Is Biman on his way to a collision course?


This newspaper is calling for Biman, the government-owned airline, to be privatized – and rightly so.

The argument against privatization is that it will prevent politics from directing the way the airline operates. That’s the point of having a public company, after all.

That politics and politicians should be able to influence what happens and how, instead of just being a money-hungry capitalist business.

The fact is that, in a happy coincidence, this is also the argument in favor of privatization.

So that politics and politicians are not able to interfere in the race to the point that it simply becomes a money-hungry capitalist organization.

We even have proof – a bit odd, to be fair – of how it works.

Britain’s water and energy companies used to be owned by the British government and they weren’t run very well.

They have been privatized and some of them are now owned by foreign governments.

They’re not perfect, no one would claim that, but they’re much better managed than before.

Which gives us this little logical problem.

For example, why can the French government run a water company in Britain while the British government cannot run a water company in Britain?

Or at least why can the French handle one better than the British?

My answer is, and I admit it’s a bit strange, that when the French government is running something in Britain, they don’t have to worry about politics.

They can just be capitalists and run it for the money – or, as you could also say, run it efficiently.

But the continuing British government in Britain is subject to all these domestic political tensions.

Unions will start using their members’ votes to get higher wages, just as an example.

In other words, the problem with a state-owned company, a government-run company, isn’t quite that the government can’t run things.

It’s that if the government has one in its own country, how it’s run inevitably becomes a matter of local and national politics.

Things that the government must of course take into account.

This is exactly what leads to inefficiencies.

The advantage of privatization – even if it ends up being led by a foreign government – ​​is that it removes the organization entirely from domestic politics, shields it from these pressures, and allows management to organize things efficiently.

Now, yes, Biman is a particularly extreme case of inefficiency and we’re likely to find out if anyone would be willing to pay for it.

The answer may well be no, or at least not much. But then, that’s also rather the point.

An airline in a rapidly growing economy should be worth a lot of money.

That this is not the case is the proof we need for its ineffectiveness.

Having an efficiently run airline would also be very beneficial to the wider economy.

So, as the editorial of this newspaper says, privatize it.

Having a better Biman will be worth it.

But the point here is that it doesn’t matter who it’s sold to.

Well maybe try to make sure it’s not a known scammer etc but other than that whether the buyer is a private sector organization or part of a foreign government , it doesn’t really matter.

The only organization we don’t want to lead is the government of Bangladesh.

To repeat this point, the argument for a public company – like an airline – is that politics and politicians can trump commercial efficiency.

It is also the interest of not having a public company: because we prefer commercial efficiency to the problems that come from the fact that politics and politicians ignore this required efficiency.

Tim Worstall is Senior Research Fellow at the Adam Smith Institute in London


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