IIt is difficult to unify nationalization advocates and skeptics. But the British Industrial Coalition went into hot water this week, not based on claims that the plan to reorganize the Labor Party's utility would amount to £ 196 billion. A large number of this kind attract the media's attention and help to elicit stories, especially from established organizations such as the CBI. But by presenting an unbalanced view, they missed the opportunity for a truly useful public debate.
Organizations lobbying on behalf of British companies have already had to admit to the Labor party's mistake. The analysis assumed that the Labor government would purchase railroad cars (trains owned and leased by individuals to rail operating companies) in the railroad industry, although this was not a political party policy. This mistake is important, but because it misleads the public, the impact on the overall figure will be relatively small.
The analysis of the CBI has a much bigger problem. For example, when calculating the amount the government would pay for a company operating in an industry that would like to nationalize, the CBI made a 30{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} increase in the company's asset value. This is based on “evidence of historical acquisitions showing that utility companies have generally brought higher prices than asset prices”. However, this high price reflects effectively the benefits of guarantees from the government, as well as the value of economic rents that can be created in an exclusive industry as an essential service. This is not a fair price. There is no reason for the government to pay for its own guarantees, and no reason to pay for rent extraction to stop nationalization.
More fundamentally, the analysis only evaluates state-owned costs rather than potential benefits. For example, we do not consider income from companies that have returned to public ownership, such as ticket sales, energy and water bills. The CBI was willing to refer to future costs, including maintenance, operating costs and investments, but did not consider the asset side of the balance sheet.
It's a shame because real discussions about public and private ownership will be welcome. There are legitimate questions about which industries and companies should be openly owned, which should be privately owned, and whether alternative models such as owning a community or cooperative can actually provide better results. These questions should take into account not only the costs to the government, but also those who benefit and lose in society through different ownership models, depending on who can control the finances and the economy. They must consider who we all best manage for reliable services and ensure sufficient investment for the future. In addition, you need to consider not only assets, but also liabilities.
It's not just the CBI that can't do it. The UK government's “public sector net debt” goal does not count many income-generating assets that can be paid for themselves. The inclusion of public corporations in this calculus has created a great bias in public ownership. If Germany had taken the same approach, in 2015, the general government total debt would have increased by more than 2.5 times from 181{7be40b84a6a43fc4fae13304fce9a2695859798abfc41afd127b9f8b21c5f9c5} of GDP. Thankfully, questions about our national accounting rules are growing, and proposals are being made that governments, like private investors, should target net assets in the public sector to evaluate both sides of the balance sheet.
The CBI is at the forefront of omitting the potential benefits of nationalization. But if you want to be considered a reliable and fair voice in public debate, that's not enough. Voters can't dig details and see how big numbers are calculated. Even if they want to, the CBI's claims cannot be fully evaluated. Worryingly, the group said it was "not comfortable", explaining how its members totaled £ 196 billion.
There will be more and more claims in the future as political parties prepare for the general election. The business lobby group's desire to pour out news about Labor's policy plan seems to be a close result. But instead of posting a partial analysis, the CBI should focus on the actual questions. In the past few years, when trust in business has reached a record low, such interventions have little impact on tensions with other societies.
• Carys Roberts is the Chief Economist and Director of the Center for Economic Justice at the Institute for Public Policy Research.
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