“One need only look at England’s crisis-ridden water companies—or brave a swim in an English river flooded with sewage” to see the “disastrous effects” of privatisation, the think-tank head argues in a guest essay
economy has been subject to a giant experiment: privatisation on a scale more extensive than in almost any othercountry. Perhaps most strikingly, following the lead of Augusto Pinochet’s Chile, in 1989 the Conservative government privatised the water industry in England and Wales. This outlier status remains to this day: the majority of water infrastructure in other countries is held and managed by the public.
The practice of loading a company with debt to distribute cash to shareholders and managers is especially pronounced among private-equity owners in the water industry. However, the tension between generating strong returns for investors in uncompetitive monopoly conditions and providing high-quality, affordable infrastructure to the public is as real for publicly listed companies as it is for those owned by private equity.
Dogmatic adherence to privatisation in the face of its sustained failure suggests ideology, not pragmatism, was the motivation. Whether key infrastructure is publicly or privately owned, investment in its construction and maintenance will always ultimately be borne by taxpayers, bondholders and water customers. The question is whether we want to add to those costs the weight of shareholder payouts and the extra interest that private owners have to pay over sovereign borrowers.
Belgique Dernières Nouvelles, Belgique Actualités
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