Yes, foreign government ownership is better than domestic nationalisation

One of our less strongly held but more controversial views here - foreign government ownership is more efficient than domestic government ownership or nationalisation. The point becoming important when we think of the latest cunning plan:

Currently, many British energy generators are wholly or partly owned by foreign governments or companies. In his speech, Starmer cited “the largest onshore windfarm in Wales”, adding: “Who owns it? Sweden. Energy bills in Swansea are paying for schools and hospitals in Stockholm.

“The Chinese Communist party has a stake in our nuclear industry. And 5 million people in Britain pay their bills to an energy company owned by France.”

At one level it does seem simple enough. If foreign governments can run companies in Britain efficiently then the British government can too. One answer to that is that the British government is uniquely incompetent and having met many of Westminster’s inhabitants that’s a view we have some sympathy with. But then we’ve also met a number of foreign politicians and have to report that the surmise doesn’t in fact stand up.

We think that the actual issue is that if a government owns a company that operates outside its own voting base or population then it’s possible to run it as a market and capitalist based company. It’s when the customers and the workers become part of the voting block that managing government is trying to attract that the problems really start. Because this inevitably means that electoral politics becomes part of the management system of that company.

The Swedish voters are interested in that windfarm in Wales to the extent that Welsh windpower produces profits for Swedes to enjoy. Thus the Welsh windfarm is run efficiently to maximise those profits. Also, the Swedish government has no input into what the subsidy level, output prices or wage levels are or should be in Wales. It’s a free market and capitalist operator - therefore it works.

The moment it becomes the British government running that same windfarm the operation - and staffing levels, wages, output prices and so on - become subject to those British domestic political pressures. As proof of this we’d call into evidence that (possibly mythical) five levels of middle management that British Gas fired immediately upon privatisation, the surge in investment in the privatised water companies - politics simply wouldn’t pay for maintenance, let alone upgrading the system.

Of course, to some the irruption of politics into operating decisions is the very point. But by definition decisions made for political reasons are ones not made for efficiency ones. Otherwise, why would the decisions based on the two sets of concerns differ?

So, our opinion becomes that foreign governments do better at managing economic assets than domestic ones. Precisely because a foreign government, unaffected by domestic politics, can act as a capitalist organisation in a market. A domestic government is inevitably affected by domestic politics and therefore so is the operation of assets owned by that local government - at the expense of the efficiency of the operation.

As we say, the concluding proof here is the very insistence that a domestic government owned operation would do things differently- that influence of politics, that insistence upon decisions made for political, not efficiency, reasons, is the proof that the decisions made will be less efficient.