The Economist says it Best

I am an ardent fan of the Economist magazine and have been reading it for decades. I love it for its language and  variety. A recent article titled, “A World Turned Upside Down with a catch line” Giant state-owned firms have fallen back out of fashion” captures an important lesson in economics (which I hapr on frequently in this blog) in a most engaging fashion with pop music analogies and irreverent certainty of its line of argument.

It states that,

“These vast organisations are not going away; most still make huge profits, often boosted by cheap public funding. But governments must recognise that the slump in their valuations is a sign they are allocating capital badly. That is in no one’s interest. Petrobras has made a baby step by allowing outside shareholders to appoint a director, while China sometimes mutters about modest reforms of its industrial fiefs. But the hybrid model of a firm beholden to both investors and politicians is as full of contradictions as Karl Marx said capitalism was. Privatisation is the best way to resolve these tensions. Businesspeople, at least, can now be a little less dazzled by state firms. To outlast the average pop star’s career, companies need a culture of innovation, financial discipline and, increasingly, global reach. These are things only a few managers are able to deliver—and which no government can.”

I have nothing against the public sector but I do feel that a level playing field is imperative for healthy growth of a liberalised sector/economy. I am against ill analysed public funding of PSUs and believe that they must compete (and be allowed to compete) on equal terms with private counterparts to create value for customers. This applies also to Broadband Networks and National Broadband Plans.