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Debates Forum

  1. Standard member finnegan
    GENS UNA SUMUS
    20 Mar '15 22:15
    I am tired of American ideologues repeatedly parroting claims about public sector enterprises and government planning in the economy. I have decided to refer to one useful article - written in 2010 - that sets out some of the achievements of the French public sector.
    Even after repeated rounds of privatization, a substantial share of France’s economy remains in state hands. In 2006, the state controlled ninety companies directly (representing 3.7 percent of total employment) and 755 indirectly (notably via the Caisse des Dépôts et Consignations, an institution nationalized just after the Second World War, which today functions something like a discrete sovereign fund). Its holdings include not only controlling interests like its 85 percent of Électricité de France, but also minority stakes—35.7 percent of Gaz de France-Suez and 27 percent of France Télécom. At the financial market’s 2007 zenith, its portfolio was estimated at 191.9 billion euros.
    And in the aggregate, these companies not only cost taxpayers nothing, but may well keep taxes down. The state’s biggest fully owned enterprises, for example, are flourishing, even in this increasingly difficult climate. La Poste’s annual profits fell to a more than respectable 530 million euros in 2008. The SNCF (the state railway monopoly created in 1938 during the Popular Front) saw its profits drop from 1.1 billion euros in 2007 to 575 million in 2008—all the while employing 158,000 railway workers, charging passengers considerably less than Amtrak or its privatized British counterparts, keeping France’s carbon-gas emissions low, and operating what is one of the best rail systems in the world. Indeed, nationalized businesses are an important source of regular revenue for the state. For fiscal 2008 alone, the shareholder-state received no less than 5.6 billion euros in dividends from its holdings.
    But nationalization’s benefits have been much broader than simple profits. Over the entire period since the Liberation, French planning’s record of creating employment and prosperity is considerably better than neoliberal critics would have it. The state has used planning as a flexible tool to restructure companies and save jobs, to create new industries from scratch and promote job growth, to soften deindustrialization’s blow to workers and their communities, and to orient transportation and energy policy onto more sustainable pathways.

    Like the 2008 total collapse of the banking system throughout the developed world, these public sector success stories are supposed to be impossible according to the neoliberal free market orthodoxy which presently holds us all (especially in the US and the UK) in its thrall.
  2. Standard member finnegan
    GENS UNA SUMUS
    20 Mar '15 22:16
    Neither France—nor indeed Europe—would today have a robust civilian aircraft industry, employing hundreds of thousands of people in high-skilled, well-paying jobs, had the French state not taken the lead (with a 37.5 percent stake) in initiating the British-French-German Airbus consortium in 1966. The French government still owns 13 percent of a company that posted a $2 billion profit in 2008 and tallied its sixth consecutive year of building more planes than its competitor Boeing.
  3. Standard member finnegan
    GENS UNA SUMUS
    20 Mar '15 22:18
    At a time when loss-making airlines in the United States have renewed their time-honored tango with Chapter 11, Air France’s recent history provides still more evidence that states can manage businesses just fine. Although the state ended its control of the airline when Air France merged with KLM in 2004 (in reality, a friendly acquisition of the Dutch company), it today retains a 17 percent stake in what is the largest passenger airline in the world, which netted nearly 750 million euros in profit in 2008. Far from being a consequence of privatization, these profits are a testament to prudent public stewardship: the year before the KLM merger, Air France had posted six consecutive years of profits. Nor has Air France built its economic health at the expense of its employees: powerful unions have earned its flight crews one of the most enviable compensation packages in the industry.
  4. Standard member finnegan
    GENS UNA SUMUS
    20 Mar '15 22:20
    The story of Renault, publicly held from the Liberation until the 1990s, starkly belies the myth that nationalized companies can’t perform. When competition from Japanese competitors challenged French and American carmakers alike, and Renault’s losses began to mount, the government imposed a wide-reaching restructuring (entailing layoffs), which returned the company to profitability by the end of the 1980s. By the time the state began selling off its stock in 1990, becoming a minority shareholder in 1996 (it maintains a 15 percent stake today), Renault was in good health. In 2006, Renault employed over 125,000 workers and sold close to 2.5 million vehicles worldwide (making it bigger than Chrysler); it acquired an ailing Nissan in 1999 and turned it around. Although Renault has not been spared in the current downturn, its profits dropping to 599 million euros in 2008, these are numbers every American automaker would trade their SUV-assembly lines for in a heartbeat. State management is no small part of the reason why France today is home to profitable automobile manufacturers whose product lines are focused on small, innovative, fuel-efficient cars.
  5. Standard member finnegan
    GENS UNA SUMUS
    20 Mar '15 22:22
    Consider how successive governments used their stakes in France’s traditional smokestack industries to guide industrial reorganizations. Faced first with cheaper coal imports in the 1960s, and then opting in the 1970s to develop nuclear power, the government put in place a decades-long plan to wind down Charbonnages de France’s coal mining and power generation activities. The company gradually shrank its work force by relying exclusively on retirements and transfers to other public companies. From its peak in 1946, when Charbonnages employed 350,000 miners, to 2004 when the last coal mine in France shuttered its shafts, the company didn’t lay off a single worker. Though unemployment today remains higher than the French average in the old mining regions of northern and eastern France, this policy spared communities the social dislocation of abrupt shutdowns. A far cry from Thatcherite Britain’s brutal mine closures and bloody union-police confrontations.
  6. Standard member finnegan
    GENS UNA SUMUS
    20 Mar '15 22:25
    Among the six largest industrial groups nationalized in 1982 (CGE, Saint Gobain, Péchiney, Rhône-Poulenc, Thomson, and Bull)—several of which were losing money before the takeover—all were turning profits by 1985. True, between 1982 and 1985 the state had to pump in forty-five billion francs to recapitalize them. But the nationalization balance sheet cannot be closed there. A 1990 report by the Cour des comptes—a French General Accounting Office with judicial teeth—showed that when the costs of nationalization and recapitalization are weighed against dividend income and privatization proceeds, the 1982-1990 cycle of nationalization/privatization had a net zero impact on government finances. Over the long term, Mitterrand’s nationalization adventure didn’t cost French taxpayers a centime.
    http://www.dissentmagazine.org/article/lessons-from-the-nationalization-nation-state-owned-enterprises-in-france
  7. Standard member finnegan
    GENS UNA SUMUS
    20 Mar '15 22:31
    Nationalized industries and five-year plans may transgress the treasured tenets of neoliberal orthodoxy, but they didn’t stop France from enjoying three decades of sustained economic growth and prosperity. In the period between 1950 and the first oil shock in 1973, recalled in France today as les trente glorieuses (the “thirty glorious years”), its economy grew at the impressive clip of 5 percent a year (while United States growth averaged 3.6 percent), unemployment was virtually unknown (2 percent in France, compared to 4.6 percent in the United States), and French women and men experienced dramatic increases in their standard of living.
  8. Standard member finnegan
    GENS UNA SUMUS
    20 Mar '15 22:35 / 1 edit
    The move away from state ownership was not in fact born of a rational economic calculus but rather of specific political choices. From Chirac’s praise of Ronald Reagan and Margaret Thatcher in the 1980s to Nicolas Sarkozy’s emphatic embrace of the American free market model in the 2007 elections, the Right’s antipathy toward nationalizations has been fundamentally ideological.
    Opting for austerity in 1983, Mitterrand abandoned wage indexing, reined in government spending, and loosened capital controls in order to avert another devaluation, keep the thrifty directors of the German central bank happy, and move forward the negotiations that culminated in the 1992 Treaty of Maastricht and the creation of the European monetary union. Although Mitterrand himself never renounced his nationalizations, the strict free market rules imposed by Maastricht and subsequent EU treaties committed member states to privatization.


    Hands up those who think France and Europe have done better since embracing free market ideology after the Eighties? Who thinks the economy today is healthier and more prosperous or that it was terribly worse under state planning and control?
  9. 20 Mar '15 23:07
    Interesting that you come up with France, a country with a bloated government bureaucracy, a business climate plagued by frequent strikes and a horribly low social mobility on par with that of the US.
  10. Standard member DeepThought
    Losing the Thread
    21 Mar '15 00:41
    Just an observation, but when Royal Mail was privatised the Conservatives sold it for too little. The share price increased significantly after the privatisation. This means that the business was running perfectly well as a state run enterprise. In fact, there was no good reason to privatise it. A majority of the British public think that the railways should be renationalised. So I don't think that the political myth that governments that are prepared to nationalise companies are unelectable is tenable. What politics in Britain needs is an anti-Thatcher, she was the one who dragged the terms of political discourse so drastically to the right, we need someone with the courage to drag it back to moderation, never mind to the left.
  11. Standard member finnegan
    GENS UNA SUMUS
    21 Mar '15 11:14 / 1 edit
    Originally posted by KazetNagorra
    Interesting that you come up with France, a country with a bloated government bureaucracy, a business climate plagued by frequent strikes and a horribly low social mobility on par with that of the US.
    Yes it is interesting that I came up with a capitalist western democracy with a disgraceful record in its post war empire and internal racism, bearing no comparison with the Black / White Left / Right Capitalist / Communist Manichaean alternatives presented in American / neoliberal ideology. If I wanted to give a negative account of all that is wrong with France that would be easy enough. But instead what I wanted to demonstrate was that the ideological dualism is a false dichotomy and that within a capitalist, democratic society, state planning and state run enterprise can prosper and has done as a matter of historical fact. Nor has the more recent imposition of privatisation and neoliberal economics produced anything comparable - instead, things got worse.

    I am curious that you use terms like "Bloated bureaucracy" and "plagued by frequent strikes" which are not objective descriptions of course; they are heavily value laden and as such neither factual nor reasoned comments. Frequent strikes (and what is the measure for the term "frequent?"- in a world where the USA and the UK are making strikes almost impossible?) do not have to be a terribly significant issue you know. They can indicate the presence of a militant trade union movement that has not yet been emasculated by the Right, and also an active and vibrant political democracy, but do not have to be seen as inherently incompatible with successful business. Besides, since when has it been right to subordinate our democratic rights to the priorities of business? If you prefer fewer strikes, then instead of the New Right model of removing trade union rights, one could consider the German model (introduced by the British politician Bevin after WW2) of combined union, business and political leadership in a corporate model that has been shown to work brilliantly well.

    I have trouble accepting that social mobility in France (which is terrible) matches the USA or the UK - which are considered the worst in the world. A table in an OECD report ranks twelve developed countries with, from the bottom, worst UK, then Italy, USA and then France, making France bad but not as bad. http://www.oecd.org/tax/public-finance/chapter%205%20gfg%202010.pdf

    However, I am not holding up France as a socialist or economic model for the world. I am more simply demonstrating that the ideological arguments against state planning and state run enterprise are not supported by the evidence. The benefits of state run enterprise include the model for economic transformation and, for example, the closing of French coal mines was a remarkable achievement compared with Britain's disastrous experience under Thatcher.

    In addition, when people make claims about the achievements of Capitalism as a whole, they need to be reminded that this has not been a history of free market untrammelled capitalism, but in every relevant country a history with a complex mix of public and private enterprise and planning. In the same way, the history of Western Reason is a history of religious thinking as well as secular science.

    Ideologists want the world made simple to fit their caricatures. The reality is complex and far more interesting.
  12. Standard member vivify
    rain
    21 Mar '15 15:36
    Originally posted by finnegan
    I am tired of American ideologues repeatedly parroting claims about public sector enterprises and government planning in the economy. I have decided to refer to one useful article - written in 2010 - that sets out some of the achievements of the French public sector. [quote]Even after repeated rounds of privatization, a substantial share of France’s econom ...[text shortened]... e market orthodoxy which presently holds us all (especially in the US and the UK) in its thrall.
    While I personally am not against the public sector, I should remind you that the issue isn't whether or not state-run businesses can be economically successful, but whether or not the state can be trusted to not abuse rights of the people. The fear (mostly held by U.S. conservatives) is that the more we really on government, the more certain it is that a democracy will erode into some type authoritarian state.
  13. Standard member finnegan
    GENS UNA SUMUS
    21 Mar '15 15:40
    Originally posted by vivify
    While I personally am not against the public sector, I should remind you that the issue isn't whether or not state-run businesses can be economically successful, but whether or not the state can be trusted to not abuse rights of the people. The fear (mostly held by U.S. conservatives) is that the more we really on government, the more certain it is that a democracy will erode into some type authoritarian state.
    ..okay and is that fear borne out by the experience of socialist policies implemented in European democracies since 1945?


    No.
  14. 21 Mar '15 16:10
    Originally posted by vivify
    While I personally am not against the public sector, I should remind you that the issue isn't whether or not state-run businesses can be economically successful, but whether or not the state can be trusted to not abuse rights of the people. The fear (mostly held by U.S. conservatives) is that the more we really on government, the more certain it is that a democracy will erode into some type authoritarian state.
    Wouldn't such an authoritarian state need a large army?
  15. 22 Mar '15 17:03
    Originally posted by vivify
    While I personally am not against the public sector, I should remind you that the issue isn't whether or not state-run businesses can be economically successful, but whether or not the state can be trusted to not abuse rights of the people. The fear (mostly held by U.S. conservatives) is that the more we really on government, the more certain it is that a democracy will erode into some type authoritarian state.
    And those US conservatives are, of course, perfectly willing to trust companies like Google, McDonalds and HSBC with their safety, privacy and health.

    Me, I'd rather trust a government. At least we can (if we live in a democracy, quid in USA non) un-elect it if it turns sour. When was the last time the public got to un-elect a bank manager?

    No, don't worry. I don't actually trust the government. Certainly not my current one. But I dis-trust multinational companies considerably more.