Now, to understand the methodology of turning public assets into private investment opportunities, we need to understand a basic Machiavellian principle of divide and rule. This would normally apply to a rebellious underclass, but works just as well for the public sector. Firstly, ensure that you repeatedly describe the publicly funded institution as ‘bloated expensive and too centralised’. Think of a slow moving luxury ocean liner with its hull clad in Louis Vuitton and gold leaf, even if the image in most people’s heads is a battered shabby whale with scars all over it. Ensure that there are no comparable private institutions so that no one can compare the running costs or challenge your assertions that the institution is no longer ‘fit for purpose’.
Next, destroy the economy of scale by introducing an internal market. Firstly break up each part of the institution into smaller fund holding units that compete with each other to provide services at external market prices that were previously absorbed by the overhead at cheaper rates achieved through the economies of scale.
A perfect business model to study here is from the nineties - John Birt’s visionary ‘Producers Choice’ initiative in the BBC that divided the BBC’s 23,000 staff into 8,500 buyers and 14,500 sellers. This meant a light bulb replacement in an office used by one programme would be charged against their production budget along with office rental and the costs of requesting a music track from the BBC sound library and discovering that it was now cheaper to ‘outsource’ the need by nipping down to a supermarket and buying it. Thus, the BBC, (the bloated luxury liner clad in gold and Vuitton) which used to operate like an old Hollywood studio with its own carpenters, props and costume stores etc could now sell of all of these wasteful assets and pay the market price for private companies to supply them with what they previously supplied to themselves at a fraction of the cost. Even when the model is discovered to have been flawed and is scrapped, the important work has been done and the economies of scale fatally damaged.
Another instructive example from the nineties is the UK National Health Service which was also subjected to the internal market by turning each health authority into a separate fundholding trust with its own management rather than the centralised layers of administration (remember to say bloated and unwieldy) that were wilfully capitalising on the economies of scale by cleaning hospitals, buying equipment, feeding and caring for patients from the same budget. The staff costs of course, would initially rocket by 800% due to the new layers of management required for each trust, but you can’t make an omelette fit for purpose without over-egging. Then, show your adaptability to market forces by changing the structure at least three times but always retaining the internal market ensuring the institution becomes more and more expensive and can be cherrypicked by private providers for the most lucrative services.
The final part of this module covers the closing stages for which all of this preparation has carefully laid the ground. Declare the public institution a wasteful drain on the nation’s resources and argue for a complete private sector replacement dictated by the market with some cursory inspectorate to ensure that some basic standards that are no longer economic to maintain can be seen to occasionally be observed by high profile incidents that are exposed and censured whilst the majority remain un-reported. Argue that the country can no longer afford the public funded institution and hope that the British people maintain their reputation for apathy and resignation and don’t flood the streets to protest that everything they have come to rely upon is being taken away and sold to the highest bidder.
Next term, how to divert attention from tax avoiding international corporations by scapegoating foreigners and homosexuals for everything that is wrong with the European project, the economy, the welfare system and the lack of decent real ale in golf clubs Farage Major and Cameron Minor, see me after class. Putin? Insolent boy. Put your shirt back on at once.