A Level Economics 48: Nationalisation

Nationalisation refers to the process in which the government takes ownership and control of privately-owned companies, industries, or assets. It involves transferring the ownership and operation of these entities from private hands to the public sector.

Argument for Nationalisation: The argument for nationalisation is primarily based on the belief that certain industries or services are best managed and operated by the government to serve the interests of the public and the nation as a whole. Proponents of nationalisation often cite the following reasons:

1. Public Interest and Welfare: Nationalisation aims to ensure that essential goods and services, such as healthcare, education, and utilities, are provided to all citizens at affordable prices and without discrimination. It prioritizes public interest and welfare over profit motives.

2. Natural Monopolies: Some industries, like water and electricity distribution, have natural monopolies due to high fixed costs and economies of scale. Nationalisation can prevent private monopolistic practices and ensure equitable access to such services.

3. Strategic Importance: Nationalisation is often advocated for industries considered strategically important for the country's security, economic stability, or technological advancement. This includes sectors like defense, energy, and transportation.

4. Market Failure Correction: Nationalisation can address market failures, particularly when private firms fail to provide essential services adequately or when industries experience excessive volatility.

5. Long-term Planning: The government's involvement can facilitate long-term planning and investment in infrastructure, research, and development, which may be challenging for private firms with short-term profit goals.

6. Income Redistribution: Nationalisation can be seen as a mechanism to redistribute wealth and reduce income inequality by ensuring profits benefit the wider population rather than private shareholders.

Historical Examples of Nationalisation:

1. Post-World War II: After World War II, the UK undertook significant nationalisation efforts, bringing key industries like coal mining, railways, and steel production under public ownership. The goal was to rebuild the nation's infrastructure and secure critical industries.

2. 1970s Oil Crisis: In response to the 1970s oil crisis, several countries, including Venezuela and Mexico, nationalised their oil industries to gain greater control over energy resources and protect national interests.

Current Examples of Nationalisation:

1. Healthcare: Countries like the United Kingdom and Canada have nationalised their healthcare systems to provide universal healthcare to all citizens, regardless of their income or social status.

2. Public Utilities: In some countries, utilities such as water and electricity supply are nationalised to ensure that these essential services are accessible and affordable to the entire population.

Evaluation of the Argument for Nationalisation: The argument for nationalisation has both strengths and weaknesses:

Strengths:

• Ensuring Essential Services: Nationalisation can guarantee essential services for all citizens and reduce the risk of profit-driven price increases or exclusions.
• Strategic Control: In certain industries, nationalisation provides greater control and stability, safeguarding national interests and security.
• Long-term Planning: Nationalised industries can prioritize long-term investments and research without short-term profit pressures.

Weaknesses:

• Efficiency Concerns: Nationalised industries may suffer from inefficiency and bureaucratic practices, resulting in suboptimal performance and higher costs.
• Budgetary Burden: Nationalisation requires significant government funding, which may lead to increased public debt or budgetary challenges.
• Lack of Competition: In some cases, nationalisation may lead to a lack of competition, hindering innovation and consumer choice.

The debate over nationalisation is complex and often depends on specific circumstances and industries. Some proponents argue that nationalisation is essential for the provision of crucial services and strategic control, while opponents stress the potential inefficiencies and risks of excessive government control. A balanced approach might involve a combination of private and public ownership, with appropriate regulation to ensure the best outcomes for the economy and the welfare of citizens.

A Level Economics Essay 4: Natural Monopoly Evaluation

 To what extent can a natural monopoly ever be efficient? Use a diagram(s) to support your answer.

A natural monopoly occurs when a single firm can efficiently meet the entire market demand at a lower cost than if multiple firms were to compete. In such cases, the existence of a natural monopoly can lead to efficiency gains. However, the extent to which a natural monopoly can be efficient depends on various factors.

Here's a simplified explanation of the efficiency of natural monopolies and a relevant diagram to support the answer:

In a natural monopoly, the firm benefits from economies of scale, meaning that its average costs decrease as production increases. This occurs when spreading fixed costs over a larger output leads to lower average costs per unit. As a result, the firm can offer its products or services at lower prices compared to multiple competing firms.

The diagram that illustrates this concept is the average total cost (ATC) curve. In the case of a natural monopoly, the ATC curve slopes downward continuously over a large range of output levels. This indicates that as the firm produces more, its average costs decrease. The shape of the ATC curve demonstrates the economies of scale enjoyed by the natural monopoly.

However, there are limitations to the efficiency of natural monopolies. Here are a few considerations:

1. Market Power: Natural monopolies have significant market power, which can lead to reduced competition. Without competition, the firm may lack the incentive to minimize costs and improve efficiency. It could potentially exploit its monopoly power by charging higher prices or offering lower-quality products or services.

2. Regulatory Oversight: To ensure that natural monopolies do not abuse their market power, governments often regulate them. Regulatory bodies establish price controls or performance standards to protect consumers and promote efficiency. The aim is to strike a balance between allowing the natural monopoly to benefit from economies of scale and ensuring fair pricing and quality for consumers.

3. Technological Advances: Technological advancements can alter the nature of natural monopolies. Innovations and disruptive technologies may enable new entrants to challenge the monopoly's dominance. For example, the rise of digital platforms has introduced competition to various industries that were previously considered natural monopolies, such as transportation or accommodation services.

4. Public Ownership: In some cases, natural monopolies are publicly owned and operated by the government. The goal is to ensure that the monopoly operates in the public interest, rather than solely pursuing profit. Public ownership can help align the objectives of the natural monopoly with broader societal goals such as affordability, accessibility, and fairness.

In conclusion, a natural monopoly can be efficient due to economies of scale, as depicted by the downward-sloping ATC curve. However, regulatory oversight, technological advancements, and considerations of market power are essential to ensure that the natural monopoly operates in an efficient and socially beneficial manner. The specific efficiency and effectiveness of a natural monopoly depend on the particular circumstances and the balance struck between market forces, regulation, and public interest.

Pioneering Britain has a rethink on privatisation

 Jonathan Ford and Gill Plimmer in The Financial Times

It was one of the most influential reports ever written by a modern British economist — and perhaps the most rushed. 

Stephen Littlechild, then a little-known academic, was commissioned by Margaret Thatcher’s government in October 1982 to design a regulatory mechanism that would prevent Britain’s soon-to-be privatised telecoms monopoly, BT, from exploiting its position and gouging the public. 

The work was urgent. The prime minister wished to push through legislation that would enable the company to be sold as soon as possible, making it a pioneer for the privatisation of public utilities that she hoped would create a new shareholding democracy in Britain. She needed the report by January 14 1983, which Prof Littlechild said gave him just “10 working weeks (allowing for Christmas!)”. 

 His formula “was invented between 5 and 7 January 1983” allowing just a single week “to write it up in a plausible way, test it against the specified criteria, [and] conclude that it was the best available option”, Prof Littlechild recalled. 

Fortunately, “RPI minus x” passed muster not only with Mrs Thatcher, but also with BT’s investment bankers, SG Warburg, which thought it vastly preferable to the profit ceiling used by US utilities. “It was politically defensible and even attractive,” recalled Prof Littlechild. It won the day. 

The Littlechild formula has gone on to serve as the template for all UK regulation of privatised utilities. In modified form, it sits at the heart of the mechanisms that still regulate prices set by electricity and water companies. 

That means it is also at the centre of the divide in British politics, which in the past two years has fractured about the merits of allowing private companies to run essential utilities that are natural monopolies. 

After a series of scandals and controversies over poor service, high prices and generous payouts to shareholders, the country that was the global frontrunner in privatisation is rethinking how to run its essential utilities. Almost three decades after they were sold off, critics — and many voters — believe that investors have run rings around the watchdogs set up by the government to regulate the industries. 

Under Jeremy Corbyn, the opposition Labour party has come out firmly for the renationalisation of rail, water, energy and the postal service. 

At the Labour party’s annual conference in September, the shadow chancellor, John McDonnell, promised to bring “ownership and control of the utilities and key services into the hands of people who use and work in them”. 

Labour’s attack has exposed the fragility of public consent for private utilities. An October poll conducted by the UK’s far-from-socialist Legatum Institute showed 83 per cent of respondents favoured the nationalisation of water. For energy, the figure was only slightly lower, at 77 per cent. 

“If you look at this list, you see the public most objects to private ownership of natural monopolies — ones where there is little real possibility of injecting meaningful competition,” says Martin Blaiklock, an infrastructure expert and former head of the European Bank for Reconstruction and Development’s power and energy division. 

 Prof Littlechild’s regulatory system was supposed to substitute for competition, giving consumers a fair price while also offering private owners incentives to innovate and find efficiencies. Charges were set to give operators a reasonable return on their capital assets, indexed for inflation (the retail price index) less a certain amount each year (x) to spur them to drive productivity. 

 What makes Britain’s regime different from the one for private US utilities, for instance, is that these returns are not capped. “We didn’t like the idea of an effective 100 per cent tax on efficiencies over a fixed rate of return,” recalls Prof Littlechild. “Margaret Thatcher’s economics adviser, Alan Walters, was particularly offended by the cap. He said: ‘We can’t do this. It’s socialism!’” 

Instead, every few years the watchdog estimates the costs the company is likely to face in the next regulatory period. If the company can achieve greater savings, it is permitted to keep 100 per cent of the extra it makes. 

 This sounds logical enough. It has helped to usher dozens of utilities into the private sector and support huge investment. But critics allege the system has delivered neither the discipline nor the innovation that was promised. They think regulators have been too lenient in setting the efficiency targets that are used to justify extra returns for private capital. 

Take, for instance, the water industry, which was sold off in 1989. Cathryn Ross, until recently the chief executive of Ofwat, boasted that her organisation’s efficiency demands had saved consumers £120 off bills (which currently average about £400) since privatisation. That may sound a large number, but it equates to an annual productivity improvement of just 1 per cent. It is well below even the anaemic 1.5 per cent average rate for the UK economy over the same period. 

“By giving the companies an easy ride, the regulator has ensured that customers’ bills have risen more than they should have,” says David Hall, director of the Public Services International Research Unit at Greenwich university. In the case of water, they have gone up by about 40 per cent above the rate of inflation since 1989, although the steepest increases took place in the first decade after privatisation. 

Second, regulators have paid too little attention to the way companies structure their finances. Finance costs are a key factor watchdogs weigh when setting prices. Yet they have consistently overestimated these expenses during a long period of falling interest rates. 

That, combined with a reluctance to regulate companies’ balance sheets, has resulted in an orgy of borrowing, as this allows owners to achieve “savings” that have more to do with financial engineering than effort and enterprise. Stratospheric debts — including high yielding shareholder loans — have also suppressed tax revenues. Thames Water, for instance, has paid almost no corporation tax for the past decade. 

In 1989, the water industry in England and Wales was privatised with no net debt. Yet almost three decades on, it has built up borrowings of £42bn. 

All but three of the 10 English water companies have been taken off the stock market by private equity investors — many backed by foreign sovereign wealth funds and pension schemes. In the meantime, all the industry’s post-tax profits have been carried off in the form of dividends. Shareholders’ funds have barely budged since 1989. 

A comparison with Scottish Water is instructive. The Scottish utility was not privatised in 1989, but remained in the public sector. Like its southern cousins, it has been forced into a heavy programme of investment, much of it at the behest of the EU.  

Yet unlike the English utilities, it remains relatively unleveraged. Its borrowings of £3.8bn represent just 48 per cent of the value of its regulated assets, as against the 65-80 per cent that is prevalent in England. Meanwhile, the average bill from Scottish Water was £357 last year — 10 per cent lower than the English average of £395. 

Some believe that tweaks to the regulatory regime could make the system function better. Prof Littlechild argues, for instance, that instead of keeping 100 per cent of any extra efficiency gains, these could be split with the customer. “That way there would be some community of interest,” he suggests. 

Mr Blaiklock, a longstanding critic of excessive leverage in utilities, believes the watchdog should intervene much more in companies’ financial affairs, which he thinks are unsustainable in the long term, especially if interest rates rise. “The regulator should be given stronger executive powers to intervene in extreme financial engineering initiatives and aggressive tax tactics.” 

Faced with mounting criticism, watchdogs are making changes. Ofwat is proposing to alter the payment terms for water companies so that more of their money comes from hitting performance targets. 

Critics warn that this will make an already complex system even more baroque. “You have to question whether any system this involved can be transparent, when even people with an interest in getting to the bottom find it very hard,” says Mr Hall. The intricacy of the regulatory process also troubles Prof Littlechild, who notes that it takes about three years to decide the next regulatory settlement. “When we created it, I fondly imagined the regulator sitting down with the companies shortly before the expiry of each period and just setting a price,” he says. 

 Not everyone is convinced that tweaks are sufficient. Mr Hall argues that the regulatory system is inherently dysfunctional. “There is a fundamental contradiction between the regulator’s duty to protect consumers and its overarching duty to ensure that the companies have enough money to deliver investment,” he says. 

Prof Littlechild’s original idea with BT was that the watchdog would simply hold the fort for the consumer until competition arrived like the US cavalry. Permanent regulation is vulnerable to industry capture. “The problem is that the regulator spends all its time talking to the company and its investors,” says Mr Hall. 

Ofwat, for instance, has been criticised for its focus on investors rather than customers. While the watchdog sets aside two days a year to give presentations to the City of London, there is no forum for it to meet customers. 

While regulators do have the power to strip companies of their licences, this has been invoked only once in the water sector — when the collapse of Enron in 2001 forced Ofwat temporarily to take control of its Wessex Water. 

According to Mr Blaiklock, this lack of grip explains why privatisation has failed to achieve its primary purpose — of passing the operational and financial risks for the delivery of a public service to the private sector. London’s £4.2bn “super sewer”, for instance, is financed directly from customer bills, with households rather than the company bearing the risk of a complex project. 

Few developed countries have copied the British model in selling off whole utility networks to private entities. In Europe, the model has generally been to separate asset ownership from service provision and to grant private companies the right to operate concessions. 

In recent years, doubts about the governance and customer benefits have encouraged other countries to reverse this process — especially in water — and take these concessions back into municipal ownership. A study of French water services in 2004 found that the price of privately-delivered water was 16.6 per cent higher than in places where municipalities delivered the service. 

Similar arguments buttress the Labour party’s plans to bring utilities back into public ownership. 

Its proponents stress not efficiency, which they claim is much the same in either public or private sectors, but cost and accountability. A publicly-owned utility would not have to deliver the returns demanded by the private sector. 

A study by Greenwich university claims that refinancing utility debt and equity with government bonds and scrapping dividends could save £2.3bn a year. That is equivalent to a saving of almost £100 off the average £400 water bill. Public ownership would also remove all the incentives that, Mr Hall claims, encourage bosses to favour financial management over customers. 

 “These are local amenities supplying a basic service that ought to be properly accountable to local people,” he says. 

Other structural options involve introducing more competition by separating network ownership from the services, and auctioning limited concessions. The snag is that this would be extraordinarily expensive, requiring the state both to buy out the existing owners and then retender the operations. Taxpayers could end up paying twice — first to compensate existing investors and then potentially to reward the new operators. 

Lastly, there is the possibility of placing utilities in not-for-dividend entities, akin to Welsh Water, which was restructured in 2000. Although they would remain regulated entities, companies could use retained earnings only to invest in their assets or to cut customer bills. Shareholders and executives would no longer be able to skim off all the cream. 

There may be no cheap and easy answers to the problems facing Britain’s utilities, but the status quo is unlikely to hold. “What we can now see is that the regulatory regime is not robust enough,” says Mr Blaiklock. “We need to change that.”

Why too much choice is stressing us out

Stuart Jeffries in The Guardian

Once upon a time in Springfield, the Simpson family visited a new supermarket. Monstromart’s slogan was “where shopping is a baffling ordeal”. Product choice was unlimited, shelving reached the ceiling, nutmeg came in 12lb boxes and the express checkout had a sign reading, “1,000 items or less”. In the end the Simpsons returned to Apu’s Kwik-E-Mart.

In doing so, the Simpsons were making a choice to reduce their choice. It wasn’t quite a rational choice, but it made sense. In the parlance of economic theory, they were not rational utility maximisers but, in Herbert Simon’s term, “satisficers” – opting for what was good enough, rather than becoming confused to the point of inertia in front of Monstromart’s ranges of products.

This comes to mind because Tesco chief executive Dave Lewis seems bent on making shopping in his stores less baffling than it used to be. Earlier this year, he decided to scrap 30,000 of the 90,000 products from Tesco’s shelves. This was, in part, a response to the growing market shares of Aldi and Lidl, which only offer between 2,000 and 3,000 lines. For instance, Tesco used to offer 28 tomato ketchups while in Aldi there is just one in one size; Tesco offered 224 kinds of air freshener, Aldi only 12 – which, to my mind, is still at least 11 too many.

Now Lewis is doing something else to make shopping less of an ordeal and thereby, he hopes, reducing Tesco’s calamitous losses. He has introduced a trial in 50 stores to make it easier and quicker to shop for the ingredients for meals. Basmati rice next to Indian sauces, tinned tomatoes next to pasta.

What Lewis is doing to Tesco is revolutionary. Not just because he recognises that customers are time constrained, but because he realises that increased choice can be bad for you and, worse, result in losses that upset his shareholders.

Scrapping 30,000 products ... Tesco chief executive Dave Lewis is streamlining the supermarket experience. Photograph: Neil Hall/Reuters

But the idea that choice is bad for us flies in the face of what we’ve been told for decades. The standard line is that choice is good for us, that it confers on us freedom, personal responsibility, self-determination, autonomy and lots of other things that don’t help when you’re standing before a towering aisle of water bottles, paralysed and increasingly dehydrated, unable to choose. That wasn’t how endless choice was supposed to work, argues American psychologist and professor of social theory Barry Schwartz in his book The Paradox of Choice. “If we’re rational, [social scientists] tell us, added options can only make us better off as a society. This view is logically compelling, but empirically it isn’t true.”

Consider posh jams. In one study cited by Schwartz, researchers set up two displays of jams at a gourmet food store for customers to try samples, who were given a coupon for a dollar off if they bought a jar. In one display there were six jams, in the other 24: 30% of people exposed to the smaller selection bought a jam, but only 3% of those exposed to the larger selection did.

Now consider – and there’s no easy way to say this – your pension options. Schwartz found that a friend’s accounting firm was offering 156 different retirement plans. Schwartz noted that there was a shift of responsibilities from employer to employee in this seemingly benign transfer of choice: “When the employer is providing only a few routes to retirement security, it seems important to take responsibility for the quality of those routes. But when the employer takes the trouble to provide many routes, then it seems reasonable to think that the employer has done his or her part. Choosing wisely among those options becomes the employees’s responsibility.”

Posh jam conundrum ... too many options can be baffling. Photograph: Graham Turner for the Guardian

But that’s the problem. Which of us, really, feels competent to choose between 156 varieties of pension plan? Who wouldn’t rather choose to lie in a bath of biscuits playing Minecraft? And yet, at the same time, we are certain that making a decision about our workplace pensions is an important one to get right. But instead of making that choice, Schwartz says, many defer it endlessly. One of his colleagues got access to the records of Vanguard, a gigantic mutual-fund company, and found that for every 10 mutual funds the employer offered, rate of participation went down 2% – even though by not participating, employees were passing up as much as $5,000 a year from the employer who would happily match their contribution.

But even if we do make a choice, Schwartz argues, “we end up less satisfied with the result of the choice than we would be if we had fewer options to choose from”. When there are lots of alternatives to consider, it is easy to imagine the attractive features of alternatives that you reject that make you less satisfied with the alternative that you’ve chosen.

Increased choice, then, can make us miserable because of regret, self-blame and opportunity costs. Worse, increased choice has created a new problem: the escalation in expectations. Consider jeans. Once there was only one kind, says Schwartz – the ill-fitting sort that, fingers-crossed, would get less ill-fitting once he wore and washed them repeatedly. Now, what with all the options (stone-washed, straight-leg, boot-fit, distressed, zip fly, button fly, slightly distressed, very distressed, knee-holed, thigh-holed, knee and thigh-holed, pretty much all holes and negligible denim), Schwartz feels entitled to expect that there is a perfect pair of jeans for him. Inevitably, though, when he leaves the store, he is likely to be less satisfied now than when there were hardly any options.

In the good old days there was just one kind of jeans ... Photograph: Ben Margot/AP

Schwartz’s suggestion is that, at a certain point, choice shifts from having a positive relationship with happiness to an inverse one. So, what’s the answer? “The secret to happiness is low expectations,” he says, sensibly.

No wonder, then, we aren’t happy. In the 10 years since Schwartz wrote his book, the ideology of unlimited choice has expanded into unlikely areas – schools, sex, parenting, TV – and expectations have risen as a result. Equally importantly, new tactics have developed to help consumers deal with the downsides of choice. For instance, Schwartz notes, there is an increasing reliance on recommendation engines to help people cope with choice. “The internet hath created a problem that it is now trying to solve,” he says.

One of the areas affected is dating. Relationships are being treated like any other product – online we can browse and compare prospective sexual partners.

“I think dating sites are now the most common path for meeting romantic partners, and the overwhelming amount of choice that dating sites have created is a real problem,” says Schwartz. One of those problems was noted by the comedian Aziz Ansari in his book Modern Romance. In it, a woman recounts meeting a man on the dating app Tinder, then spending the journey to their first date swiping through the service to see if anyone better was available. Failure to commit to a date or a relationship can itself be a choice – indeed, the sociology professor who helped Ansari with his book, Eric Klinenberg, wrote Going Solo: The Extraordinary Rise and Surprising Appeal of Living Alone to account for those who have stepped off the treadmill of dating, the nightmare of having more choice but less reason to choose. Hence, too, Japan’s soshoku danshi or herbivore men who, so corrupted by the endless choices offered by online pornography, are no longer interested in real sex or romantic relationships. Psychologist Philip Zimbardo fears that, thanks to how online pornography is offering more choices for masturbatory satisfactions, becoming more interactive and immersive, choosing real-life romantic relationships will become even less appealing.

BT vying with Sky for football coverage is good news, right? Not necessarily ... Photograph: Rex Shutterstock

There’s another problem with choice: it can be more apparent than real – that is, a seeming increase in choice masks the fact that you’re paying more for the same stuff you had before. My Guardian colleague Barney Ronay identified this when he considered football on TV recently. The ostensibly good news is that BT Sport is competing with Sky for football rights. It now exclusively shows European Champions League football, which should mean more choice, lower customer outlay and more joy, shouldn’t it? But if you are already a Sky Sports subscriber (or, perhaps more pertiniently, watched the free-to-air games on ITV), it means the opposite. If Barney wants to watch the same amount of football as last year, he will now have to pay more.

That sort of phenomenon repeats itself across TV more generally. To watch all the good stuff on TV now involves paying money in the form of monthly subscriptions to Amazon Prime, Netflix, Sky, BT and Blinkbox, as well as having a Freeview box. But who can afford that kind of outlay? A decade ago everything you could ever wish to watch was on Sky (if you were prepared, admittedly, to pay a monthly subscription to Murdoch). A decade before that, all good TV was on terrestrial, so once you had paid for the telly and the licence you were set. What is sold to us as increased choice has thus made us poorer and, if Ronay’s experience is anything to go by, more disappointed. As Ronay says: “for the captive consumer this isn’t really a proper choice at all, but an opportunity to spend the same and get less, or alternatively spend more and get the same.”

UK TV: how much does it cost to watch everything?



Anger at this state of affairs is comprehensible to anyone who lives in an advanced western society in 2015 and has to choose between mobile phone plans, schools, and water, gas and electricity suppliers – not to mention minimally distinguishable prospective dates. Admittedly these are the choices typical of decadent westerners in the era of late capitalism, but that thought doesn’t make the burden of choice any easier to bear.

Consider electricity, says Professor Renata Salecl, author of The Tyranny of Choice. “Privatisation of electricity did not bring the desired outcome – lesser prices, better service – however, it did contribute to the anxiety and feeling of guilt on the side of the consumers. We feel that it is our fault we are paying too much and we are anxious that a better deal is just around the corner. However, while we are losing valuable time doing research on which provider to choose, we then stop short of actually making the choice.”

So we do nothing, and corporations profit from this inertia.

All of this confounds the idea that human beings act in such a way that they maximise their wellbeing and minimise their pain. “People often act against their wellbeing. They also rarely make choices in a rational way.”

The political idea of allowing parents to choose between schools was to apply the presumed rigour of the market to education so that underperforming schools would improve or close. Standards would rise and formerly illiterate brats in key stage II would relax after double quantum physics by dancing around the maypole singing settings of Horace’s verse in Latin, just like in Michael Gove’s dreams.

 Education has become a consumer good, and could all go wrong ... Illustration from Charles Dickens’ Oliver Twist. Mansell/Time Life Pictures/Getty Images

So education has become a consumer good, and my daughter’s is something I’m encouraged to think about as though it were a trip to the shops to buy shoes. Can I buy the best education for my daughter, possibly by moving house, lying about my real address or selling a kidney for private schooling? I’m not sure, but one thing I am becoming increasingly convinced of is what Salecl says: “Ideology that convinces us that everyone can make it if only he or she makes the right choice relies on blindness – we do not see that social constraints stop us making out of our lives what we wish for. And when we think about choice as a primarily individual matter, we also become blind about broader social, political choices.”

What she means, I think, is that the ideology of choice makes us forget that some things shouldn’t be bought and sold, and they are the most important things of all. What’s more, having made a decision, we don’t want to hear we have got our choices wrong. “We are constantly under the impression that life choices we made after careful planning should bring us expected results – happiness, security, contentment – and that with better choices, traumatic feelings that we have when dealing with loss, risk and uncertainty can be avoided.” No wonder, then, that Slacel’s most recent work is on the power of denial and ignorance. “When people are overwhelmed by choice and when they are anxious about it, they often turn to denial, ignorance and wilful blindness.”

Schwartz demurs, arguing that some extensions of choice can be a good thing. When I tell him about the preponderance of academies and free schools that, seemingly, increase choice for British parents, he says a similar phenomenon, charter schools, has arisen in the US. “There is something good about this, since public education in much of the US is dreadful, and competition might make it better. But there is no doubt it is stressing parents out big time.”

As with choosing a pension, choosing a school leaves scope for regret, shame and fear of missing out. And, in extremis, the terrifying sense that I might inadvertently choose an option that will mess up my daughter’s future.

Challenging the rhetoric of choice ... Jeremy Corbyn. Photograph: Mary Turner/Getty Images

In 2015, though, there are counter-tendencies to the stress-inducing extension of choice. Not only is Tesco reducing its number of products, but the new leader of the Labour party has just been elected on a political platform that, in part, challenges the rhetoric of choice. Jeremy Corbyn proposes to renationalise not just the rail network but public utilities (gas, electricity and water), partly in the hope that the reduction of choice will provide a fairer, less anxiety-inducing experience for their users.

Perhaps, Corbyn’s political philosophy suggests, what we need is not more choice, but less; not more competition but more monopolies. But before you counter with something along the lines of “Why don’t you go and live in North Korea, pinko?” consider this: Paypal founder Peter Thiel argues that monopolies are good things and that competition, often, doesn’t help either businesses or customers. “In the real world outside economic theory, every business is successful exactly to the extent that it does something others cannot. Monopoly is therefore not a pathology or an exception. Monopoly is the condition of every successful business.” Competition, in short, is for losers.

That, of course, doesn’t mean that successful capitalists like Thiel would be supporting Corbyn in his plan to recreate the state monopolies of yore or submit schools once more to local education control, but it does mean the rhetoric of choice and competition is at least being challenged and not only from the political left.

“At least we are talking about a political and economic choice,” says Salecl, “and are not simply following the ‘desires’ of the market.” Perhaps: if she’s right about that, then we are opting for something we haven’t done for a long time.

Mobile phone companies have failed – it's time to nationalise them

It may sound like off-the-wall leftiness, but there are clear and convincing arguments for a nationalised mobile phone network

• 
• • Owen Jones
  • The Guardian, Monday 11 August 2014

Mobile phone companies put profit before the needs of the consumer. Photograph: Alamy

Nationalisation is a taboo among the political and media elite, its mere mention guaranteed to provoke near-instantaneous shrieks of "dinosaur!" and "go back to the 1970s". Imagine the Establishment's horror, then, when a succession of recent polls found that nearly seven out of 10 Britons wanted the renationalisation of energy, and two-thirds of the electorate wanted rail and Royal Mail back in public hands. Even Ukip voters – those notorious bastions of pinko leftiness – overwhelmingly backed the renationalisation of key utilities. While our political overlords are besotted with Milton Friedman, on many issues the public seem to be lodged somewhere between John Maynard Keynes and Karl Marx.

Previously state-owned services are one thing: but what about the mobile phone network? Even the very suggestion is inviting ridicule. But if people are so keen for public ownership of rail, why is the case any weaker for mobile phones? They are a natural monopoly, and the fragmentation of the telecommunications network is inefficient. Their service is often poor because they put profit ahead of the needs of the consumer. And rather than being the product of a dynamic free market and individual plucky entrepreneurs, their technological success owes everything to the public sector. It might seem like barking leftiness on speed, but the arguments for nationalising phone networks are less absurd than they might appear.

The eternal irritation of any mobile phone user is the signal blackspot. They affect everyone. Even David Cameron has had to return early from his holidays in Cornwall because of problems with signal "not-spots". Nor is it only a problem for people in rural areas. Richard Brown lives at the top of a hill in Brighton, and he can't get a signal withVodafone, despite its database claiming excellent coverage. "So for £100 I bought a 'Sure Signal' device – or in other words paid £100 to enable Vodafone to deliver me the core service that I am already paying upwards of £30 a month for." It plugs into the router and drains power, but seems to make little difference.

In his south London flat, EE customer Ben Goddard's mobile phone almost always registers no bars. With missed calls from hospitals and family members, he's been forced to install a house phone. "Zero signal in east London," says fellow EE user Dom O'Hanlon. "No attempt to fix, help or offer customer service." EE seem to have abandoned its earlier incarnation as 'Everything Everywhere' because it was so widely mocked as 'Nothing Nowhere'. When Ben Parker switched from EE to Vodafone, he found that his signal did improve, but his data access died, forcing him to depend on Wi-Fi.

If you have tried to deal with the customer service arm of the mobile phone giants, then please do not read on, because you will only relive traumas you would rather forget. After Grace Garland was signed up to EE from her Orange contract, her 4G and internet access all but vanished for several months. Errors at EE's end left her being charged double, and its system believed she had run out of her data allowance, leaving her with no access to crucial work emails. "No one took my concerns seriously," she says. "They told me they had actually subcontracted a lot of their technical support to outside parties who can only be contacted by them by email, making everything slow and ineffectual." Of course, mobile phone companies do not provide detailed data about their national coverage, leaving customers to choose on the basis of factors such as price.

According to OpenSignal – a company that is ingeniously working out national signal coverage by tracking data from mobile users – the average British user has no signal 15% of the time. And here is where the point about a natural monopoly creeps in. Mobile phone companies build their masts, but don't want to share them with their competitors. That means that rather than having a network that reflects people's needs, we are constantly zipping past masts we are locked out of. In many rural areas, mobile phone companies are simply making the decision that there are not enough people to justify building more masts. Profit is prioritised over building an effective network that gives all citizens access.

 Signal failure … a woman struggles to make a call in Hythe, Kent. Photograph: Alamy

To be fair to the government, it is proposing action to compel companies to share masts. But OpenSignal's Samuel Johnson says that this would only cover phone calls and text messages, not data, and would reduce our time without signal to about 7%. Why not force them to share all data? "Well, it'd be bad for competition, because it would hit their profits," he says. Not only that, but even if the government's modest measures are implemented, the potential financial hit to mobile phone companies would deter them from clamping down on the final 7%.

Customers are ripped off in other ways. The former Daily Telegraph journalist George Pitcher has pointed out that the typical "free phone when you sign a long contract" offer is a scam. In a typical £32-a-month contract spread over two years, you're coughing up £768, even though the phone is worth just £200. Get a £15-a-month SIM card-only deal and buy a £10 mobile off eBay instead, he suggests, and you'll save £400. "Perhaps the mobile phone companies could be nationalised and given to the banks?" he concludes. Last part aside, Pitcher has it in one. And then there's the derisory cost to the company of sending snippets of data such as text messages – which can cost the user 14p a pop. Last year, Citizens Advice received a whopping 28,000 complaints about mobile phones, often from customers who could not be released from contracts even if there was no signal in their area.

Neither are mobile phones themselves triumphs of the private sector, or even close. "It's not far-fetched to suggest nationalisation," says economics professor Mariana Mazzucato, "because these companies aren't the result of some individual entrepreneur in the garage. It was all state-funded from the start." As I write this, I fiddle occasionally with my iPhone: in her hugely influential book The Entrepreneurial State, Mazzucato looks at how its key components, like touchscreen technology, Siri and GPS are the products of public-sector research. That goes for the internet, too – the child of the US military-industrial complex and the work of Sir Tim Berners-Lee at the state-run European research organisation Cern in Geneva.

"It's actually the classic case of economies of scale, or a natural monopoly, and the decision you'd have to make is whether it's one firm or the state running the whole thing," says Mazzucato. "When you chop it up, you lose the benefits of cost and efficiency from having one operator." Many network providers spend more money on share buybacks than research and development, retarding further technological progress in the name of profit. And then there's Vodafone, which has become one of the key targets of the anti-tax avoidance movement. It's cheeky, really: leave the state to fund the technology your business relies on, and then do everything you can to avoid paying anything back.

There are many reasons why a fragmented mobile phone network is bad for the consumer. Dr Oliver Holland of King's College London's Centre for Telecommunications Research sympathises with the idea of a nationalised network on technical grounds. This is how he explains it. Each mobile phone company is allotted a slice of the frequency spectrum. But at any given time, lots of customers belonging to one company may be using their mobile phones. "You will probably have a reduction in the quality of the service, because they're all competing for the spectrum." Customers belonging to another company may be using the service less at the same time, leaving their slice of the spectrum to go to waste when others need it. "If you had just one body, instead of dividing the spectrum into chunks, they can use it more efficiently," he says.

The case for nationalising mobile phone companies is actually pretty overwhelming. It would mean an integrated network, with masts serving customers on the basis of need, rather than subordinating the needs of users to the needs of shareholders. Profits could be reinvested in research and development, as well as developing effective customer services. Rip-off practices could be eradicated. It doesn't have to be run by a bunch of bureaucrats: consumers could elect representatives on to the management board to make sure the publicly run company is properly accountable. Neither does nationalisation have to be costly: Clement Attlee's postwar Labour government pulled it off by swapping shares for government bonds. So yes, it might sound far-fetched, the sort of proposal that lends itself to endless satire from the triumphalist neoliberal right. But next time you're yelling at your signal-free mobile phone, it might not seem so wacky after all.