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The Public Is Being Looted By Privatization and Deregulation
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The privatization movement and the deregulation movement have turned out to be failures.

Privatization in Britain under the Thatcher government had its origin in the belief that the absence of incentivized managers and shareholders with a stake in the bottom line resulted in nationalized companies operating inefficiently, with their losses covered by government like the big private banks’ losses today. Thatcher’s government believed that privatizing socialized firms would reduce the UK budget deficit and take pressure off the British pound.

Today privatization is a way that governments can reward cronies by giving them valuable public resources for a low price. When the UK government privatized the postal system, there were news reports that one postal property in London alone was worth the purchase price of the entire postal service.

Privatization is also a way that conservatives, who object to social pensions and national health, can stop “taxpayer support of welfare.” In the US conservatives want to privatize Social Security and Medicare. In the UK conservatives want to privatize the National Health System.

It looks like the UK Conservative government is taking a step in the direction of privatizing the national health system, one of the great social reforms in British history.

In the US there are advocates of privatizing the national forests. In some ways the forests are already privatized as private timber companies are allowed to “harvest” the trees at favorable prices, and often the government even builds the roads for them.

In the US deregulation has resulted in high prices and poor service. When airlines were regulated, they competed on service. They had spare equipment so that mechanical problems did not mean cancelled flights. Stopovers did not involve additional costs.

When AT&T had a regulated communication monopoly, the service was excellent and the price was low. Today we have a large number of unregulated local monopolies, and the prices are high. The bottom line and managerial bonuses are more important than service. Customers experience constant service interruptions. Maintenance and broadband improvements are sacrificed to executive salaries.

In the US and UK public university tuition has risen so high that the universities have in effect been privatized. When I went to college there was no such thing as student loans. In-state tuition was nominal, and colleges provided inexpensive housing and meals. Most students in state universities were residents of the state.

Many aspects of the US military have been privatized. Services that the military formerly provided in-house are now contracted out to private companies at high costs.

The case for privatization and deregulation needs to be reexamined in light of the evidence and the real reasons they are being pursued.

(Republished from by permission of author or representative)
• Category: Economics • Tags: Neoliberalism, Privatization 
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  1. Anonymous • Disclaimer says:

    Seriously PCR? Why stop with ending privatization? Why shouldn’t every piece of economic activity be controlled by the hyper-efficient, public-minded benevolent bureaucrats?

    Please explain why this isn’t the case based on this screed?

    Apparently, free markets and freedom in general are an anathema to sound public choices.

    If you wish real world experiences with your brand of socialism, please hop the next flight to the stellar example of your worldview in action . . . Venezuela. But I caution you to bring your own toilet paper. Seems they have a bit of a shortage.

  2. Public financing for public needs. Private financing for private needs. This is a mixed economy. The only kind that makes any sense. Idiot communists who believe in the workers paradise want everything publicly owned. Idiot capitalists who believe in the free market utopia and worship the invisible hand want to privatize everything. Beware of ideologues. They are everywhere and they are extremely stupid.

  3. tsotha says:

    When AT&T had a regulated communication monopoly, the service was excellent and the price was low.

    When AT&T ran the show I used to pay a dollar a minute for an in-state long distance call. The service was excellent, but the price was definitely not low. We are far better served by the deregulated market. The only thing I wish we’d kept from that time is Bell Labs.

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