PRIVATISATION of profits, nationalisation of losses. This phrase captures everything wrong with our public sector today, from the bankers’ bailout and austerity to today’s collapse of Carillion.

Carillion is a giant and (until last weekend) relatively obscure outfit. Before 1999 it belonged to a more familiar brand name, the Tarmac Group, but since then it has transformed thanks to the boom in public sector outsourcing and private finance initiatives. Unknown to most of the public, it became Britain’s second largest construction firm, largely thanks to government money. Carillion builds everything from HS2 to the Aberdeen bypass and runs everything from school dinners to hospital beds.

Unlike most taxpayers, I was at least tangentially aware of the company’s existence. Alongside Balfour Beatty Kilpatrick, Sir Robert McAlpine, and nine other firms, Carillion was listed as a key organisation involved with blacklisting trade union activists and health and safety reps – an involvement for which they apologised six years ago.

Through my involvement in the unions, I knew the name. I knew they were up to no good in a non-specific sense. However, I had no idea how far this mega corporation had burrowed in to the public sector, and even less inkling of the disaster that greeted us.

Carillion’s collapse raises numerous questions. For one, how can a business that grows fat off public contracts go bust? Privatisation is almost designed as a licence to print money: going broke should be impossible.

The problem is ultimately a design flaw in the model where massive corporations make most of their profit from the public sector, according to Professor Karel Williams of Manchester University. “With outsourcing you have to continually bid for new contracts, and the stock market expects to see continuous growth,” he explains. “But sooner or later you take on a contract that makes huge losses and the operation can’t sustain these losses. Many conglomerates just churn through contracts and move into areas they don’t understand, until their luck runs out.”.

Carillion got so dependent on government contracts that it virtually became an arm of the state. Bankers, managers and government ministers took this to mean it was too big to fail. Beep – wrong answer.

The second question is, where does risk ultimately lie? The idea of private finance initiatives and privatisation more broadly is to remove the burden of risk from taxpayers. However, the message from the bank bailouts and corporate collapses like Carillion is clear: when all else fails, and it usually does, the public foots the bill.

The risk of privatisation, then, lies with us. “The Public Accounts Committee has previously warned of the risks when contractors, paid from the public purse, become too big to fail,” notes Meg Hillier, the committee’s chair.

Government now faces a stark choice: bail Carillion out or let public services and projects suffer. Either way, taxpayers will get a raw deal. Government has serious questions to answer about its role in allowing taxpayers’ exposure to escalate to this point.”

Even healthy companies transfer risk back to the taxpayer when the going gets tough. Virgin Trains, for instance, cancelled its contract three years early, leaving the government to mop up the mess, and government ministers signed off on this obscenity.

Carillion has 20,000 UK staff who face the prospect of unemployment. The collapse also threatens major infrastructure projects and will affect countless supply chains. Total it all up, and the costs on highly stretched public resources could be enormous.

The last question is, why was this allowed to happen? Carillion should never have been considered for public contracts. In a state with any basic sense of decency, their involvement in illegal blacklisting would be evidence enough of major corporate malpractice.

Carillion’s attempts to “compensate” its construction workers for decades of ostracism from employment have been described as an “act of bad faith” by the Scottish Affairs Select Committee.

Even leaving morality aside, the warning signs were there. The company has been under huge financial strain for years. Yet they were awarded the £1.4 billion HS2 contract just six months ago. That’s what Donald Trump would call a bad deal.

The bonanza of corporate profit is making it difficult for the public to take democracy seriously; 2008 and its political aftermath should have made this clear. Carillion should never have seen a penny of public money. The best solution would bring the workers back into the public sector and end outsourcing for good. But bad habits have been embedded in our state for decades, maybe even generations, and perhaps it takes a revolution to fix it.

The 50th anniversary of 1968 is now well under way and it’s time to reinvent some old, rebellious traditions.