Editing Privatization (section)

== Opinion ==
{{more citations needed section|date=July 2011}}
Arguments for and against the controversial subject of privatization are presented here.

=== Support ===
Proponents of privatization argue that, over time, this can lead to lower prices, improved quality, more choices, less corruption, less [[red tape]], and/or quicker delivery. Many proponents do not argue that everything should be privatized. According to them, [[market failure]]s and [[natural monopolies]] could be problematic. However, [[anarcho-capitalists]] prefer that every function of the state be privatized, including [[Private defense agency|defense]] and [[Alternative dispute resolution|dispute resolution]].<ref name="libertarianpapers">[http://libertarianpapers.org/articles/2011/lp-3-3.pdf "Review of Kosanke's Instead of Politics – Don Stacy"] {{Webarchive|url=https://web.archive.org/web/20181001010127/http://libertarianpapers.org/articles/2011/lp-3-3.pdf |date=2018-10-01 }} Libertarian Papers Vol. 3, ART. NO. 3 (2011)</ref>

Proponents of privatization make the following arguments:
* Performance: state-run industries tend to be [[bureaucratic]]. A political government may only be motivated to improve a function when its poor performance becomes politically sensitive.
* Increased efficiency: private companies and firms have a greater incentive to produce goods and services more efficiently to increase profits.
* Specialization: a private [[business]] has the ability to focus all relevant human and financial resources onto specific functions. A state-owned firm does not have the necessary resources to [[Departmentalization|specialize]] its goods and services as a result of the general products provided to the greatest number of people in the [[population]].
* Improvements: conversely, the government may put off improvements due to political sensitivity and special interests—even in cases of companies that are run well and better serve their customers' needs.
* Corruption: a state-monopolized function is prone to [[Political corruption|corruption]]; decisions are made primarily for political reasons, personal gain of the decision-maker (i.e. "graft"), rather than economic ones. Corruption (or [[Principal–agent problem|principal–agent]] issues) in a state-run corporation affects the ongoing asset stream and company performance, whereas any corruption that may occur during the privatization process is a one-time event and does not affect ongoing cash flow or performance of the company.
* Accountability: managers of privately owned companies are accountable to their owners/shareholders and to the consumer, and can only exist and thrive where needs are met. Managers of publicly owned companies are required to be more accountable to the broader community and to political "stakeholders". This can reduce their ability to directly and specifically serve the needs of their customers, and can bias investment decisions away from otherwise profitable areas.
* Civil-liberty concerns: a company controlled by the state may have access to information or assets which may be used against dissidents or any individuals who disagree with their policies.
* Goals: a political government tends to run an industry or company for [[political]] goals rather than [[economic]] ones.
* Capital: a privately held companies can sometimes more easily raise investment capital in the financial markets when such local markets exist and are suitably liquid. While interest rates for private companies are often higher than for government debt, this can serve as a useful constraint to promote efficient investments by private companies, instead of cross-subsidizing them with the overall credit-risk of the country. Investment decisions are then governed by market interest rates. State-owned industries have to compete with demands from other government departments and special interests. In either case, for smaller markets, [[political risk]] may add substantially to the cost of capital.
* Security: governments have had the tendency to "bail out" poorly run businesses, often due to the sensitivity of job losses, when economically, it may be better to let the business fold.
* Lack of market discipline: poorly managed state companies are insulated from the same discipline as private companies, which could go bankrupt, have their management removed, or be taken over by competitors. Private companies are also able to take greater risks and then seek bankruptcy protection against creditors if those risks turn sour.
* Natural monopolies: the existence of [[natural monopolies]] does not mean that these sectors must be state owned. Governments can enact or are armed with [[anti-trust legislation]] and bodies to deal with anti-competitive behavior of all companies public or private.
* Concentration of wealth: ownership of and profits from successful enterprises tend to be dispersed and diversified—particularly in voucher privatization. The availability of more investment vehicles stimulates capital markets and promotes liquidity and job creation.
* Political influence: nationalized industries are prone to interference from [[politicians]] for [[political]] or [[Populism|populist]] reasons. Examples include making an industry buy supplies from local producers (when that may be more expensive than buying from abroad), forcing an industry to freeze its prices/fares to satisfy the electorate or control [[inflation]], increasing its staffing to reduce [[unemployment]], or moving its operations to [[constituency|marginal constituencies]].
* Profits: corporations exist to generate profits for their shareholders. Private companies make a profit by enticing [[consumer]]s to buy their products in preference to their competitors' (or by increasing [[primary demand]] for their products, or by reducing costs). Private corporations typically profit more if they serve the needs of their clients well. Corporations of different sizes may target different market niches in order to focus on marginal groups and satisfy their demand. A company with good [[corporate governance]] will therefore be incentivized to meet the needs of its customers efficiently.
* Job gains: as the economy becomes more efficient, more profits are obtained and no government subsidies and less taxes are needed, there will be more private money available for investments and consumption and more profitable and better-paid jobs will be created than in the case of a more regulated economy.<ref>{{unfit|1=[https://web.archive.org/web/20091018193244/http://www.heritage.org/Research/Europe/HL352.cfm Central Europe's Mass-Production Privatization]}}, Heritage Lecture #352</ref>{{Unreliable source?|date=July 2010}}

=== Opposition ===
Opponents of privatization in general—or of certain privatizations in particular—believe that [[Public good (economics)|public goods and services]] should remain primarily in the hands of government in order to ensure that everyone in society has access to them (such as law enforcement, basic [[health care]], and basic [[education]]). There is a [[positive externality]] when the government provides society at large with public goods and services such as [[National security|defense]] and disease control. Some national constitutions in effect define their governments' "core businesses" as being the provision of such things as justice, tranquility, defense, and general welfare. These governments' direct provision of security, stability, and safety, is intended to be done for the common good (in the public interest) with a long-term (for posterity) perspective. As for [[natural monopolies]], opponents of privatization claim that they aren't subject to fair competition, and better administrated by the state.

Although private companies may provide a similar good or service alongside the government,{{according to whom|date=July 2021}} opponents of privatization are critical about completely transferring the provision of public goods, services and assets into private hands for the following reasons:
* Performance: a democratically elected government is accountable to the people through a legislature, Congress or [[Parliament]], and is motivated to safeguarding the assets of the nation. The profit motive may be subordinated to social objectives.
* Improvements: the government is motivated to performance improvements as well run businesses contribute to the State's revenues.
* Corruption: government ministers and civil servants are bound to uphold the highest ethical standards, and standards of probity are guaranteed through codes of conduct and declarations of interest. However, the selling process could lack transparency, allowing the purchaser and civil servants controlling the sale to gain personally.
* Accountability: the public has less control and oversight of private companies although these remain answerable to various stakeholders, including shareholders, clients, suppliers, regulators, employees and collaborators.
* Civil-liberty concerns: a democratically elected government is accountable to the people through a [[parliament]], and can intervene when civil liberties are threatened.
* Goals: the government may seek to use state companies as instruments to further social goals for the benefit of the nation as a whole.
* Capital: governments can raise money in the financial markets most cheaply to re-lend to state-owned enterprises, although this preferential access to capital markets risks undermining financial discipline because of the assurance of a bailout from the government.
* Cuts in essential services: if a government-owned company providing an essential service (such as the water supply) to all citizens is privatized, its new owner(s) could lead to the abandoning of the social obligation to those who are less able to pay, or to regions where this service is unprofitable.
* Natural monopolies: privatization will not result in true competition if a [[natural monopoly]] exists.
* Concentration of wealth: profits from successful enterprises end up in private hands instead of being available for public use.
* Political influence: governments may more easily exert pressure on state-owned firms to help implement government policy.
* Profit: private companies do not have any goal other than to maximize profits.
* Privatization and poverty: it is acknowledged by many studies that there are winners and losers with privatization. The number of losers—which may add up to the size and severity of poverty—can be unexpectedly large if the method and process of privatization and how it is implemented are seriously flawed (e.g. lack of transparency leading to state-owned assets being appropriated at minuscule amounts by those with political connections, absence of regulatory institutions leading to transfer of monopoly rents from public to private sector, improper design and inadequate control of the privatization process leading to [[asset stripping]]).<ref>{{cite journal |last1=Dagdeviren |year=2006 |title=Revisiting privatisation in the context of poverty alleviation |journal=Journal of International Development |volume=18 |issue= 4|pages=469–488 |doi=10.1002/jid.1244}}</ref>
* Job loss: due to the additional financial burden placed on privatized companies to succeed without any government help, unlike the public companies, jobs could be lost to keep more money in the company.
* Reduced wages and benefits: a 2014 report by In the Public Interest, a resource center on privatization,<ref>David Moberg (6 June 2014). [http://inthesetimes.com/working/entry/16811/privatization_IPTI_report Privatizing Government Services Doesn’t Only Hurt Public Workers] {{Webarchive|url=https://web.archive.org/web/20140625103322/http://inthesetimes.com/working/entry/16811/privatization_IPTI_report |date=2014-06-25 }}. ''[[In These Times (publication)|In These Times]].'' Retrieved 28 June 2014.</ref> argues that "outsourcing public services sets off a downward spiral in which reduced worker wages and benefits can hurt the local economy and overall stability of middle and working class communities."<ref>[http://www.inthepublicinterest.org/RaceToTheBottom Race to the Bottom: How Outsourcing Public Services Rewards Corporations and Punishes the Middle Class] {{webarchive|url=http://webarchive.loc.gov/all/20140604184737/http%3A//www.inthepublicinterest.org/RaceToTheBottom |date=2014-06-04 }}. In the Public Interest, 3 June 2014. Retrieved 7 June 2014.</ref>
* Inferior quality products: private, for-profit companies cut corners on providing quality goods and services in order to maximize profit.<ref>Joshua Holland (17 July 2014). [http://billmoyers.com/2014/07/17/how-a-bogus-industry-funded-study-helped-spur-a-privatization-disaster-in-michigan/ How a Bogus, Industry-Funded Study Helped Spur a Privatization Disaster in Michigan] {{Webarchive|url=https://web.archive.org/web/20140723140523/http://billmoyers.com/2014/07/17/how-a-bogus-industry-funded-study-helped-spur-a-privatization-disaster-in-michigan/ |date=2014-07-23 }}. ''[[Moyers & Company]].'' Retrieved 20 July 2014.</ref>