The Hidden Cost of Privatization

The Hidden Cost of Privatization by Nina Shapiro at Institute for New Economic Thinking  is an excellent read.

This conception of government, of course, is not new. “Small government” has been a hallmark of the Republican Party for decades, and the privatization of government properties and services has been increasing worldwide since the 1980s. In the earlier period it centered on the privatization of state-owned enterprises, but in more recent times it has shifted to government services (after the 1980s, there were not many government enterprises left to sell off). Privatization today is both more varied and extensive than it was in the past, and since its objective seems to be nothing less than the privatization of the state itself, the question of the state’s “agenda” is critical. We must address the questions about the government that Keynes raised almost a century ago, and we must address them, as Keynes emphasized, without the laissez-faire presumptions of his times and ours, for it is not the case, as he famously wrote, that “private and social interests always coincide.”

The public has interests in common, such as the extension of markets and protection of persons and their properties, and the justness of laws and law enforcement matters too, as do educational opportunities.

(Adam) Smith highlights the importance of an educated public in his discussion of the functions of government. The government must facilitate the instruction of the people as well as the commerce of the nation, and this was the case even though that instruction could be provided privately, as the charges for it could be, and were, exorbitant. The wealthy could afford them, but the public at large could not.

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