Privatisation

The hot topic is privatisation. Next month the LDP might fall because of Koizumi's thwarted attempts to privatise Japan Post.

I don't really understand it as a concept. Public companies are protected and inefficient, whereas private companies are competitive and efficient. Okay.

So how do you make a public company efficient? Make it private. Because if it's competitive, it's automatically going to be efficient.

But aren't there also inefficient private companies? And wouldn't it be nuts to suggest they are inefficient because they are private? Saying a kebab shop should be nationalized for not making a profit would definitely be nuts. So why not the same the other way around?

My understanding is that the huge postal savings funds in Japan Post are currently being used by Japanese politicians and bureaucrats to fund ridiculous, unnecessary construction projects in rural areas through the FILP (Zaito) shadow-budget scheme, which helps keep the bureaucrats and politicians in power, helps keep 10% of the population employed in the construction industry, helps destroy the Japanese countryside, but ultimately does nothing to make the Japanese economy competitive. And hence the need for change.

But how will making Japan Post a private company achieve that? It will certainly reduce labour costs and make some people very rich in the process. But will it mean that the trillions of yen in postal savings is turned to uses that will benefit the Japanese economy and people? Or will it just make the private owners very rich? And is there even any guarantee the private owners won't continue using the funds the exact same way they have been used before?

Go on, explain it all to me if you like, because I haven't got a clue. I need someone to sit down with me for about four years to help me understand economic theory.

Posted by Setsunai at August 12, 2005 10:56 AM