When I was a child, I was perplexed by the story of the emperor with no clothes. It was so obvious that he was naked I couldn't imagine why everybody colluded in the pretence he wasn't, and why any emperor should want to sustain the pretence, anyway. The spell was always broken by somebody artless blurting out the truth, but I never understood why it fell to the artless to say what should have been obvious to all.  Last week, I was reminded of my childhood perplexities by another set of impossibilities that seem impervious to the intrusion of reality, the belief in the face of all evidence that the private sector is necessarily and always more efficient than the public sector. This emperor is also stark naked, but the Labour party and senior British officials, along with the reflex instincts of the opinion-forming classes, refuse to acknowledge what is staring them in the face. Nor do you have to be artless to draw attention to the nudity. You just have to read the business pages assiduously.   For one of the great postwar financial and industrial scandals is continuing to work itself out before our eyes. Had it happened in the public sector, it would have been proof positive of its endemic hopelessness, but so far it has attracted little outrage. It's a private sector affair, after all. The financial losses, waste and emerging cases of massive fraud in the wake of the telecoms bubble, with almost nothing to show for it in terms of technological innovation or creation of a broadband optic-fibre network, are some of the greatest calamities of industrial policy ever witnessed. The inefficiency exceeds by many multiples the losses in the former nationalised industries, yet this reality has left the conventional wisdom wholly unaffected.   The Treasury blithely continues to justify public private partnerships by loading on to the public sector assumptions that it will be hopeless in any economic endeavour, while building in parallel assumptions that the private sector will be super-efficient. Yet the recent evidence is that the equation should be the other way round, certainly in those sectors which, for compelling reasons of public interest or natural economies, have to be performed as monopolies. Last week's news that another former high-flying telecoms company, Energis, is fighting for its life together with the crisis in the National Air Traffic Services (Nats) allow for no other conclusion.   The story, hard now to believe, was that the inefficient state should not stand in the way of the efficient private sector's ambitions to exploit the digital revolution. As a result, all the old rules about telephone and cable networks being natural monopolies should be suspended. Lusty entrepreneurial companies would exploit a multiplicity of old and new networks to carry the expected boom in internet traffic. Some would use the electricity network (Energis); some would build new optic-fibre cable networks (NTL and Global Crossing); others would deploy a mixture of mobile phone and existing cable (BT).   There was an orgy of roads being dug up at the behest of the companies (local authorities were forbidden to refuse their applications, whatever the consequences of traffic gridlock), but the result would be many high-tech networks offering the consumer choice and access to cheap state-of-the-art technology. Private good; public bad.   What we have instead is a monumental dbcle and a discovery that old rules hold. The companies themselves borrowed hugely, promising their backers that their existing traffic would be followed by even more growth. But now it is emerging that some falsified their claims, especially those with US interests; blocks of alleged traffic were swapped to boost their profits, now the subject of a US Securities and Exchange Commission investigation.   There never was enough traffic to justify so much network building and as reality has dawned the companies are left with debt they cannot service. Global Crossing has already gone bust; Energis has been fighting off the same fate; NTL, a byword for high prices and inefficiency, is a 50-50 call; Cable and Wireless is under investigation by the US Sec... and so it goes on.   As for the acquisitions and deals made at the height of the boom, most have proved no less disastrous. KPMG Consulting estimates that more than a third of the international deals (most of them in telecoms) are now being unwound, and the chief executives involved have all moved on, doubtless handsomely enriched, as are their investment bankers. Yet the wider community is   immeasurably poorer. It is our pension-fund savings that have been ransacked; we end up having to pay high prices for poor cable service and the country, despite billions being spent, is little closer to having a national optic-fibre network than it was five years ago. Put all that into an evaluation of private sector strengths in any proposed public private partnership computation and the public sector would win hands down.   Logic dictated that we only ever needed one network. Because this, perforce, would be a monopoly, and because the public interest in it being cheap and universal is so overwhelming, necessarily it had to financed and owned by the state. Access to the network should, of course, be wholly liberalised; cable companies could transmit their programmes through it as could anybody else. It would be a public asset serving a multitude of private interests, but which private interests could not themselves build, anathema to the current conventional wisdom now proved so devastatingly wrong.   The same elementary mistake has been made over air traffic control. The partial privatisation of Nats to seven British airlines was hailed last summer as a major breakthrough. Nats under public management was plainly incapable of managing large projects as well as the private sector, so that once under private control it would be able to lower its fees charged to the airlines by 5 per cent a year because of the consequent efficiency savings. But after 11 September, Nats has plunged from projected profits into projected losses as airline traffic has fallen away. Conventional wisdom once again is shown to be wrong.   The much vaunted private sector has proved incapable of sustaining Nats' finances to allow it to continue with its investment programme upon which the safe and efficient use of British airspace depends. Neither the airlines nor the banks have put up extra cash; they are not in a position to do so because of the economic downturn. It has fallen to the Government, which alone has injected 30 million of extra cash. But on top, Nats will have to raise prices by 5 per cent a year rather than cut them. Nor is it certain, as we report in the Business Section today, that the Civil Aviation Authority will permit the price rises, in which case the Government will have to step in again.   Under public ownership, the management of British airspace was independent from the vagaries of the business cycle; under even partial private ownership, it has been indissolubly linked to it, an act of palpable madness. The safe management of our airspace, like the provision of a single, universal cable network, is a public good that cannot be privatised. Inevitably, the Government has had to intervene to secure the public interest. It is not the private sector's fault that there is a mess; it should never have been asked or allowed to assume these responsibilities in the first place. Whatever operational efficiencies it might offer are overwhelmed by the wider public interest demands of the sector in which it is operating.   The ideological belief that the private sector is inevitably better cannot be challenged, for all its nudity. In middle age, I finally understand what the child could not. Collective lunacy does descend on groups of people with no one capable of exposing the charade. The tragedy is that is what is happening to our airspace and our telecommunications companies is no fairy tale. It is for real.