Legatum, Brexit, and the privatisation of the British government

It's common knowledge that "think tanks" play a part in forming government policy, but how large a part wasn't clear until recently.

There was a time when "think tanks" were seen as a useful method of exploring ideas and "out of the box" thinking. This was when they were still in their relative infancy (such as forty or fifty years ago), and their influence was slight. As they were, by their nature, peripheral bodies, they could easily be ignored. Think tanks were a "safe space" to explore unconventional ideas, where they would do no harm if they were shown to be mistaken. The lessons that were learned were learned in private and behind closed doors.
It could be said this changed when one think tank in particular, the Institute for Economic Affairs (IEA), began to seriously influence the thinking of the Conservative leader, Margaret Thatcher. Its thinking then went on guide large areas of her government's policy. It was not that the IEA controlled government policy, but Thatcher's thinking and its thinking overlapped to a large degree. The problem was that these ideas became self-reinforcing, and this thinking also led to massive structural change of Britain. Some of its "Libertarian" ideas were put into practice on the British population, in the form of deregulating and privatising large sections of the economy, as well as guiding some changes to social policy.

As "think tanks" are essentially used as vehicles of political agendas, its important to recognise that these institutions are, almost by definition, working to undermine the democratic process. At the very least, we can say that "think tanks" act to manipulate the political process in a way that in opaque and beyond the public eye. Whereas at one time they were seen as useful "intellectual laboratories" for political nerds, these days they have turned into an industry in their own right, thanks to the support of wealthy donors.
Where the likes of the IEA began, others have followed over the years. There is now a plethora of "think tanks" that seem to have some form of influence on the Conservative Party and its government; perhaps the most influential, thanks to Brexit, is the Legatum Institute.

An excellent analysis of this "think tank" looks into the people involved, their backgrounds, and their motivations. The government seems to have given this "think tank" the role of doing large areas of the government's thinking on Brexit for it. In large areas of policy regarding Brexit, the government seems to have deferred judgement to the Legatum Institute. In a sense, we can call this the "privatisation of government": in this case, it is government policy itself that looks to have been privatised.


A logical conclusion?

This is a logical conclusion of the "Libertarian" school of thinking that came from Thatcherism. After privatising industries and services, it then led to the selling-off of government services themselves. The IEA had a large influence behind the scenes as it mirrored Thatcher's own thinking, thus reinforcing her own prejudices. By the time David Cameron came to power, there was a "second wind" of Libertarian thinking: under the auspices of the austerity program, there were further roll-outs of contracts for government services to the private sector.
Here we see how any event is used as an excuse to further advance the Libertarian agenda. Back in the '70s, it was used as the answer to the economic problems of the times. By the '80s, they had successfully changed the structure of the economy through deregulation, which ultimately led to the financial crisis of 2008; the answer to this (self-inflicted) problem was even more of the same agenda, now under the excuse of "austerity".
The "Brexit Agenda" was yet another furthering of the same cause: by freeing Britain of the "shackles" of the EU, it would solve the problem of "austerity". All the money that was wasted on the EU could be re-channeled to Britain. The use of the "Brexit Agenda" to dominate the political narrative was even more brazen than its earlier Libertarian incarnations, as it came about through the use of an outside force (UKIP) that didn't even have any serious representation in parliament. In earlier times, events were used as an excuse to further their agenda; nowadays, the events themselves are brazenly manipulated to further their agenda, regardless of how this demeans the democratic process. Brexit didn't come about through a "popular uprising", but through the insidious seeping of an agenda into the political mainstream.

The Legatum Institute fits into this "agenda" neatly, as it espouses the same aim using the same fallacies: that the EU was the cause of Britain's problems, and deregulation from the EU's constraints would allow Britain to thrive. Of course, this narrative all suits the agenda of those espousing the narrative: the agenda, as some of its advocates have argued, is to turn Britain into an economy like Singapore's.

The situation we are at is where the agenda that serves a narrow segment of society also serves to "privatize" government itself: with the ultimate aim being where the private sector can effectively make government policy, beyond the public eye and without proper transparency. While this idea is nothing new, as "lobbying" has been a part of politics for an eternity, its logical conclusion is the "Brexit Agenda": where the private sector runs the government, in the manner of a hierarchical company where Britain's citizens are its "worker bees".

Where a properly-functional democracy is meant to fit into this, is unclear.

UK PLC: How Britain is ran like a corporation

Back in October the latest "success story" that the UK government declared was that a new generation of nuclear power station would be built at Hinkley point in Somerset, ran by the French energy giant EDF with Chinese support.
Around that time I mentioned that this event was simply another in a long line of government actions that are meant to improve Britain's fortunes, but achieve the opposite.

There is a tendency in Britain for foreign companies to run essential services and national assets, more than in any other comparable Western developed country.

The term "UK PLC" became widely-used during the Blair years, when the government was looking for a way to turn "Cool Britannia" into a brand that they could advertise the UK to foreign investment. Britain was marketed as "a good place to do business". Laws were loosened so that foreign companies could have a greater and greater role in The UK.
The spate of privatisation of government assets from the eighties onwards has led to segments of the energy industry and other utilities being owned by foreign companies (in the case of EDF, a government-owned foreign company).
When the transport network was sold off, buses and trains were sold off to whichever company offered the lowest price, regardless of if this meant effectively selling national assets to foreign governments. This was the case with companies such as "Arriva" (owned by Deutsche Bahn); the Dutch national rail carrier also owns rail stock in East Anglia and Merseyside.

I made these points in my earlier article on the subject, so don't want to repeat myself. The main observation to note here is that the actions of the British government, and even more the actions of the current Conservative-led government, are the same as those seen in the boardrooms of multinational companies.

Working in the "national interest"

The key here is how government ministers define "national interest". To the electorate, the "national interest" is would be what is in the electorate's best interest. To the government, the "national interest" is what will create the most money for the government. They are not the same things.

To understand how "UK PLC" works in reality it's easier to have a thought experiment and to imagine the British government as "a corporation that happens to operate within a national border", or a wannabe multinational company.
Like all multinationals, it has shareholders and employees. Who are they?

Its shareholders are the ones that really matter, because this is they who UK PLC's revenue is aimed at. The shareholders are the private businesses that have invested money into the UK, for it is they who really generate the income for the British government (as far as they see it). Therefore, the more future investment the government can generate, the more UK PLC's "shareholders" (private companies) will be willing to invest further in The UK. The happier the "shareholders" (i.e. investors) are, the better the fortunes of the British government. The "shareholders" want to make sure that their investment is a sound one; otherwise, they will sell their shares and go elsewhere.
In this description, it may not sound a lot different from a Ponzi scheme.

UK PLC's "employees" are its electorate. Multinationals are not renowned for treating their employees well; almost all of them seek the cheapest workforce possible. UK PLC, like other multinational companies, doesn't care where its employees come from. Limited by the resource of land, UK PLC's workforce is still constrained within the territory it contains, so therefore over-population would bring disadvantages to UK PLC over time. But apart from the long-term threat of over-population, it is to UK PLC's advantage to have a workforce that is composed of immigrants from poorer countries, in order to help limit wage demands and keep down overheads.
Of course, there will be some employees that are also shareholders, as in any multinational. But this is incidental. The main point here is that, like employees working for any multinational, those at UK PLC are expendable, and can be easily replaced. Fundamentally, they have no rights of their own, and UK PLC owes them no loyalty.

Why UK PLC loves Europe

Seen through this lens, a lot of what happens in the UK today makes much more sense. The rise of UKIP in recent times has been a result of the (correct) perception that the mass influx of East Europeans to The UK has brought about a labour crisis for some parts of the "native" population.
The government has blamed the freedom of movement around the EU for this, which is accurate, but fails to mention that it is also part of the government's intention. Much of UK PLC's "shareholders" (British and foreign investors) are strongly pro-EU because it helps them to lower wages by using workers from elsewhere in the EU (from Southern Europe as well as Eastern Europe).
At the same time, however, British people are far less likely to have linguistic ability compared to foreigners. Lulled into a false sense of security by the government, the electorate were led to believe that their economic stability would last forever because English is "the world's language". Now the UK government blames their own electorate for not taking advantage of the EU's freedom of labour mobility by not bothering to learn foreign languages.

It is not surprising that some people are left feeling "betrayed" by their own government.

The future of Britain looks more and more like that of a multinational company looking for new ways to find foreign investment and "partnerships". David Cameron's recent work with China demonstrates that is really what he sees The UK as. Rather than invest in "native" resources, it is cheaper and easier to ask foreign companies to do the work. This explains why an ever larger part of Britain's assets and services are being offered to foreign companies: because they are cheaper.
Rather than invest in Britain's assets and make them more efficient (which would be a longer-term project, but obviously better for the native workforce), it is easier and faster to simply hand them over to foreigners; like how multinationals "out-source" their services because it's cheaper.

In this way, the government has little real sense of loyalty to its own electorate: they are just "employees", and can be easily replaced with others who are more suitable to their needs.

It is the multinational cartels that are calling many of the shots because it is they who are the real "shareholders" in UK PLC, and other governments like it. UK PLC is far from alone in this regard; much of 21st century government across the world runs on the same principle.

Trains to nuclear power: British privatisation, asset-stripping and selling the family silver

The plan to build a nuclear power station courtesy of EDF, and the selling-off of the Royal Mail, are the latest in a long line of steps to erode the sovereignty of Britain's national infrastructure and assets.

A recent article in The Guardian reminds us that the deal to build a new nuclear power station next to an existing one in Somerset is thanks mostly to money from Chinese state-owned companies going to EDF, a company mostly owned by the French state (the name is an acronym for "Electricite De France"). In other words, the British government is happy to have part of the nation's future nuclear energy effectively ran as a joint venture of the French and Chinese government. Not only that, but as part of the deal, the the British government has agreed in advance to a price that is many times higher than that at the moment.
Not only are they handing British energy to joint French-Chinese custodians, they are also kicking their own people in the teeth in the process.

This is nothing new the the UK. The "privatisation" of the energy industry simply created a cartel, or oligarchy, of private sector behemoths. Due to the massive barriers to entry, this makes it necessary that only huge corporations can apply to such tenders. Worse, the oligarchy created from this "privatisation" was guaranteed government subsidies coming from taxpayers' money, completely missing the point that these companies were supposed to be in a "free market", and free of government. Thus it is the worst of both worlds, as is often the case with UK "privatisation". This model bears many characteristics similar to the corrupt arrangements found in Fascist economics.
It gets worse. Apart from one of the so-called "Big Six" (energy cartel) being part-owned by the French state (EDF), there is also "E.ON", which is a Germany-based company, with interests also in Russia, Sweden and the USA. The sad reality of who owns the "Big Six" is explained here. Of the six, only two are actually British (even if they do include the majority of the market share). Apart from the two already mentioned, "npower" is technically British, but owned by German parent company, RWE. "Scottish power", is owned by its Spanish parent company, Iberdrola. Only "Centrica" and SSE ("Scottish and Southern Electric") are British companies in the full sense.
With the recent price rises, many times above inflation, the irony is that the government sees no reason to interfere in the blatant price-fixing of this energy cartel masquerading as a "free market", while taxpayers fork out for government subsidies to the selfsame "free market". This is pattern repeated time and time again in "privatisation".

There is also the example of water supply. Again, the logic of the private sector was applied to an industry where the state-ran regional authorities were transformed into private companies. The difference between the energy sector and the water industry is that, for obvious practical reasons, you cannot make water a free market good because a customer cannot "choose" which water supply to use. The same point is true of the rail network (see below), which is still ran by companies that have, for the most part, carved up the network into spheres of quasi-monopolistic control. In the case of water supply in the UK, it has been turned into a cash-cow for foreign investors, with the British customer being often treated little better than a serf.

Apart from the energy sector, there is the "privatised" rail network. This operates on much the same operating model as that of the energy sector. As with energy, the train operating companies also include "Arriva" (one of the biggest private transport companies in the UK), which is owned by "Deutsche Bahn", the German national rail carrier. Likewise, "Greater Anglia", that is the main train carrier in the East Of England region, is owned by "Abelio", the Dutch national rail carrier; they also have a joint stake in "Merseyrail" and "Northern Rail", with one of the biggest service-provider behemoths, Serco. In other words, part of Britain's rail stock is now effectively owned by the German and Dutch government.
"Privatisation" of the railways in the UK has therefore really meant selling-off part of the rail stock to foreign governments. The laughable irony here is that Britain's nationalised rail network was parceled up piece-by-piece, with parts of it going to foreign nationalised rail companies. You really couldn't make this up!

This is not "privatisation": it's called asset-stripping, or selling national assets to foreign countries. And again, the rail companies are free to charge whatever price increases they like, far above inflation (without government interference), while still receiving taxpayer-paid government subsidies as well. EDF has been offered the same deal for the new nuclear plant.
A great arrangement if you can get it!

No wonder the British government is trying to convince China and other countries to "invest" in the UK. The British government is often taking British taxpayers' money to give it foreign companies (or foreign government-owned companies) as "subsidies", while also allowing them to suck their British customers for as much as they can (because it's a "free market").

Whose interests do the British government work for? In the examples above, it certainly isn't in the British national interest, let alone the taxpayer.

Fool the British people once, shame on you! Fool them twice...well...

People get the government they deserve.

Outsourcing and privatisation: Serco, Ayn Rand, and the Neo-liberal model

I've written before about how the "Neo-liberal model" emerged from the Second World War, and thirty years ago became the established method of financing government.

I've just read an informative article about the hidden, but massive, influence that the private company Serco has over many parts of government services across the Anglo-Saxon world, especially in the UK. Serco is an example of what happens when Ayn Rand's idea of having private companies carrying out government services is put into practice. In short, it's a disaster.
Like the infamous Halliburton in the USA, Serco is what is euphemistically-called a "public service company". It is the privatisation of government. The concept, following Rand's belief in private sector near-infallibility, is that private companies are supposed to do the carry out former government operations with lower costs to government and more efficiently, due to a combination of the profit motive and competition. This thought has become almost gospel in the last thirty years, especially in the Anglosphere.

The reality is that government often ends up handing over wholesale segments of government services to publicly-unaccountable private monopolies. Following all the failings of the Fascist economic model, government monopolistic control is transformed into the monopolistic control of government by corporate behemoths, with the public purse of government (i.e. the taxpayer) still taking the tab, but the private sector taking all the profit. The excuse for this is that the private sector need some form of incentive to become involved in the awkward work of government services; the reality is that politicians are either too ideologically-blinkered and ignorant to see when they're being robbed blind, too weak-willed in the face of corporate might, or there is something more corrupt going on. The question of where these political parties get the funding from also may help to explain things.

Whatever the truth, under this model, government is therefore ran with private-sector unaccountable, monopolistic inefficiency. Costs are transferred to the consumer and the workforce; to ensure profits are maximised to maintain the company's share value, employees working conditions and salaries are pared down to the minimum, with overheads reduced through squeezing the most out of the smallest-possible workforce. As this creates greater unemployment, this creates even more reason to reduce salaries further, boosting profits again, which creates more greater expectations on the share price. This downward spiral is what happens when government services are transferred to the private sector. And as already mentioned, any losses are covered by the government as a condition of these companies agreeing to provide the services in the first place. Such financial vampirism might but smoothed-over with euphemisms like "subsidies", but the result is the same.

This aspect of the Neo-liberal model effectively ensures the worst of all worlds for the taxpayer. Fascism was the parent to National Socialism in Germany; the Neo-liberal model in the contemporary world has given birth to "Corporate Socialism", which is, economically-speaking, much the same thing.

When companies are "too big to fail", like the banks were five years ago, this really means they are too big to exist. Not allowing companies to fail because they are too big, by definition tells you there is no market in a real sense; at best, a cartel. The outsourcing of government services to huge public service companies goes against the principle of the free market; Ayn Rand knows this best of all, because small companies cannot possibly hope to compete with the huge barriers to entry for these kinds of services. This is because these services are not designed to be in the domain of the private sector; when they are, the result is always a rapid cartelisation of the service - or monopoly in the cases of Serco and Halliburton.

Cartels are synonymous with crime for a reason: because they are, by definition, corrupt. So it goes with outsourcing and privatisation in general. These practices breed corruption and inefficiency, with the largest loss of all going to the consumer - or in the case of outsourced government services, the taxpayer. There is a reason why the USA happens to have the most financially-inefficient and yet the most expensive health care service in the developed world; because it is ran by the private sector.

Fascism is therefore the psychology of the Mafia put into economic practice. Like the Mafia in the control of rackets and criminal markets, the Neo-liberal model's creation of "Corporate Socialism" has created a vampire on the public purse. Neo-liberalism's fetishisation of the merits of the private sector over the public sector has simply created a modern version of Fascism, only these days it's called "Corporate Socialism".