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Labour Uses Fake Figure Cooked Up by Industry to Oppose Water Nationalisation (www.thecanary.co)

submitted 2 months ago by shreddy_scientist@lemmy.ml to c/worldnews@lemmy.ml

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[-] avidamoeba@lemmy.ca 13 points 2 months ago

I guess renting the water supply is cheaper in the short run and more expensive in the long run.

[-] dawnglider@lemmy.ml 10 points 2 months ago* (last edited 2 months ago)

Is that really the case though?

Nationalisation would of course be supported by debt (just like any public investment), so it would only be a matter of comparing the interest rates to the cost of renting. Well most private companies are supported by debt (as they should), so part of the cost is directly paying for the companies' debt. The state will always have lower interest rates (Since the BoE base rate shot up to 5% in the last 2 years you might have to take into account the maturity of different obligations but this would settle as debt gets refinanced), and taking the first company outlined, "Wessex Waters", their financial report show a cost of debt of 5.2% for 22-23, with a debt-to-equity ratio of about 4 if my maths are good.

What this means is that for Wessex Waters, even if we completely ignored profit margin in the form of dividends (5.4% yield), overhead cost of private business (extremely high leadership salaries, bonus, lobbying...etc) and the fact that interest rates are only gonna rise, it would still be profitable in the very short term to nationalise the company.

Don't be mistaken, what's opposing nationalisation and public ownership is and always has been purely ideological (market is more efficient, national debt is somehow a problem), there is absolutely no financial argument against it.

BONUS: Because if I had to skim Wessex Waters strategic report, might aswell chop up some of the Chairman's foreword:

The high quality of our customer service was again recognised, [...] however, we were extremely disappointed that we failed to maintain our record on environmental performance.

Our financial health has always been, and remains, robust.

I thank the Lord Jesus for his constant grace and guidance and pray that we will be able to rise to the challenges we face.

[-] GarbageShootAlt2@lemmy.ml 4 points 2 months ago* (last edited 2 months ago)

what’s opposing nationalisation and public ownership is and always has been purely ideological

It's private interests seeking to maintain their own profits. The ideology is downstream of that.

[-] dawnglider@lemmy.ml 3 points 2 months ago* (last edited 2 months ago)

Sorry I wasn't very clear, thanks for pointing that out! I'm referring to the arguments opposing nationalisation in the mainstream discourse and not the actual obstacle to it happening (I wouldn't accuse the Labour Party of acting in good faith).

Within the liberal ideology you often here things like "who's gonna pay for it" or "it'll be too expensive", I'm saying that those arguments are surprisingly false even within the frame of liberalism. They pretend that it's impossible due to some cold accounting reality in order to deflect conversation away from the core idea, but this opposition is actually ideological too (it's just more of an uphill battle to defend keeping water in private hands than most other commodities).

As a matter of fact all neoliberal "theories" crumple under their own weight surprisingly fast (EU's flavor in ordoliberalism with it's 3% deficit to GDP and 60% debt to GDP ratios being dazzling examples of idiocy) so you might be onto something, perhaps it's because they're not the product of rigorous research but instead attempts to justify something that is already there 🤔