For God’s sake don’t re-nationalise the Railways!

Yesterday’s news on rail fare increases has, as can be expected, been met with the usual cries of outage by special interest groups like Passenger Focus and the RMT. Via Facebook, I found this e-petition to re-nationalise the railways, which has already attracted the signature’s of 1,969 mad fools.  Yes, let’s get the government even more involved in an industry they already wreaked!

Railways are one of those areas (along with health provision) where unless you’re an anorak the pre-state history is almost forgotten. Almost the entire rail network in the UK today was built by private firms before World War 1, and were run successfully for well over a hundred years under private ownership. Yes there were issues after each world war (when the industry was de-facto nationalised and run into the ground to support the war effort), but it was only once the state took over that things really hit the buffers. Wikipedia states:

At its peak in 1950, British Railway’s system was around 21,000 miles (34,000 km) and 6,000 stations. By 1975, the system had shrunk to 12,000 miles (19,000 km) of track and 2,000 stations; it has remained roughly this size thereafter.

All that private capital investment wasted! And they want to give them another go at running it?

Of course the current system is a mess (which even the ASI, who helped draw it up acknowledge), and needs sorting out. Vertical integration, where track and trains are run by the same firm seems to work better than the current system where tracks are owned and maintained by a different organisation. However vertical integration would not fix the biggest  issue since time immemorial – a lack of competition.

It is competition plus Government subsidy and fare caps, that causes the current cycle of endless fare increases. Competing railways can work, I saw this when I visited Japan a few years ago with small cities like Nara having two competing rail lines. Unfortunately there is probably little chance of getting the investment necessary in today’s climate.

Instead I have a modest proposal: when restructuring the industry rather than a PLC go for a mutual structure, and give season ticket holders voting rights at AGM like a building society. If the passengers (and staff) had a greater say in remuneration packages of managers, fares, track and rolling stock investment then we might get somewhere.

Oh, and definitely keep the government the hell away, for whenever a politician meets a train it usually ends in disaster.

Railways in Britain, current (black) and closed by the state (blue)


We never put a penny in

The tone of the public discussion as to whether “we” should “let” News Corporation buy more shares in a company it founded is disgusting. Why do “we” (who never put a penny into either company) have the right to decide? Why do “we” have the right to wipe millions off the value two great companies to gratify “our” lust for vengeance on an old man?

“Tom Paine” in response to my article at Anna Raccoon

Murdoch the Indefensible?

The people over at News International have been very naughty boys, that much is clear. Yet there is something troubling about the way this saga has been covered that stretches even to the libertarian blogosphere. Murdoch’s bid to buy BSkyB was a perfectly non-aggressive transaction, yet it was blocked. An application for permission he should not have needed was “deferred” and then abandoned due the pressure of the mob on the State to exercise it’s discretion over a private sale. I wonder if I am alone in noticing that this was wrong; that the State should never have had that discretion in the first place?

News International, Rupert Murdoch and his executives have become the target of sustained speculation, and vilification in daily bulletins over the accusations of privacy infringement and bribery. I have nothing new to say about those accusations and will spare you, reader, a token rehearsal of why those acts were wrong. It is good that Rebekah Brooks has been arrested and I support the application of the rule of law to the whole host of them, Rupert Murdoch included, but I cannot ignore the obvious violation of property rights codified into that law, as it stands.

For a right-libertarian life liberty and the pursuit of happiness requires ownership of our property. Since property is the justly acquired outcome of ones life depriving a man of his property, or of his control over it, is to deprive him of a part of his life. The state’s power of discretion over the sale of BSkyB is an imposition upon Rupert Murdoch’s life and upon the lives of shareholders who own the other 61% of BSkyB. Those shareholders are prohibited, on the basis of one man’s whim, from selling their own property. This means they are prohibited from making good on their investment and achieving the outcome they expected from part of their lives.

This is justified with reference to media plurality, and a fit and proper persons test. Neither of these justifications deserve our sanction. The second should be simple to dismiss, we do not endorse a society which welcomes participation only from screened and favoured applicants, but one based on personal initiative and the consent of those directly involved. This is the law of “mind your own” and the same principle is at work when we stand up to oppose CRB checks and the formalisation of family life. We should be consistent when it comes to the affairs of businessmen.

On the topic of monopolies I will need to set out my case.

Some people see giant corporations currying favour with Government and react emotionally by condemning all corporations above a certain size, while letting the state off the hook for creating those corporations and granting those favours in the first place.

Remembering that limited liability companies are a legal invention, Libertarians identify the actions of corporations as natural for artificial persons in an economy thick with artificial regulations, and the power of Government as the root cause of both. We know that regulations increase the cost of setting up a business, and that larger businesses tend to cope better with new regulation. As such, regulation causes consolidation and reduces the number of competing firms to a few large ones. In broadcasting the Government apportions the available spectrum, and in doing so limits the number and picks the names of the winners before the game even starts. The subsidised BBC also provides stiff competition and crowds out alternative broadcasters. It is little wonder then that media plurality is an issue. The perfect conditions for oligopoly were created by government.

As ever, the state’s answer to a problem caused by imposing it’s will on others is to impose it’s will on them again. Before it was revealed that the Dowler’s had been affected by phone hacking Murdoch was playing a perverse economic game to avoid the arbitrary competition rules that eventually prevented the bid. Painted as populist and only concerned with short term profit he was asked to hive off Sky News and exchange success in one dimension for success in another. He could not have both market share and maximum profit, but isn’t a bid for market share a long term strategy?

Afterwards the game changed. Murdoch became so unpopular that allowing the bid through on the basis of media plurality was unthinkable to the government, who knew it would cost them votes. Responsibility for the proper application of the law was shirked and the decision delayed and passed on to bureaucrats. This is not the Rule of Law but Rule by Popularity Contest. The perverse consequence is that Murdoch was forced to make himself more popular by sacrificing his past success and closing News of the World. Knowing that he was still unable to win sufficient popularity to please his coalition masters he eventually abandoned the bid and was left without News of the World or BSkyB.

Justice is not a popularity contest to determine the use of aggression; it is the use of arbitration and objective rules to replace aggression. As libertarians justice is at the centre of our creed right along with the non- aggression principle which these laws violate. Despite that, we have not applied it when discussing this story on our blogs. Every aspect of the story but the property rights angle has been discussed, but not that one.

On Saturday we turned out in the rain to defend the unpopular smokers of Stony Stratford. We did that because the restriction of one class of people is the thin end of a wedge which represents the persecution and exclusion of any unpopular minority. Rich businessmen – Bill Gates, the bankers, the supermarkets etc – all  have different problems but don’t they also enjoy the protection of the non-aggression principle? Isn’t this mad law just the same wedge applied to another crack?

I hope Murdoch is not so unpopular that he will not be defended on principle.

Simon Gibbs – Libertarian Home
Hanging Murdoch image by Surian Soosay