Thatcher wouldn't Adam'n'Eve it
September 12, 2013 6:40 AM Subscribe
After 500 years, the government of David Cameron has announced the unthinkable: from as early as today a majority stake in the Royal Mail of the United Kingdom of Great Britain and Northern Ireland will be put up for sale into private hands. Some are not happy.
The sale is expected to fetch between US$3-4.7 billion.
But what does it mean? Should you invest? And what does it mean for other postal systems in, say, Australia or the USA?
Postal services have been benefiting from the rise in online shopping, even as traditional mail declines.
I hope the USPS buys it.
posted by escabeche at 6:42 AM on September 12, 2013 [10 favorites]
posted by escabeche at 6:42 AM on September 12, 2013 [10 favorites]
Oh, this should go about as well as the Chicago parking meters being privatized. A one time influx of cash goes away pretty quickly, even billions of dollars. In Chicago, we've watched rates rise on the meters steadily and the company that took them over rake in the profits, increasing with each year - the city is out any potential profit and Chicago Parking Meters LLC is laughing all the way to the bank, I'm sure. No one thinks about the long game anymore. I couldn't help thinking about the parking meters when I heard about this.
posted by IvoShandor at 6:45 AM on September 12, 2013 [34 favorites]
posted by IvoShandor at 6:45 AM on September 12, 2013 [34 favorites]
ooh - the way they structured this is very bad not good at all once the post offices are forced to allow third party mail services. and don't kid yourself - that will happen.
posted by JPD at 6:45 AM on September 12, 2013
posted by JPD at 6:45 AM on September 12, 2013
Oh, this should go about as well as the Chicago parking meters being privatized. A one time influx of cash goes away pretty quickly, even billions of dollars. In Chicago, we've watched rates rise on the meters steadily and the company that took them over rake in the profits, increasing with each year - the city is out any potential profit and Chicago Parking Meters LLC is laughing all the way to the bank, I'm sure. No one thinks about the long game anymore. I couldn't help thinking about the parking meters when I heard about this.
totally different game here. not remotely the same thing. The problem with the chicago parking meter deal was basically the price they paid and how the tariff increases were structured. There is nothing like that here.
posted by JPD at 6:47 AM on September 12, 2013
totally different game here. not remotely the same thing. The problem with the chicago parking meter deal was basically the price they paid and how the tariff increases were structured. There is nothing like that here.
posted by JPD at 6:47 AM on September 12, 2013
So the entire UK postal system is only worth 3 or 4 Instagrams?
posted by octothorpe at 6:50 AM on September 12, 2013 [2 favorites]
posted by octothorpe at 6:50 AM on September 12, 2013 [2 favorites]
The problem with the chicago parking meter deal was basically the price they paid and how the tariff increases were structured. There is nothing like that here.
I certainly hope that's the case, I still couldn't help thinking of it when I heard about this.
posted by IvoShandor at 6:54 AM on September 12, 2013
I certainly hope that's the case, I still couldn't help thinking of it when I heard about this.
posted by IvoShandor at 6:54 AM on September 12, 2013
This sale is made possible by the state - ie, the British taxpayer - taking on the Royal Mail's (very sizeable) pension liabilities. Profit gets privatised, debt gets nationalised. Just like the banks.
posted by WPW at 6:57 AM on September 12, 2013 [30 favorites]
posted by WPW at 6:57 AM on September 12, 2013 [30 favorites]
So the entire UK postal system is only worth 3 or 4 Instagrams?
But you can't touch an Instagram. It's like a fairy or a unicorn: priceless.
posted by Mezentian at 6:57 AM on September 12, 2013
But you can't touch an Instagram. It's like a fairy or a unicorn: priceless.
posted by Mezentian at 6:57 AM on September 12, 2013
totally different game here. not remotely the same thing. The problem with the chicago parking meter deal was basically the price they paid and how the tariff increases were structured. There is nothing like that here.
It will be some other sort of clusterfuck - for example, the recent hullaballoo in DC over private tax collectors.
I'm trying to think of a time when privatizing a public service has gone well, and I just can't come up with any. Costs go up while service goes down.
It's almost as though there has to be room for profit in addition to the cost of service delivery.
posted by Pogo_Fuzzybutt at 6:58 AM on September 12, 2013 [9 favorites]
It will be some other sort of clusterfuck - for example, the recent hullaballoo in DC over private tax collectors.
I'm trying to think of a time when privatizing a public service has gone well, and I just can't come up with any. Costs go up while service goes down.
It's almost as though there has to be room for profit in addition to the cost of service delivery.
posted by Pogo_Fuzzybutt at 6:58 AM on September 12, 2013 [9 favorites]
No no - this is way worse.
The chicago thing shouldn't have been bad. It was just mispriced and misstructured, but this deal with the privatization of the royal mail ex-post offices is a debacle at any price.
posted by JPD at 6:58 AM on September 12, 2013 [7 favorites]
The chicago thing shouldn't have been bad. It was just mispriced and misstructured, but this deal with the privatization of the royal mail ex-post offices is a debacle at any price.
posted by JPD at 6:58 AM on September 12, 2013 [7 favorites]
The chicago thing shouldn't have been bad. It was just mispriced and misstructured, but this deal with the privatization of the royal mail ex-post offices is a debacle at any price.
Gotcha, just a commo glitch between us, I misunderstood your post. Thanks for clarifying.
posted by IvoShandor at 7:00 AM on September 12, 2013
Gotcha, just a commo glitch between us, I misunderstood your post. Thanks for clarifying.
posted by IvoShandor at 7:00 AM on September 12, 2013
As a resident of Victoria, Australia who is living under my 13th or so year of privatised electricity and gas, can I just say how utterly shit it is. Prices rise, services decline, and my phone runs hot with young people from Mumbai representing a dizzying myriad of private utilities asking me to switch supplier to save but a few cents in only the most exceptional circumstances over the shortest possible time.
Privatisation of utility is a croc I tells ya. The consumer don't win.
posted by Mario Speedwagon at 7:01 AM on September 12, 2013 [12 favorites]
Privatisation of utility is a croc I tells ya. The consumer don't win.
posted by Mario Speedwagon at 7:01 AM on September 12, 2013 [12 favorites]
I mean, who uses post offices and snail mail anymore, amirite?
posted by wuwei at 7:01 AM on September 12, 2013
posted by wuwei at 7:01 AM on September 12, 2013
This article from the London Review of Books about the privatisation of the postal services in the Netherlands is a must read in this context. Summary: it's good for capital, it's absolute shite for postal workers and makes using a physical service for your mail an even shittier option.
posted by Marcc at 7:02 AM on September 12, 2013 [1 favorite]
posted by Marcc at 7:02 AM on September 12, 2013 [1 favorite]
Profit gets privatised, debt gets nationalised. Just like the banks.
do be fair that debt was already nationalized. The argument is that the royal mail in government hands has a negative PV w/o the pension liabilities, but that once nationalized "the magic of the invisible hand" will allow it become lean and mean and profitable.
In reality what you've got is an entity with a massive embedded cost base that will eventually be forced to compete with smaller lower cost entities focused on skimming off the most profitable bits of their business. So you'll have to basically fire everyone - and then you still won't succeed.
And yes, that LRB article is quite good. In fact I've linked it in other postal privatization threads. And what happened in the NL is actually better than what will happen here.
posted by JPD at 7:03 AM on September 12, 2013
do be fair that debt was already nationalized. The argument is that the royal mail in government hands has a negative PV w/o the pension liabilities, but that once nationalized "the magic of the invisible hand" will allow it become lean and mean and profitable.
In reality what you've got is an entity with a massive embedded cost base that will eventually be forced to compete with smaller lower cost entities focused on skimming off the most profitable bits of their business. So you'll have to basically fire everyone - and then you still won't succeed.
And yes, that LRB article is quite good. In fact I've linked it in other postal privatization threads. And what happened in the NL is actually better than what will happen here.
posted by JPD at 7:03 AM on September 12, 2013
Has privatization ever worked out in favor of the consumer/taxpayer?
I strongly suspect not.
posted by five fresh fish at 7:06 AM on September 12, 2013 [7 favorites]
I strongly suspect not.
posted by five fresh fish at 7:06 AM on September 12, 2013 [7 favorites]
Roy Mayall (geddit?) is a good source for insider stuff on the post office, but he seems to have stopped blogging & writing.
posted by DanCall at 7:10 AM on September 12, 2013
posted by DanCall at 7:10 AM on September 12, 2013
Cable said privatisation was necessary to "secure a healthy future for the company". The government says Royal Mail must be sold so that it can borrow private money and not compete against schools and hospitals for public funds.So, it looks like the interest rate on 10 year UK government bonds is around 3% and they aren't having any problems selling them. The Royal Mail TM is going to do better on the private market?
Of all the justifications for privatizing this is always the most laughable. (see Obama's "Infrastructure Bank")
posted by ennui.bz at 7:10 AM on September 12, 2013 [1 favorite]
I hope the USPS buys it
That kind of acquisition sounds right up the NSA's alley.
posted by ghharr at 7:10 AM on September 12, 2013 [4 favorites]
That kind of acquisition sounds right up the NSA's alley.
posted by ghharr at 7:10 AM on September 12, 2013 [4 favorites]
Mail handlers should take advantage of a very simple need. If someone knows they have mail almost arriving, they will often pay a premium to get it sooner than later. They should be notified when the mail is first logged into the system and be given the opportunity to add value to the service.
posted by Brian B. at 7:10 AM on September 12, 2013
posted by Brian B. at 7:10 AM on September 12, 2013
Our public water company was acquired by a private Australian investment bank called Macquarie in 2006. Rates have risen 31% since and they have proposed another 23% rate increase this year. Selling off public utilities to private interests does nothing but benefit the current politician in charge - giving him a short-term slush fund that he almost invariably funnels to other private interests and benefactors while the municipality suffers the long term effects.
posted by any major dude at 7:13 AM on September 12, 2013 [7 favorites]
posted by any major dude at 7:13 AM on September 12, 2013 [7 favorites]
That's only happened every single time in the UK, there's no proof it will happen again!
posted by Artw at 7:15 AM on September 12, 2013 [16 favorites]
posted by Artw at 7:15 AM on September 12, 2013 [16 favorites]
If it goes anything like the privatisation of the UK's power companies, it'll probably end up being being owned by another European country's national postal service.
posted by pipeski at 7:17 AM on September 12, 2013 [2 favorites]
posted by pipeski at 7:17 AM on September 12, 2013 [2 favorites]
The chicago thing shouldn't have been bad. It was just mispriced and misstructured...
Except that pricing for parking is only partly about raising money, it's also about managing a scarce resource "parking" so that it benefits everyone. There was no reason to think that a private cartel was going to manage this resource to benefit anyone other than themselves. If the deal has explicit price controls then what's the point? Are the emirates and their hedge funds really going to manage meter maids more efficiently?
It was always a terrible idea regardless of how much money Chicago made from the deal.
posted by ennui.bz at 7:18 AM on September 12, 2013 [1 favorite]
Except that pricing for parking is only partly about raising money, it's also about managing a scarce resource "parking" so that it benefits everyone. There was no reason to think that a private cartel was going to manage this resource to benefit anyone other than themselves. If the deal has explicit price controls then what's the point? Are the emirates and their hedge funds really going to manage meter maids more efficiently?
It was always a terrible idea regardless of how much money Chicago made from the deal.
posted by ennui.bz at 7:18 AM on September 12, 2013 [1 favorite]
Our public water company was acquired by a private Australian investment bank called Macquarie in 2006.
I'm sorry.
I am so, so sorry.
As an Australian I declaim any relationship with that pyramid scheme known as MacBank.
posted by Mezentian at 7:18 AM on September 12, 2013 [1 favorite]
I'm sorry.
I am so, so sorry.
As an Australian I declaim any relationship with that pyramid scheme known as MacBank.
posted by Mezentian at 7:18 AM on September 12, 2013 [1 favorite]
The argument is that the royal mail in government hands has a negative PV w/o the pension liabilities, but that once nationalized "the magic of the invisible hand" will allow it become lean and mean and profitable.
The Chicago event this really reminds me of is the privatization of the CTA's fare collection. Lot of handwaving going on there, too.
posted by Steely-eyed Missile Man at 7:18 AM on September 12, 2013
The Chicago event this really reminds me of is the privatization of the CTA's fare collection. Lot of handwaving going on there, too.
posted by Steely-eyed Missile Man at 7:18 AM on September 12, 2013
UK Privatisation - the greatest hits
Rail - deadly accidents attributable directly to lax safety standards brought on by privatisation, endless inflation-busting fare hikes, a bizarre franchising system in which the taxpayer takes the risk, and an even more bizarre system of leasing train stock.
Energy - Inflation-busting bill hikes, and err... nationalisation of the infrastructure and a good chunk of the retail market by France.
Telecoms - Inflation-busting bill hikes. To be fair, British Telecom was always shit, they just export it now to other countries.
Water - Inflation busting-bill hikes. Better water quality.
Welfare payment administration - Hire private companies to target disabled people, preferably the really disabled ones who won't fight back.
Royal Mail - Well, it's early days, but what could go wrong?!!?!?!!
posted by TheAlarminglySwollenFinger at 7:18 AM on September 12, 2013 [20 favorites]
Rail - deadly accidents attributable directly to lax safety standards brought on by privatisation, endless inflation-busting fare hikes, a bizarre franchising system in which the taxpayer takes the risk, and an even more bizarre system of leasing train stock.
Energy - Inflation-busting bill hikes, and err... nationalisation of the infrastructure and a good chunk of the retail market by France.
Telecoms - Inflation-busting bill hikes. To be fair, British Telecom was always shit, they just export it now to other countries.
Water - Inflation busting-bill hikes. Better water quality.
Welfare payment administration - Hire private companies to target disabled people, preferably the really disabled ones who won't fight back.
Royal Mail - Well, it's early days, but what could go wrong?!!?!?!!
posted by TheAlarminglySwollenFinger at 7:18 AM on September 12, 2013 [20 favorites]
the recent hullaballoo in DC over private tax collectors
wait what
what the actual fuck
posted by curious nu at 7:19 AM on September 12, 2013 [1 favorite]
wait what
what the actual fuck
posted by curious nu at 7:19 AM on September 12, 2013 [1 favorite]
Yes! Let's let churches educate our children, warring insurance companies fight our fires with their own engines, profit making companies sell us our drinking water ... and discover very soon just why state intervention in these areas was ever thought necessary. I mean what (other than a bit of cholera, corruption, and illiteracy) could possibly go wrong, right? And private fire companies are so cute when they fist-fight one another for the right to fight the fire rather than, you know, putting out the flames.
posted by Sonny Jim at 7:21 AM on September 12, 2013 [1 favorite]
posted by Sonny Jim at 7:21 AM on September 12, 2013 [1 favorite]
wait what
what the actual fuck
Read it and weep.
That government of the corporations, by the corporations, for the corporations, shall not perish from the earth.
posted by longdaysjourney at 7:22 AM on September 12, 2013 [2 favorites]
TheAlarminglySwollenFinger: "Welfare payment administration - Hire private companies to target disabled people, preferably the really disabled ones who won't fight back."
Yep, to the Tories, vulnerable people committing suicide as a direct result of their policies is a feature, not a bug.
posted by ArmyOfKittens at 7:27 AM on September 12, 2013 [3 favorites]
Yep, to the Tories, vulnerable people committing suicide as a direct result of their policies is a feature, not a bug.
posted by ArmyOfKittens at 7:27 AM on September 12, 2013 [3 favorites]
Actually just yesterday saw an actual screenshot on Twitter from a person in the UK who has cerebral palsy - according to this letter their benefits payments are being affected because their medical condition will improve. W the actual F ...
posted by GallonOfAlan at 7:30 AM on September 12, 2013 [1 favorite]
posted by GallonOfAlan at 7:30 AM on September 12, 2013 [1 favorite]
Moist Von Lepwig wept.
posted by The Whelk at 7:31 AM on September 12, 2013 [5 favorites]
posted by The Whelk at 7:31 AM on September 12, 2013 [5 favorites]
The only good thing about the Chicago parking plan is that my city saw what happened and decided to run away from a similar deal. So thank you windy city for being a bad example for the rest of us.
posted by octothorpe at 7:35 AM on September 12, 2013
posted by octothorpe at 7:35 AM on September 12, 2013
The claim of 500 years is a bit open to debate, I'd have thought. OK, there's been some kind of postal service over that period, but it's been through many changes of legal status. In 2001, to name but one, it became a plc and marketing fuckwits renamed it Consignia for a while.
posted by Segundus at 7:38 AM on September 12, 2013
posted by Segundus at 7:38 AM on September 12, 2013
That kind of acquisition sounds right up the NSA's alley.
Why buy the cow when you already get the milk for free?
posted by strangely stunted trees at 7:39 AM on September 12, 2013
Why buy the cow when you already get the milk for free?
posted by strangely stunted trees at 7:39 AM on September 12, 2013
Read it and weep.
Jesus.
This article is, however, not fair and balanced:
“Where is the justice? They’re taking people’s lives,” said Beverly Smalls, whose elderly aunt lost her home in Northeast Washington. “It’s just not right.”
Okay, so people are losing their homes over trifling outstanding amounts of $50 or $100, but the crucial thing to keep our eyes on here is that these private companies are creating value for the shareholder. hamburger
posted by ricochet biscuit at 7:39 AM on September 12, 2013
Jesus.
This article is, however, not fair and balanced:
“Where is the justice? They’re taking people’s lives,” said Beverly Smalls, whose elderly aunt lost her home in Northeast Washington. “It’s just not right.”
Okay, so people are losing their homes over trifling outstanding amounts of $50 or $100, but the crucial thing to keep our eyes on here is that these private companies are creating value for the shareholder. hamburger
posted by ricochet biscuit at 7:39 AM on September 12, 2013
Royal Mail already does a great deal of grunt work for many of the private carriers in the UK. I wonder how privatization will play out for the private delivery businesses that contracted part of their distribution out to Royal Mail. Will they get locked out if they don't buy it? Will they now have to build parallel infrastructure?
Royal Mail was awesome for me when I was in the UK. I shipped over a thousand packages and only two got lost and those were to other countries and probably lost abroad.
USPS on the other hand just sent me confirmation of my change of address forwarding this week. 5 weeks after I moved and 8 weeks after I filled out my change of address form. I still haven't received a single forwarded piece of mail and I don't really expect to.
posted by srboisvert at 7:40 AM on September 12, 2013 [1 favorite]
Royal Mail was awesome for me when I was in the UK. I shipped over a thousand packages and only two got lost and those were to other countries and probably lost abroad.
USPS on the other hand just sent me confirmation of my change of address forwarding this week. 5 weeks after I moved and 8 weeks after I filled out my change of address form. I still haven't received a single forwarded piece of mail and I don't really expect to.
posted by srboisvert at 7:40 AM on September 12, 2013 [1 favorite]
It was always a terrible idea regardless of how much money Chicago made from the deal.
Terrible for Chicago, but Daley got his next job working for the legal firm that handled the deal. So there is always that
posted by srboisvert at 7:44 AM on September 12, 2013 [1 favorite]
Terrible for Chicago, but Daley got his next job working for the legal firm that handled the deal. So there is always that
posted by srboisvert at 7:44 AM on September 12, 2013 [1 favorite]
The claim of 500 years is a bit open to debate, I'd have thought.
Via the wiki :The Royal Mail can trace its history back to 1516, when Henry VIII established a "Master of the Posts", a post which in 1710 was renamed as "Postmaster General".
Seems pretty solid rationale to me.
posted by Mezentian at 7:45 AM on September 12, 2013 [1 favorite]
Via the wiki :The Royal Mail can trace its history back to 1516, when Henry VIII established a "Master of the Posts", a post which in 1710 was renamed as "Postmaster General".
Seems pretty solid rationale to me.
posted by Mezentian at 7:45 AM on September 12, 2013 [1 favorite]
The only good thing about the Chicago parking plan is that my city saw what happened and decided to run away from a similar deal. So thank you windy city for being a bad example for the rest of us.
Go! Pitt! Go!
posted by Slackermagee at 7:47 AM on September 12, 2013
Go! Pitt! Go!
posted by Slackermagee at 7:47 AM on September 12, 2013
longdaysjourney: "Read it and weep. "
It's unbelievably shitty, but the loophole that allowed it to happen will likely be closed this week. DC might be corrupt as hell, but we're not beholden to the financial industry. This scandal royally pissed off DC's senior citizens, who are arguably the most powerful and mobile voting bloc in the city.
Really, it's a different kind of scandal, because nobody in their right mind supports the state of affairs that led to banks seizing seniors' homes over $47 debts. On the other hand, privatization programs enjoy widespread popularity, in spite of a truly godawful track record.
posted by schmod at 8:08 AM on September 12, 2013 [1 favorite]
It's unbelievably shitty, but the loophole that allowed it to happen will likely be closed this week. DC might be corrupt as hell, but we're not beholden to the financial industry. This scandal royally pissed off DC's senior citizens, who are arguably the most powerful and mobile voting bloc in the city.
Really, it's a different kind of scandal, because nobody in their right mind supports the state of affairs that led to banks seizing seniors' homes over $47 debts. On the other hand, privatization programs enjoy widespread popularity, in spite of a truly godawful track record.
posted by schmod at 8:08 AM on September 12, 2013 [1 favorite]
Looking forward to the sell-off of the NHS. Then we can all move to France.
posted by blue_beetle at 8:09 AM on September 12, 2013
posted by blue_beetle at 8:09 AM on September 12, 2013
The first issue with the postal service is that the government are using privatisation as a means of leverage on the unions. The second issue is that how privatisation is implemented matters.
We already have some of the steps to privatisation: we have third party mail handlers already who use Royal Mail for the final mile. In my area TNT are already providing a trial mail service including delivery to the door. We also have a large number of final mile courier companies delivering packages as an adjunct to Royal Mail, which is hugely inefficient. I should add also that the cost of stamps has already shot up ahead of inflation in preparation for privatisation, having run below inflation for the previous 25 years. We also now have a weight/size costing system rather than just costing by weight - a small step away from universal pricing and towards the kind of tiering and complication of pricing possible in a privatised environment.
In the case of the postal service specifically, cherry picking the cheap parts is easy to do. Business mail to urban centres costs very little because it's easy to handle and efficient to deliver. Personal mail to and from outlying rural areas is expensive.
I doubt universal pricing, i.e. the delivery of a piece of mail from anywhere in the country to anywhere in the country for a single price, can survive privatisation, whatever the government says. It's unsustainable in a privatised environment unless there are radical changes to the service itself - i.e. delivering less frequently to rural areas and/or it is safeguarded in legislation - which it is, until 2022 only.
You can read this many ways, including as a shot across the bows of the SNP. Scotland is the expensive most postal area to service. The cost of sending mail to and from Scotland will be much more expensive in a deregulated privatised environment. The less affected areas will be the southeast, where population densities are higher. This is, not uncoincidentally, the heartland of Tory voters.
One outcome for privatisation and one possible salvation for the Royal Mail is that it will enable them to compete more aggressively for mail sorting and final mile delivery. They already have the infrastructure to do this, of course. An obvious barrier is that the unions resist change - the 2007 strikes particularly, under a Labour government, were an example of this - with accusations from Royal Mail of 'Spanish Practices' and disputes over the flexibility of how postal workers work in addition to usual and well founded concerns from the other side over the erosion of pay, pensions and jobs.
If a new, streamlined, Royal Mail can achieve success, it is a given that no small part of those efficiencies will come from a streamlined workforce and less generous pay and compensation for postal workers as well as changes to working conditions. Postal workers intuitively understand this, which is why they are so vehemently opposed.
This is, basically, British industrial relations for the past 40 years in a nutshell. Unions, where they are strong, tend not to give an inch and defend edge/wedge case practices. Hardline bedwetting Tories who keep pictures of Milton Friedman oiling up Margaret Thatcher on their nightstands need no excuse to push privatisation and use union intransigence as a gotcha. Babies are thrown out with the bathwater and the unions lose. I am sympathetic to the unions - decent pay and working conditions are admirable, and the right, things to fight for - but they have learnt almost nothing about how to fight and win political battles.
posted by MuffinMan at 8:11 AM on September 12, 2013 [8 favorites]
We already have some of the steps to privatisation: we have third party mail handlers already who use Royal Mail for the final mile. In my area TNT are already providing a trial mail service including delivery to the door. We also have a large number of final mile courier companies delivering packages as an adjunct to Royal Mail, which is hugely inefficient. I should add also that the cost of stamps has already shot up ahead of inflation in preparation for privatisation, having run below inflation for the previous 25 years. We also now have a weight/size costing system rather than just costing by weight - a small step away from universal pricing and towards the kind of tiering and complication of pricing possible in a privatised environment.
In the case of the postal service specifically, cherry picking the cheap parts is easy to do. Business mail to urban centres costs very little because it's easy to handle and efficient to deliver. Personal mail to and from outlying rural areas is expensive.
I doubt universal pricing, i.e. the delivery of a piece of mail from anywhere in the country to anywhere in the country for a single price, can survive privatisation, whatever the government says. It's unsustainable in a privatised environment unless there are radical changes to the service itself - i.e. delivering less frequently to rural areas and/or it is safeguarded in legislation - which it is, until 2022 only.
You can read this many ways, including as a shot across the bows of the SNP. Scotland is the expensive most postal area to service. The cost of sending mail to and from Scotland will be much more expensive in a deregulated privatised environment. The less affected areas will be the southeast, where population densities are higher. This is, not uncoincidentally, the heartland of Tory voters.
One outcome for privatisation and one possible salvation for the Royal Mail is that it will enable them to compete more aggressively for mail sorting and final mile delivery. They already have the infrastructure to do this, of course. An obvious barrier is that the unions resist change - the 2007 strikes particularly, under a Labour government, were an example of this - with accusations from Royal Mail of 'Spanish Practices' and disputes over the flexibility of how postal workers work in addition to usual and well founded concerns from the other side over the erosion of pay, pensions and jobs.
If a new, streamlined, Royal Mail can achieve success, it is a given that no small part of those efficiencies will come from a streamlined workforce and less generous pay and compensation for postal workers as well as changes to working conditions. Postal workers intuitively understand this, which is why they are so vehemently opposed.
This is, basically, British industrial relations for the past 40 years in a nutshell. Unions, where they are strong, tend not to give an inch and defend edge/wedge case practices. Hardline bedwetting Tories who keep pictures of Milton Friedman oiling up Margaret Thatcher on their nightstands need no excuse to push privatisation and use union intransigence as a gotcha. Babies are thrown out with the bathwater and the unions lose. I am sympathetic to the unions - decent pay and working conditions are admirable, and the right, things to fight for - but they have learnt almost nothing about how to fight and win political battles.
posted by MuffinMan at 8:11 AM on September 12, 2013 [8 favorites]
Surely it would be fruitful to consider how "internal markets" and privatization have worked for the NHS.
Oh, this should go about as well as the Chicago parking meters being privatized. A one time influx of cash goes away pretty quickly, even billions of dollars. In Chicago, we've watched rates rise on the meters steadily and the company that took them over rake in the profits, increasing with each year - the city is out any potential profit and Chicago Parking Meters LLC is laughing all the way to the bank, I'm sure. No one thinks about the long game anymore. I couldn't help thinking about the parking meters when I heard about this.
The whole point of these things is to loot government. Prices do not decline when things are moved to the private sector, because you've added layers and layers of profit-seeking, fees and a whole different set of managers, many of whom expect to make the big bucks. It's just that those are "normal" roles, while being, for example, a senior civil servant and taking home a whopping $60,000 a year plus pension is abnormal, lazy and sucking on the government teat. This is why, for instance, Medicare and Medicaid are pretty efficient compared to private sector health care. You also remove accountability when you get outside the state.
I mean for fuck's sake, I'm an anarchist and I disapprove of all this nonsense.
Anyway, the point is that the government is basically a "frontier", or a subject of enclosure. It's too corrupt to protect its own people - it has a comprador class at its head, eager to sell itself off for short term profits and connections for the few.
Capitalism requires frontiers and enclosures (basically, colonization and theft, even if actual land is not involved). We've mostly closed the physical frontier; all that's left is looting the precious human structures that have been built up to serve the majority.
posted by Frowner at 8:12 AM on September 12, 2013 [13 favorites]
Oh, this should go about as well as the Chicago parking meters being privatized. A one time influx of cash goes away pretty quickly, even billions of dollars. In Chicago, we've watched rates rise on the meters steadily and the company that took them over rake in the profits, increasing with each year - the city is out any potential profit and Chicago Parking Meters LLC is laughing all the way to the bank, I'm sure. No one thinks about the long game anymore. I couldn't help thinking about the parking meters when I heard about this.
The whole point of these things is to loot government. Prices do not decline when things are moved to the private sector, because you've added layers and layers of profit-seeking, fees and a whole different set of managers, many of whom expect to make the big bucks. It's just that those are "normal" roles, while being, for example, a senior civil servant and taking home a whopping $60,000 a year plus pension is abnormal, lazy and sucking on the government teat. This is why, for instance, Medicare and Medicaid are pretty efficient compared to private sector health care. You also remove accountability when you get outside the state.
I mean for fuck's sake, I'm an anarchist and I disapprove of all this nonsense.
Anyway, the point is that the government is basically a "frontier", or a subject of enclosure. It's too corrupt to protect its own people - it has a comprador class at its head, eager to sell itself off for short term profits and connections for the few.
Capitalism requires frontiers and enclosures (basically, colonization and theft, even if actual land is not involved). We've mostly closed the physical frontier; all that's left is looting the precious human structures that have been built up to serve the majority.
posted by Frowner at 8:12 AM on September 12, 2013 [13 favorites]
Royal Mail are terrible ("couldn't find" my address yesterday, returned package to sender - in a highly populated area of London - really?!) but this isn't going to improve it remotely, and it won't even save taxpayers any money, medium-long term.
Sigh.
posted by dickasso at 8:20 AM on September 12, 2013
Sigh.
posted by dickasso at 8:20 AM on September 12, 2013
The problem with deals between the private sector and the public sector is that the people bargaining for the private sector have skin in the game. They will personally be better off of they negotiate effectively. Although the people bargaining for the public sector have an incentive not to embarrass themselves, they don't have nearly as much incentive to drive a hard bargain and sometimes have an incentive to provide a sweetheart deal to the private sector, as the private player can offer future employment or other legal bribes. I would be surprised if this deal works out in favor of the British taxpayer. Not impossible, but unlikely.
posted by vorpal bunny at 8:29 AM on September 12, 2013 [1 favorite]
posted by vorpal bunny at 8:29 AM on September 12, 2013 [1 favorite]
Are there any historical cases where this sort of thing worked out well for the taxpayer?
I wasn't able to find any. The closest I came were various sales of limited resources, like bandwidth. For example, the sale of the wireless bandwidth to Vodaphone was at a near-ruinous price for that company - BUT this didn't involve selling off a fully-formed business but selling a raw commodity for exploitation, one that the government hadn't invested a penny in.
Barring any examples of this working properly, how could this possibly work?
posted by lupus_yonderboy at 8:45 AM on September 12, 2013
I wasn't able to find any. The closest I came were various sales of limited resources, like bandwidth. For example, the sale of the wireless bandwidth to Vodaphone was at a near-ruinous price for that company - BUT this didn't involve selling off a fully-formed business but selling a raw commodity for exploitation, one that the government hadn't invested a penny in.
Barring any examples of this working properly, how could this possibly work?
posted by lupus_yonderboy at 8:45 AM on September 12, 2013
How many times do conservatives have to go down the privatization road before everybody realizes it doesn't fucking work? Providing a social service and profit motive may as well be oil and water.
If the last 40 years have shown us anything, it's that the unending drive toward profit and efficiency can have extremely negative effects on society at large. The many simply take a back seat to the few. If the goal is to provide a society-wide service, then society must be the overriding concern.
posted by Benny Andajetz at 8:47 AM on September 12, 2013 [1 favorite]
If the last 40 years have shown us anything, it's that the unending drive toward profit and efficiency can have extremely negative effects on society at large. The many simply take a back seat to the few. If the goal is to provide a society-wide service, then society must be the overriding concern.
posted by Benny Andajetz at 8:47 AM on September 12, 2013 [1 favorite]
It works if you hate the people using the service.
posted by Artw at 9:06 AM on September 12, 2013 [6 favorites]
posted by Artw at 9:06 AM on September 12, 2013 [6 favorites]
I wish we could get past the "what's the point of this" and "how could this happen" kind of reactions and just realize that the point/how it happens is looting and we are getting screwed. There is no calculation on how it benefits society because no one doing the deal cares about benefiting society. How could it possibly work? It won't work and doesn't have to. All it has to do is funnel money into someone's pockets, which it will do. It's not governance, it's kleptocracy, period and always.
posted by Steely-eyed Missile Man at 9:12 AM on September 12, 2013 [10 favorites]
posted by Steely-eyed Missile Man at 9:12 AM on September 12, 2013 [10 favorites]
It's hard not to feel completely helpless and hopeless about the future when things like this come to light.
posted by The Underpants Monster at 9:14 AM on September 12, 2013
posted by The Underpants Monster at 9:14 AM on September 12, 2013
UK Privatisation - the greatest hits
Rail - deadly accidents attributable directly to lax safety standards brought on by privatisation, endless inflation-busting fare hikes, a bizarre franchising system in which the taxpayer takes the risk, and an even more bizarre system of leasing train stock.
Energy - Inflation-busting bill hikes, and err... nationalisation of the infrastructure and a good chunk of the retail market by France.
Telecoms - Inflation-busting bill hikes. To be fair, British Telecom was always shit, they just export it now to other countries.
Water - Inflation busting-bill hikes. Better water quality.
Former Fidelity Magellan Fund manager Peter Lynch in One Up on Wall Street (a stock trading HowTo) had a full chapter on this where at the end he says they were among his greatest all-time trades and the final sentence is "any time the Queen is selling I'm buying."
posted by bukvich at 9:24 AM on September 12, 2013 [9 favorites]
Rail - deadly accidents attributable directly to lax safety standards brought on by privatisation, endless inflation-busting fare hikes, a bizarre franchising system in which the taxpayer takes the risk, and an even more bizarre system of leasing train stock.
Energy - Inflation-busting bill hikes, and err... nationalisation of the infrastructure and a good chunk of the retail market by France.
Telecoms - Inflation-busting bill hikes. To be fair, British Telecom was always shit, they just export it now to other countries.
Water - Inflation busting-bill hikes. Better water quality.
Former Fidelity Magellan Fund manager Peter Lynch in One Up on Wall Street (a stock trading HowTo) had a full chapter on this where at the end he says they were among his greatest all-time trades and the final sentence is "any time the Queen is selling I'm buying."
posted by bukvich at 9:24 AM on September 12, 2013 [9 favorites]
What frightens me is that I'm not sure the public will ever be able to reclaim these things, short of outright civil war.
posted by five fresh fish at 9:30 AM on September 12, 2013
posted by five fresh fish at 9:30 AM on September 12, 2013
I can't formulate anything meaningful. Just, fuck Cameron and his cronies.
posted by Joh at 9:43 AM on September 12, 2013 [4 favorites]
posted by Joh at 9:43 AM on September 12, 2013 [4 favorites]
"any time the Queen is selling I'm buying."
Well, quite.
posted by Artw at 10:04 AM on September 12, 2013
Well, quite.
posted by Artw at 10:04 AM on September 12, 2013
Apple could buy it outright and screw with Amazon just for fun.
posted by aesop at 10:09 AM on September 12, 2013 [3 favorites]
posted by aesop at 10:09 AM on September 12, 2013 [3 favorites]
So, will it still be Royal?
Or is it going to get some cool new name?
RoyMa? RMail?
posted by madajb at 10:21 AM on September 12, 2013
Or is it going to get some cool new name?
RoyMa? RMail?
posted by madajb at 10:21 AM on September 12, 2013
Or is it going to get some cool new name?
RoyMa? RMail?
Consignia.
posted by jack_mo at 10:31 AM on September 12, 2013
RoyMa? RMail?
Consignia.
posted by jack_mo at 10:31 AM on September 12, 2013
Or is it going to get some cool new name?
RoyMa? RMail?
Rik Mayall?
posted by MuffinMan at 10:37 AM on September 12, 2013 [3 favorites]
RoyMa? RMail?
Rik Mayall?
posted by MuffinMan at 10:37 AM on September 12, 2013 [3 favorites]
Does the UK have the same issue that the US does - lots of expensive to reach customers that UPS and Fedex don't have to deliver to? I see governments selling off assets, and it's usually crappy for workers and investors seem to do fine. for some people that's fine, I guess.
posted by theora55 at 11:14 AM on September 12, 2013
posted by theora55 at 11:14 AM on September 12, 2013
DC might be corrupt as hell, but we're not beholden to the financial industry.
I'm deeply skeptical of the concept of a large American city that this is true of.
posted by Pope Guilty at 11:23 AM on September 12, 2013
I'm deeply skeptical of the concept of a large American city that this is true of.
posted by Pope Guilty at 11:23 AM on September 12, 2013
> Does the UK have the same issue that the US does - lots of expensive to reach customers that UPS and Fedex don't have to deliver to?
I don't know for sure, but the likely answer is "No". England is pretty tiny, and even more urbanized than the United States. From Lands End to John o'Groats is less than 900 miles - the population density of the whole UK is about 250 people per square kilometer as opposed to the US's 32.
I'm sure there are a few problematic rural customers, but overall England is nice and compact for delivery purposes.
posted by lupus_yonderboy at 12:45 PM on September 12, 2013
I don't know for sure, but the likely answer is "No". England is pretty tiny, and even more urbanized than the United States. From Lands End to John o'Groats is less than 900 miles - the population density of the whole UK is about 250 people per square kilometer as opposed to the US's 32.
I'm sure there are a few problematic rural customers, but overall England is nice and compact for delivery purposes.
posted by lupus_yonderboy at 12:45 PM on September 12, 2013
The NL is even denser and more compact and the experience there for TNT is that universal service is a big commitment.
Universal Service can only survive when you allow a cross-subsidy with the profitable bits. Once that goes its all sort of untenable
posted by JPD at 12:54 PM on September 12, 2013 [2 favorites]
Universal Service can only survive when you allow a cross-subsidy with the profitable bits. Once that goes its all sort of untenable
posted by JPD at 12:54 PM on September 12, 2013 [2 favorites]
So the sale may bring £3bn at best. Meanwhile the two carriers, one of which will be mothballed for a decade will cost (at best) £5.5bn-plus. Priorities.
posted by ersatz at 1:23 PM on September 12, 2013 [1 favorite]
posted by ersatz at 1:23 PM on September 12, 2013 [1 favorite]
How can you have an IPO for something that's already owned by the public?
(and lupus_yonderboy, England≠UK. It would be like calling North America “Canada”, just because it's the largest part.)
posted by scruss at 3:41 PM on September 12, 2013 [2 favorites]
(and lupus_yonderboy, England≠UK. It would be like calling North America “Canada”, just because it's the largest part.)
posted by scruss at 3:41 PM on September 12, 2013 [2 favorites]
1. take something paid by taxpayers
2. squeeze every dime out of it (fire people, 3rd world wages, legal loopholes,, higher rates,etc )
3. privatize the profits
4. resell it to taxpayers
That's not too difficult?
posted by elpapacito at 4:49 PM on September 12, 2013 [1 favorite]
2. squeeze every dime out of it (fire people, 3rd world wages, legal loopholes,, higher rates,etc )
3. privatize the profits
4. resell it to taxpayers
That's not too difficult?
posted by elpapacito at 4:49 PM on September 12, 2013 [1 favorite]
How many times do conservatives have to go down the privatization road before everybody realizes it doesn't fucking work?
It works splendidly, if you're one of the looters.
posted by Kadin2048 at 7:02 PM on September 12, 2013 [4 favorites]
It works splendidly, if you're one of the looters.
posted by Kadin2048 at 7:02 PM on September 12, 2013 [4 favorites]
When you disregard the enduring social structures of power, capitalism in abstract works to eradicate middlemen. The government is simply providing a public service by preventing this beautiful and endangered species from going extinct.
Over the course of decades we construct their habitats, making sure that they have the right environment to thrive in - ours seem to be doing very well - and I hear that next year China even plans to send a pair of their own middlemen here to breed. The nation holds its breath in hope.
posted by forgetful snow at 3:43 AM on September 13, 2013
Over the course of decades we construct their habitats, making sure that they have the right environment to thrive in - ours seem to be doing very well - and I hear that next year China even plans to send a pair of their own middlemen here to breed. The nation holds its breath in hope.
posted by forgetful snow at 3:43 AM on September 13, 2013
I think MuffinMan is entirely correct that the unions are terrible at the political battle.
There may be reasons for it that I'm not aware of (there probably are) but it seems to me that if you control the post office and >96% of you are opposed to this then step one is not to strike, which annoys the public and sets them against you, but to utilise the power that you wield. That is an easy and almost zero cost mail shot to every house in Britain.
You are the post. You can spread your message cheaply and easily to every single letter box. Print out a leaflet detailing how the government is stealing from the people and add it to every post run. You don't need to rely on the media to cause an outragage.
posted by Just this guy, y'know at 4:10 AM on September 13, 2013 [1 favorite]
There may be reasons for it that I'm not aware of (there probably are) but it seems to me that if you control the post office and >96% of you are opposed to this then step one is not to strike, which annoys the public and sets them against you, but to utilise the power that you wield. That is an easy and almost zero cost mail shot to every house in Britain.
You are the post. You can spread your message cheaply and easily to every single letter box. Print out a leaflet detailing how the government is stealing from the people and add it to every post run. You don't need to rely on the media to cause an outragage.
posted by Just this guy, y'know at 4:10 AM on September 13, 2013 [1 favorite]
My local postal workers actually did just that, although it was about TNT's trial delivery service, not privatisation. It mentioned about five reasons why the trial was bad news. For example: mail redirection won't work (although it seems to me that if the UK goes down the route of multiple mail providers, a common database and sytem would not be impossible to implement).
posted by MuffinMan at 5:24 AM on September 13, 2013
posted by MuffinMan at 5:24 AM on September 13, 2013
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posted by Kitteh at 6:41 AM on September 12, 2013 [1 favorite]