The Thatcher Reforms in the UK are famous as a successful example of capitalism. Former British Prime Minister Thatcher promoted neoliberal economic policies from around 1982. Her administration was a world leader in promoting privatization and liberalization. Following this privatization, British companies merged with Dutch and other companies. Foreign capital also flowed into the water industry. These privatizations initially boosted the UK economy. However, they gradually began to have negative effects. Foreign companies that invested in privatizations tended to prioritize dividends to shareholders and not allocate sufficient funds to infrastructure investment. As a result, infrastructure sectors such as water supply in the UK suffered from a lack of investment and a deterioration in service quality.
Price hikes due to privatization were also a problem in France, across the English Channel. Water rates in Paris rose 265% between 1985 and 2009, following privatization. Between 1985 and 2009, Paris’s inflation rate was 70.5%. Private water utilities raised their prices by a rate far exceeding inflation. As a result, Paris’s water utility, “Waters of Paris,” was remunicipalized in 2010. The following year, in 2011, “Waters of Paris” successfully reduced water rates by 8%. Since remunicipalization, Paris’s water utility has attracted attention from water industry professionals around the world for its innovative management methods. Severe pollution increases water purification costs, leading to higher water rates. “Waters of Paris” is working to increase the area of land converted to organic farming and promote the elimination of nitrate-based pesticides. It also supports organic farming.
When we look at privatization in the UK and France, several problems become apparent. They place more emphasis on dividends for companies and shareholders than on the interests of citizens. They operate their businesses based on ensuring executive compensation, shareholder dividends, and corporate profits. If the business incurs losses, they resort to raising rates. The initial contract creates a mechanism to ensure this profit. Here, too, there is a mechanism for paying large amounts of money to contract lawyers. Because of executive compensation and shareholder dividends, which are unnecessary in private businesses, infrastructure investment decreases over time, while money spent on maintenance and repairs increases. British steel companies, which are often referred to as national steel, have Chinese capital. Chinese capital was trying to close unprofitable blast furnaces. In April, the British government passed emergency legislation to place the companies under government control, preventing the Chinese parent company from closing them. It appears that British privatization policy is at a turning point.
