Tuesday, October 25, 2005

The Fluffy Economist replies...

The Fluffy Economist has replied to my post, and I believe that he misses the point on a couple of issues.
My impression is that many lower paid jobs (cleaners, maintenance) are outsourced so these would skew the average private sector figures downwards.

Yes, but the market ensures that they are paid they are worth. The point is that, if they were paid more in the public sector then they were overpaid. If cleaners suddenly leave and become scarce, then the price for a cleaner will rise as dictated by market forces.
To fill in, the Edinburgh Royal Infirmary was sold to the private sector for £12m then leased to the NHS, so the latter could make a quick buck. The hospital then became a 'prime piece of real estate' and was sold for SIXTY MILLION POUNDS!

To sum up from another viewpoint: the NHS, a public body, sold a public asset for well below what the asset was worth in order to divest themselves of a capital asset (and thus capital cost) as an accounting fiddle. They did this to raise funds to start work on a new capital project.

In other words, they sold an asset at way below its market value in order to fiddle the books: if they were a private company, the directors would be being sued by the shareholders by now. At best, this shows massive incompetance; at worst it is negligence, verging on fraud. Only, of course, the NHS (and the government departments administering it) effectively answer to nobody.
I'm told the new hospital, Little France, is tremendously clean and friendly place to be, but what good is that, as DK so rightly points out, when any benefit is literally and economically bled away getting there?

Well, exactly; even the staff have to pay a massive fee to park their cars there. Plus the whole thing is too small, there have been engineering problems and severe shortfalls in funding leading to ward closures. And I imagine that its location is rather putting a strain on the ambulance service as well.

This is what happens when the public sector attempts to manage large projects. And the private contractors have no incentive to do a good job, because they have no end liability: the government will keep paying out regardless. This is not a free market, this is the usual government incompetance.

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