The twenty-two steps he politics of privatisation need careful 1
handling — as witness that apostle of market freedom, Dr Madsen Pirie, of the Adam Smith Institute. His new study, Privatisation in theory and practice (Adam Smith Institute, £7.80), begins with a paragraph from The Wealth of Nations urging the monarchies of Europe to sell off their crown lands: public debt down, public spending down, private productivity up. It ends more cautiously: 'Large though the progress of privatisation has been, and successful though the techniques have proved, the process is still in its very early stages . . . There are hopeful signs. Those addicted to folk wisdom might note that a good beginning is half-way through, and the first half is always the hardest.' We have now had more than five years of privatisation. Was that the first half? If so, Dr Pirie implies, the second half needs to be better. He links public ownership and control with public spending. Govern- ments, he urges (and the five years argue for him), cannot control spending until they step back from ownership and control. He lists 22 ways of taking that step, from outright sales of assets to breaking public- sector monopolies of supply. There must indeed be more to privatisation than arranging for one of half-a-dozen merchant banks to transfer a state-owned monopoly into the partial ownership of the pension funds of other state-owned monopolies. The question is political rather than finan- cial, but the prizes should go to the financial engineers who can answer it.
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