The Sun’s Political Editor picked a fight with an economics professor. It did not go well for him.
Tom Newton Dunn was demanding that Labour provides costing for nationalising water. But Kings College London (KCL) economics professor Jonathan Portes schooled the Sun journalist. Portes pointed out that bringing essential services, like water, into public control is a financial transaction that doesn’t impact the deficit.
Newton Dunn, however, argued otherwise:
Except, it would if Labour makes “an outright purchase” – which is one option McDonnell suggested. Keep up
So Portes set the record straight:
No. It wouldn’t. It would be a financial transaction. No impact on deficit – capital or current. Keep up.
In other words, there are two ways Labour could democratise essential services. It could wait for a private contract presently providing the service to end and then choose not to renew it. This is the case for the railways, which will cost nothing to bring into public control. Or, it could purchase back the service from shareholders.
Portes’ point is that even if the government purchases the service, it does not impact day to day spending. The government gains an asset when it buys the service, which far outweighs the one-off cost.
BBC joins in
Portes also took aim at BBC Political Editor Laura Kuenssberg. She was reinforcing myths about the “cost” of public ownership:
None of Labour's big proposed nationalisations have got numbers against them in manifesto costings
— Laura Kuenssberg (@bbclaurak) May 16, 2017
So the former Chief Economist at the Department of Work and Pensions retorted:
Again. Nationalisation (like privatisation) does not impact deficit.
Drawing on the BBC’s duty to inform the electorate, one social media user commented:
gov'ts do not need to "balance the books" like households. You (and @bbcnews in general) should understand and explain this better
— David Farbey (@dfarb) May 16, 2017
Not cost, but gain
Another Twitter user summed up the false debate around public ownership:
Presently, rail profits, for example, are going to rich shareholders. If we nationalised the industry then we would be able to reinvest the profits into employee wages, high tech services and cheaper fares.
The same is true for other services we all need. Electricity, health and housing make up the backbone of economy. It will only be cheaper for businesses and people if essential services are publicly provided.
The Sun journalist should think twice about challenging an economics professor next time.
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