Privatization

Privatization is a central component of the neo-liberal policies currently governing much of our domestic and international economic policy. Privatization occurs when a government-owned business is sold to a private company or a government-provided service is "privatized" and becomes a service provided by a private firm. In the U.S., some utilities, and many services such as sanitation, bus driving, the provision of social services including education, and many functions in the military have been privatized. Around the world, education, health care, water and other utilities, steel mills, and oil refineries have all been privatized. Often when a service is privatized it becomes more expensive to consumers. For example a private firm may charge a fee for what had been provided free of charge (for example, education or health care) or prices may rise for goods (like water) that had been available at a reduced (subsidized) price. Advocates of privatization argue that private firms operate more efficiently than government. But often any savings due to privatization are the result of paying workers lower wages and not the result of efficiency gains. While mismanagement or corruption may occur when a government runs a company, the same holds true for the private sector, especially in a country with poorly developed legal and judicial safeguards. Too often privatization has resulted in the sale of public assets at below-market prices, allowing private firms to reap large profits. Moreover, government-run agencies can be held publicly accountable in ways that private firms often cannot. 

The question of who can best provide services like education and prisons -- a government agency or a private firm -- is the focus of ongoing debate. Some people believe that private companies can always do a better job than the government which, in their view, is inherently inefficient and an interference in the private market. But others argue that government can do just as good a job as a corporation, that government should provide services that are needed by everyone including those who cannot afford to pay for them, and that making a profit is inconsistent with the mission of some institutions.

This is a debate about privatization, whether services that are typically provided by government should instead provided by private firms. Privatization: A Challenge to the Common Good examines this question by looking at the consequences of privatization in six areas: water, Social Security, health care, public education, prisons, and the military.

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Ms. Edith Rasell, Ph.D.
Minister for Economic Justice
700 Prospect Ave.
Cleveland,Ohio 44115
216-736-3709
raselle@ucc.org