Somewhere, Milton Friedman is laughing.

Tony Judt argues western societies need to re-think how government and society interact. It's a must-read on both sides of the aisle:

If we had to identify just one general consequence of the intellectual shift that marked the last third of the 20th century, it would surely be the worship of the private sector and, in particular, the cult of privatisation. With the advent of the modern state (notably over the course of the past century), transport, hospitals, schools, postal systems, armies, prisons, police forces and affordable access to culture – essential services not well served by the workings of the profit motive – were taken under public regulation or control. They are now being handed back to private entrepreneurs.

What we have been watching is the steady shift of public responsibility on to the private sector to no discernible collective advantage. Contrary to economic theory and popular myth, privatisation is inefficient. Most of the things that governments have seen fit to pass into the private sector were operating at a loss: whether they were railway companies, coal mines, postal services, or energy utilities, they cost more to provide and maintain than they could ever hope to attract in revenue. For just this reason, such public goods were inherently unattractive to private buyers unless offered at a steep discount. But when the state sells cheap, the public takes a loss. It has been calculated that, in the course of the Thatcher-era UK privatisations, the deliberately low price at which longstanding public assets were marketed to the private sector resulted in a net transfer of £14bn from the taxpaying public to stockholders and other investors.

To this loss should be added a further £3bn in fees to the bankers who transacted the privatisations. Thus the state in effect paid the private sector some £17bn to facilitate the sale of assets for which there would otherwise have been no takers. These are significant sums of money – approximately the endowment of Harvard University, for example, or the annual gross domestic product of Paraguay or Bosnia-Herzegovina. This can hardly be construed as an efficient use of public resources. The outcome has been the worst sort of "mixed economy": individual enterprise indefinitely underwritten by public funds. In Britain, newly privatised NHS hospital groups periodically fail – typically because they are encouraged to make all manner of profits but forbidden to charge what they think the market might bear. At this point the hospital trusts (like the London Underground, whose PPP collapsed in 2007) turn back to the government to pick up the bill. When this happens on a serial basis – as it did with the nationalised railways – the effect is creeping de facto nationalisation with none of the benefits of public control.