Management for Efficiency
- The failure of any nationalised business to show a profit must be ultimately attributable to poor management, with few exceptions. One of these exceptions is the exhaustion of the resource, and would be applicable to the mining industry in particular. Another would be to suffer loss of manufacturing or supply capability as the result of war, earthquake, etc. Yet another would be a condition of supply or manufacture imposed by law that prevents a profit being made. Anything that can be controlled, however, and isn’t, is a management failure.
- Certain items such as defence, or the police force, are inherently incapable of generating profit, and will remain burdens on the country’s exchequer. The cost of these burdens, can, and should be, kept to a minimum by good management practice.
- If management is at fault, management can be changed, and the industry or service retained under public ownership. The task is then to operate at minimum cost to the consumer consistent with not making a loss. A profit could be allowed if future investment were to be self-funded, and set at a maximum limit, but this is not strictly necessary as the investment funds normally come from taxation via the exchequer. The main consideration is to bring efficiency up to the same levels as that of a private company, but to do this privatisation itself is not actually required.
- If privatisation is considered a necessity, there is no need whatsoever to link it directly to profit. There are enough examples of hospitals being run by not-for-profit companies, and there is no reason to limit such a company to that particular function.
Change of Priorities
- The so-called “mature” economies, where service industries now predominate, seem to be promoting privatisation world-wide as the panacea for all financial evils, when it is patently not. On the contrary, privatisation in the wrong place itself becomes a financial evil! At best it should be viewed as one of a range of options, to be used only if nothing else works better.
- Management for efficiency, however, is in almost universal demand, and works on the same principle as “Teach a man to fish”. People with the ‘greatest good’ at heart, will have no hesitation in helping others to help themselves better. People interested only in themselves, and concerned about increasing competition for their products, will continue to export pain.
- The optimum approach is to teach as best you can, while at the same time investing heavily in research. This, at least in theory, could enable you to continue teaching indefinitely.
The interests of the community at large are not best served
by generating profits for the few.