UPDATE: For the latest developments in this story, see here.
Since the idea of the great EUR50bn Greek asset sale first became a matter of national debate in a staged intramarital spat earlier this year, there's been a good deal of speculation on whether it can be done, how it might be done and what might go under the hammer. Depending on one's predisposition for foaming at the mouth, the purported stakes tend to range from the National Electricity Co., to Greek islands or indeed the Parthenon.
The idea itself is not new. In fact, in a curious twist of fate, the senior opposition party (of whom I am a repentant voter) had proposed the Great Asset Sale as early as mid-2010. They even mooted the original 50bn figure. To hear some in the Left speak of 'selling off the People's property' you might think that a majority of Greek are against privatisations. In fact, the most recent poll on this subject (commissioned by a centre-right leaning daily) found that 41% believe they are 'definitely' necessary, while another 33% believe that they are 'probably' necessary. 58% generally believe they are a good thing. The most popular target for privatisation is the Hellenic Railway Organisation group (a listed company), which as one of our few libertarian MPs (and a minister of finance for a mere 2 years) put it back in 1992, once made more losses than the cost of booking every last rail passenger in the country a taxi.
I've promised to look into this matter in the understanding that our Government is hoping to use privatisations to build a war chest of cash that will help Greece default a little earlier. Alternatively a proper price list of public property could facilitate the equity to debt swaps I've called for here. Either way selling state assets could break an important deadlock because, although we can't default without a primary surplus, the longer you draw out a default that everyone knows will happen, the worse off everyone is. And of course everyone's patience is beginning to wear thin.
This will take some time for me to research properly so please come back to this page later if you have time. Here's what I've got to date.
One place to start digging for past privatisation data is the World Bank's privatisation database, which covers the periods from 1988 to 2008. It is focused on developing countries, but let's face it. That's what we are, too. Alternatively, the European Privatisation Barometer is another option. Registration is required to view the data, but it is free.
Examples of such mass privatisation are scarce; indeed most examples come from post-communist states where mass privatisation programmes were carried out almost overnight. (A very interesting review of this experience showing a link to higher mortality rates can be found here. It shows that social capital is a crucial mediating factor mediating the effects of privatisation on mortality, and I think this will be a telling factor in our case as well.)
Of course moving from communism to (hopefully) capitalism is not the same as the Greek experience will be as we have an experience of things like private ownership, corporate governance, protection of minority investors and the trappings of half-way workable markets. But it can still go very very wrong.
Another good place to start is this review which shows that privatisation tends to improve efficiency in publicly owned enterprises and that this more than makes up for loss of jobs where these do occur. I note that the productivity gains aren't necessarily passed on to consumers (the evidence is not there for me to be able to say this). And by the way privatisations mostly tend to cost middle-managers, rather than blue-collar workers, their jobs (evidence reviewed here).
More details soon.
Since the idea of the great EUR50bn Greek asset sale first became a matter of national debate in a staged intramarital spat earlier this year, there's been a good deal of speculation on whether it can be done, how it might be done and what might go under the hammer. Depending on one's predisposition for foaming at the mouth, the purported stakes tend to range from the National Electricity Co., to Greek islands or indeed the Parthenon.
The idea itself is not new. In fact, in a curious twist of fate, the senior opposition party (of whom I am a repentant voter) had proposed the Great Asset Sale as early as mid-2010. They even mooted the original 50bn figure. To hear some in the Left speak of 'selling off the People's property' you might think that a majority of Greek are against privatisations. In fact, the most recent poll on this subject (commissioned by a centre-right leaning daily) found that 41% believe they are 'definitely' necessary, while another 33% believe that they are 'probably' necessary. 58% generally believe they are a good thing. The most popular target for privatisation is the Hellenic Railway Organisation group (a listed company), which as one of our few libertarian MPs (and a minister of finance for a mere 2 years) put it back in 1992, once made more losses than the cost of booking every last rail passenger in the country a taxi.
I've promised to look into this matter in the understanding that our Government is hoping to use privatisations to build a war chest of cash that will help Greece default a little earlier. Alternatively a proper price list of public property could facilitate the equity to debt swaps I've called for here. Either way selling state assets could break an important deadlock because, although we can't default without a primary surplus, the longer you draw out a default that everyone knows will happen, the worse off everyone is. And of course everyone's patience is beginning to wear thin.
This will take some time for me to research properly so please come back to this page later if you have time. Here's what I've got to date.
One place to start digging for past privatisation data is the World Bank's privatisation database, which covers the periods from 1988 to 2008. It is focused on developing countries, but let's face it. That's what we are, too. Alternatively, the European Privatisation Barometer is another option. Registration is required to view the data, but it is free.
Examples of such mass privatisation are scarce; indeed most examples come from post-communist states where mass privatisation programmes were carried out almost overnight. (A very interesting review of this experience showing a link to higher mortality rates can be found here. It shows that social capital is a crucial mediating factor mediating the effects of privatisation on mortality, and I think this will be a telling factor in our case as well.)
Of course moving from communism to (hopefully) capitalism is not the same as the Greek experience will be as we have an experience of things like private ownership, corporate governance, protection of minority investors and the trappings of half-way workable markets. But it can still go very very wrong.
Another good place to start is this review which shows that privatisation tends to improve efficiency in publicly owned enterprises and that this more than makes up for loss of jobs where these do occur. I note that the productivity gains aren't necessarily passed on to consumers (the evidence is not there for me to be able to say this). And by the way privatisations mostly tend to cost middle-managers, rather than blue-collar workers, their jobs (evidence reviewed here).
More details soon.
