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Noam Chomsky said once in lecture:

Social Security is actually in pretty good shape despite what everybody screams about. But if you can defund it, it won't be in good shape. And there is a standard technique of privatization, namely defund what you want to privatize. Like when Thatcher wanted to defund the railroads, first thing to do is defund them, then they don't work and people get angry and they want a change. You say okay, privatize them and then they get worse.
Source

Among various government programs (American and British, since Chomsky implies both) that are less public and more private than they were, was the road to their privatization started with defunding measures? If not, what motivated their privatization? In either case, are those programs less functional than before?

Note: I don't think this question is too broad. I think showing some examples and counter-examples and expert opinion (from not Chomsky and non-politicians) would be sufficient. Though social security is mentioned specifically by Chomsky, I'd like if answers focus on other programs.

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    Is anything said by Chomsky accurate? Certainly in the case of American passenger rail, it would seem (from casual reading - I am no expert) that it did quite well as private companies without subsidies (other than for initial construction) up until post WWII, then declined due to competition from automobiles and airlines. and outside of areas like the Northeast Corridor, only survives due to subsidies (Amtrak). Freight rail seems to be doing well, although AFAIK it's always been private. – jamesqf Jan 26 at 18:31
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    This would be very diffucult to answer objectively, since "defund" is a very vague term. You can always claim "defund" for any action short of giving something an unlimited budget. (On a separate note, Chomsky doesn't seem to have a clue when it comes to Social Security - first; it's not "funded" by government, second, it's definitely NOT in good shape even in medium term official projections) – user4012 Jan 26 at 18:43
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    @user4012 I think that definition of defund is a bit obtuse. It's quite enough to assume he means that it has adequate funding until measures are taken to reduce that funding. – fredsbend Jan 26 at 21:03
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    @fredsbend - "adequate" is fully in the eyes of the beer holder. You can make anything work well with unlimited funding. – user4012 Jan 26 at 21:12
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    @user4012 Utterly false. Some things are just badly designed or bad ideas, regardless of funding. Money doesn't fix everything. – fredsbend Jan 27 at 1:08
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Let us take the claim made:

Like when Thatcher wanted to defund the railroads, first thing to do is defund them, then they don't work and people get angry and they want a change. You say okay, privatize them and then they get worse.

Besides the obvious mistake of 'wanted to defund... first thing to do is defund', note that Thatcher was not the one to privatise the railways. She was 'anti-railway' in terms of not believing in government subsides, but that was an ideology in itself.

It is also worth noting customer levels were steadily decreasing long before Thatcher came to power; to suggest any cuts was causing customer dissatisfaction where there had been none is somewhat misleading https://en.m.wikipedia.org/wiki/British_Rail

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    Well, there had been cuts, but due to a different political generation: en.wikipedia.org/wiki/Beeching_cuts – origimbo Jan 28 at 2:05
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    Also after Beeching and before Thatcher: legislation.gov.uk/ukpga/1974/48/contents – Evargalo Jan 28 at 9:44
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    The fact that State subsidies for the UK railroads were much lower when it was nationalized than after the privatization can be interpreted as an insufficient funding (hence "defunding" ?) that encouraged the privatization. en.m.wikipedia.org/wiki/British_Rail#/media/… – Evargalo Jan 28 at 9:52
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    @Evargalo the claim is the defunding was to allow for privatisation - the fact is that to try and see that you have to stretch as far as possible. The main problem we have is that any government that doesn't believe in subsidising a loss-making government owned facility will have to privatise eventually, for obvious reasons - but the reason isn't 'I want to privatise' but 'I don;'t want to subsidise'. I doubt Thatcher would have agreed to subsidising them well privately franchised. – Orangesandlemons Jan 28 at 9:57
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Historians defy the accuracy of broad descriptive claims made by non-specialists who lack adequate reading. They do so doubly when the impulse to make the claim is to advance a contemporary politics rather than adequately characterise the documentary record of the past.

As Chomsky is no economic historian of public institutions, or comparative equivalent, his claim cannot be historically accurate.

Moreover there are problems with the concept of defunding including changes in the administration of existing funding that result in reduced perceived volume or quality; increased funding at a rate lower than the rate of increase of serviceable population / need; increased funding at a rate lower than inflation (rate of increasing costs); transfer of capital works funding to line service provision with the consequent increase in functional debt; failure to increase partial cost recovery charges in line with inflation or real costs; etc.

An appropriate historical approach for this scope of claim would certainly include New Zealand’s Rogernomics and the Australian Wages and Prices Accord process; and would need to include the Soviet and Soviet-style society denationalisation, and the Chinese proportional privatisation through deliberate forced growth in the private sector and destruction of state industries.

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    Is this a comment or an answer? I don't think begging the question with a genetic fallacy counts as an answer pretty much ever. – fredsbend Jan 27 at 1:19
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    Your words: "As Chomsky is no economic historian [therefore] his claim cannot be historically accurate." You're saying, quite literally, the claim is wrong because of who said it. – fredsbend Jan 27 at 1:30
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    Ok, if I agree with you, which I don't, then you're just claiming burden of proof is on him. In a classical logic course, I'd agree, but on SE and right now it's not very helpful. In the least, you should include a summary of what "Rogernomics and the Accord process" are and show that Chomsky doesn't account for them. – fredsbend Jan 27 at 2:11
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    "As Chomsky is no economic historian of public institutions, or comparative equivalent, his claim cannot be historically accurate." Wow, you mean no layperson can occasionally be correct about a specialized topic, not even by chance? – Zebrafish Jan 28 at 8:23
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    "Chomsky lacks the methodological training to possess an informed opinion." You actually went a step further than that. First you said he lacks the training, and then said his claim cannot be historically accurate. That's wrong. I don't mean to be nitpicky, but precision of words matter, especially when you're making a consequential claim. – Zebrafish Jan 28 at 9:13

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