail Political Corruption Trial.

The Mantra of Kevin Falcon and the BC Liberals

By Peter Ewart
Opinion 250 - December 07, 2010

One of the mantras that gets repeated a lot these days is that the "private sector" always does things better than the "public sector".

Kevin Falcon was saying just that on the Meisner Show on December 6. According to him, the sale of BC Rail was justified because CN Rail would do a "better job" than the publicly owned rail company, adding that "government is not particularly adept at running businesses".

However, the problem with repeating mantras like this is that oftentimes reality can become obscured and history ends up getting revised.

Has it been the case that the private sector has always "done it better" in regards to crown corporations like BC Rail and BC Hydro? Take for example BC Rail. History shows that, in fact, the private sector was incapable of building the provincial railway. Various attempts were made in the early part of the Twentieth Century. All failed.

It was only after government stepped in that the railway was actually built. Contrary to what Mr. Falcon is alleging, the governments of that time did a much better job than the private sector in building a railway - one that was key to the development of the province as we know it.

Over a span of decades, BC Rail expanded its operations and developed a wealth of expertise in operating a railway in the difficult climactic and geographic conditions of the BC interior. It was considered by many to be a jewel in the crown of the province. This was despite the fact that its operations and budgets were frequently interfered with and undermined by various politicians.

One of the allegations made by defence lawyers in the recent BC Rail corruption trial was that the Liberal government went out of its way to undermine the publicly-owned company so as to justify its sale to the giant U.S. company, CN Rail. And there are not a few things to back up that claim, including the cloud of misinformation that was generated over the railway's finances.

But there is another irony here also. CN Rail, which is now owned by a giant U.S. private monopoly, was itself once publicly owned - by the Canadian government. How did CN Rail originally come about? Back in the period between 1918 and 1923, many people believed that another national railway was needed (the other national railway, i.e. CP Rail, was a privately-owned monopoly).

However, many of the private companies that made up a potential national rail network had gone bankrupt, i.e., they were incapable of even being a part of another national railway, let alone building one. It was only when the federal government stepped in that CN Rail, a publicly-owned, national railway network came into being.

Despite the fact that the private CP Rail monopoly had been granted the best routes along with prize real estate and other perks, CN Rail operated successfully for over 70 years, playing a big role in the opening up of the West, as well as northern and eastern parts of the country. Although it was forced to "run money-losing lines and ... provide all kinds of unprofitable services", the railway actually made a profit in 11 out of 15 of the years between 1978 to 1992.

However, in 1995, the federal Liberal government sold off CN Rail to American investors in what author Harry Bruce termed "the Mother of All Sales" and was the biggest IPO ($2.2 billion) in Canadian history (see "The Pig That Flew"). Not reported in the establishment press of that time was that U.S. financial experts saw this sell-off as "the Mother of all Deals" and a huge windfall. In a word, it was a "gift" to foreign investors, much as the sale of BC Rail was a "gift" also.

So this is how it works. Governments of previous generations, using the public treasury, do all the heavy lifting and all the massive investment to get both CN Rail and BC Rail operational. During this time, the "private sector" sits on its hands on the sidelines.

But once the railways have been operational for some decades and become coveted investment "jewels", this same "private sector" that was incapable of building the railways in the past, now steps up to the plate to buy them at bargain basement prices. They, of course, are assisted by a modern generation of politicians who never miss an opportunity to spout the mantra that the "private sector always does it better than the public sector".

And, so it has come to pass, that two great publicly-owned railways in Canada, built with the people's money, have been scooped up by foreign financiers. History will not be kind to the crew of politicians who let this happen.

Indeed, more and more information is coming out that certain modern-day politicians in a number of countries have used underhanded methods to foster disinformation, deliberately de-valuing and destabilizing publicly owned assets and utilities in order to sell them off to foreign financiers.

There is a word for that, and no mantra can drown it out.


Peter Ewart is a writer and columnist based in Prince George, British Columbia. He can be reached at:


It's not that "governments" can't do it better...just that THIS government can't do it better!
Anyone with eyes to see and really use them can eee that these two sales--CNR and BCR--are part-n-parcel of a larger play on the grand chess board--but none will dare call it conspiracy, i'm sure.
Falcon is probably right, HIS government would screw up a wheel barrow if they were in charge of one; too many moving parts.
I find Peter Ewert very informative and enlightening. You can check his articles for "57 Online" here.

There is much of interest.

i Thought this post by Eagleone on December 7 2010 5:04 AM made a lot of sense:

"Word I've heard is the best investment one can make is in a privatized public asset or function... often they come with a built in monopoly and therefore guaranteed price maker for profits... the least risky of all investments.

Assets that have monopoly markets are almost always better for society as public entities, because then all stakeholders get a say in how they are utilized for the greater public good.

Monopoly assets under government control are what protect and ensure a vibrant private sector free enterprise market place. Without that protection in place all associated industry become vertical in its ownership and control, and the sustainability of a diverse economic base is surrendered to the greed of monopoly capitalists.

All to often these days finance comes along with debt based capital and uses the leverage of funny money to take control of strategic assets that can be used to harvest greed level profits in the name of capitalism... ignoring the many stakeholders and factors in society that make their business model profitable in the first place. A form of corporate welfare not easily recognized, because it doesn't show up on the financial statements in anything other than ownership of profits."
a few thigs need to be done and fast to save BC's economies:

Get rid of HST

Raise the drinking and driving level back to .08

Get BC Rail back to the people

Lock up Campbell
If the basics of the BC Rail sale were explained to a classroom of grade 5 students, even they could tell you it was wrong. Something the SCoBC appears not to be able to do - so much for being smarter than a 5th grader.
Privatization of public services, that generally have almost necessarily a monopoly, NEVER provides those services (at least at equivalent levels) at reduced cost - usually it costs more for less. All it ever does is redirect the monies paid to people other than those who provide the expertise and/or actual effort that provides the service.

Generally either the cost goes up or the service quality goes down, because somewhere the money has to be found to line the pockets of the uneccessary "middle/top" men poised to profit for virtually nothing other than having an in with the right folks.

The only other thing privatization, of things not suited to privatization, can accomplish is to allow government to phoney up the books to hide deficits. It's comparable to me selling my house, thus showing a personal profit, but if I continue to live in it an pay the mortgage and taxes for the new owner, how have I really benefitted unless my new owner is going to subsidize me and rent it to me for less than his costs - never mind any profit for him, which isn't the goal of the pirates who benefit from privatization.
My first experience with the privatization of a public asset was in England, August 1993 or 1994. It was hotter than the hubs of hell, and there was a shortage of water. Because why?

Because Margaret Thatcher had sold off the water rights for the City of London. The newspapers were at full tilt digging up WHY there was a shortage of water.

Well ... seems the new owners didn't care much about bringing on new sources of water, or looking after the old sources of water ... they were looking after their profits.

A very informative interlude ... because it was crystal clear, the difference between a public service and a private enterprise. Not only is the attitude different, but there's a whole new partner in a bed which, to my mind, was meant for only two.
Much the same is true with health care. In the public health care system, the government pays for all the costs of health care and we pay the govt for taxes and fees to cover these costs. With private health care, the insurance companies pays for these costs and we pay our fees to the companies. But the private insurance companies need to make a profit so they must charge more. Ergo it costs more for private coverage than the public system. I am assuming that the administrative costs are the same for both the private company and the public system. As well the private companies will do everything in their power to find ways to reduce the payment of these costs. Look at what happened in the US when Obama tried to bring in some form of public health care. The insurance companies fought very hard to stop this inroad to their monopoly. They spent billions trying to stop this. Where did they get this money? It came from their clients who paid their fees to have health insurance. If this money was devoted to paying for health care costs the premiums could be decreased. This is why public health care and other services are better in the public hands than in the hands of the privates.
I used to work for a health insurance company as an adjuster. We did everything in our power to reduce payments to our clients to increase our profits. It was because of this poor coverage that public health insurance was needed. And along came Tommy Douglas and people could live longer and healthy lives.


How grand it is when it takes a songwriter to make Canada a better place to live. :)

lessons to be learned here MSM!
I don't get the songwriter reference by 3:31AM, but then folks often aren't thinking clearly at 3:30 in the morning after Saturday night.

But regarding the comment referred to at 11:19, the former adjuster is bang on. It is well known that the US has the best health care on earth, FOR THE RICH! However for the nation as a whole they spend more, and a greater portion of the national GDP, on a health care system that provides poorer service or none to the majority of the population, than Canada or any of the European nations. Even Cuba has a health care system with better outcomes than the United States in spite of decades of economic terrorism against that island nation by successive US regimes.

Nashville is often thought of as Music City, but in actuality it is the home of the US Health Insurance/HMO industry and the real wealth in Nashville isn't in the pockets of the country music makers but the CEOs and corporate elite of the (poor)Health Industry.

The example above about privatized water in London isn't a unique example either. Before the current move to the left and a sense of social justice in most of South America (except Harper's chosen trading partner Columbia) it used to be common for privatized water lines to pass through shanty towns where people routinely died from water borne disease because they couldn't afford to buy the safe water passing by their shacks and depended instead on polluted streams and mud puddles. Many of these usually offshore "water" corporations abandoned their investments or had them nationalized because I guess there weren't enough thirsty rich folks and there was a tendency for the poor to access the water by independent means, equivalent to siphoning gas or bypassing the hydro meter.
Post a Comment

<< Home