Wednesday, April 02, 2014

Privatization is theft

A government is carrying out a crash-program of privatization without a mandate. It is desperate to sell, so it sets the price of the shares artificially low, and loses $1.5 billion in a single day.

No, this isn't New Zealand (yet) - its the UK:

The government's desperation to sell Royal Mail cost taxpayers £750m in a single day, the National Audit Office has said in a scathing report into the privatisation of the 500-year-old national institution.

The public spending watchdog says the business secretary Vince Cable ploughed ahead with plans to float Royal Mail at a maximum price of 330p-a-share despite repeated warnings from City experts that the government had vastly undervalued the company.


Royal Mail's shares spiked 38% on their debut on the stock market on 11 October - the biggest one-day rise in a privatisation since British Airways in 1987 - as investors tried to buy up more than 23 times the number of shares available.

The audit office said the government could have made an additional £750m for taxpayers if it had priced the sale at the first day closing price of 455p rather than the maximum 330p starting price. Achieving an additional £750m from the sale could have covered the annual salaries of an additional 34,000 NHS nurses.

Cut to New Zealand: the National Party is carrying out a crash-program of privatization without a mandate. It is desperate to sell Genesis Energy before the election, so it has set the price of shares artificially low. Its pretty obvious what will happen next - but I'm sure their donors and cronies will be happy with the free gift of public wealth.

When governments in the developing world sell public assets to cronies at bargain-basement prices, we call it what it is: corruption and theft. The National Party (and the UK Conservative party) are no different. And its time we held them criminally responsible for their theft of public wealth.