Driven by wrong-minded public officials and corporate greed, contracts for public services are doled out without regard to cost effectiveness or quality. Time and time again, the public pays more and gets lower quality of services while public workers are laid off and corruption scandals make the news.
What is Privatization?
“Privatization” is an umbrella term covering several distinct types of transactions. Broadly speaking, it means the shift of some or all of the responsibility for a function from government to the private sector. The term has most commonly been applied to the divestiture, by sale or long-term lease, of a state-owned enterprise to private investors. But another major form of privatization is the granting of a long-term franchise or concession under which the private sector finances, builds, and operates a major infrastructure project. A third type of privatization involves government selecting a private entity to deliver a public service that had previously been produced in-house by public employees. This form of privatization is increasingly called outsourcing. (Other forms of privatization, not discussed here, include service shedding, vouchers, and joint ventures.)
Regardless of the mode of privatization, the common motivation for engaging in all three types is to substitute more efficient business operations for what are seen as less efficient, bureaucratic, and often politicized operations in the public sector. Some have described the key difference as the substitution of competition for monopoly, though some forms of privatization may involve only one provider in a given geographic area for a specific period of time. But because government almost always operates as a monopoly provider, the decision to privatize usually means demonopolization, even if not always robust, free-market competition.
The decision to privatize usually involves money. Governments sell state-owned enterprises to obtain proceeds either for short-term budget balancing or to pay down debt. They turn to the private sector to finance and develop a major bridge or seaport when their own resources are stretched too thin. And they outsource services in the hope of saving money in their operating budgets, either to balance those budgets or to spend more on other services (and occasionally to permit tax reductions).
Fighting Privatization Resources
- Food and Water Watch – Resources to Fight Water Privatization
- Privatization During an Economic Downturn Still Inefficient and Problematic – Progressive States Network
- In the Public Interest – Ensuring Democratic Control of Public Functions and Understanding the Risks of Privatization
- Stop Bad Contracts and Protect Public Jobs: Sample Legislative Language
- Working Better Together: A Practical Guide for Union Leaders, Elected Officials and Managers to Improve Public Services
- Public Service, Public Savings: Case Studies in Labor-Management Initiatives in Four Public Services
- Government for Sale: An Examination of the Contracting Out of State and Local Government Services
- Schools for Sale: The Privatization of Non-Instructional School Services
- Safety Net for Sale: The Dangers of Privatizing Social Services
- Child Welfare And Privatization: Trends And Considerations
- Florida's Experiment with Privatizing Child Welfare Services
- Prison Privatization: Don't be a prisoner to empty promises
- Facts at Your Fingertips: Corporate Research
