Where Privatization Works, and Where It Fails

From my perspective, libertarianism is all about freedom, in every facet possible. But, then you might ask yourself why I have any sort of desire to maintain a government at all. This is perfectly legitimate questioning and is a question I have struggled with throughout my philosophical and political ramblings — learning to understand what my perspective on government actually is.

The challenge with a government-free society is the lack of regulation. That word, regulation, is the cyanide of any sort of libertarian ideology, but let’s start from the opposite side — an absolutely free market.

There are clear advantages to the free market: you get what you pay for (ideally), competition would keep skyrocketing prices at bay, the variety of choice and cost would be based on demand — making the market better for both businesses and consumers. This sounds just peachy!

In fact, in a past issue of The Economist, the cover story, The $9 trillion sale, said, “Taxpayers might think that the best family silver has already been sold, but plenty is still in the cupboard. State-owned enterprises in OECD countries are worth around $2 trillion… the real treasures are ‘non-financial; assets-buildings, land subsoil resources-which the IMF believes are worth three-quarters of GDP on average in rich economies: $35 trillion across the OECD.”

Those are some lofty numbers, which could aid in solving the debt problem and, in turn, help make taxes lower. Sell stuff we don’t need/want to get debt down and put more money in taxpayer pockets — sounds like my garage sale last summer.

According to the same article, worldwide government reluctance to support these money-gaining opportunities is partly due to the opposition privatization often faces. While this might be somewhat accurate, as of late, when has the government avoided signing laws or enacting legislation because it wasn’t popular in the public’s eye? While privatizing some of these areas and selling off some government-owned assets might be met with some vitriol, I am hard-pressed to believe that the public’s dislike of the political powers has any impact on their decision-making.

The article also says, “Privatisation[sic] is no panacea for profligate governments. Selling assets is a one-off that provides only brief respite for those addicted to overspending (though, once sold, assets — from ports to companies — tend to generate far more business).”

Herein lies part of the issue with privatization. Having assets is great, but once it’s sold, it’s gone. Granted, putting these assets into the hands of a private venture may bring more money in, overall, there is a challenge in giving too many assets to too few. And, let’s be honest, no small, or even medium-sized, business could afford the assets that the U.S. might be interested in selling. So, these sales would go to big businesses and corporations, who are already acting as puppeteers for many politicians.

Privatization needs to belong to the small businesses of America. If privatization occurs with bloated corporate entities, the road to indentured serfdom will be much faster than anything that might occur with an over-sized government. (If there is one thing that massive corporations do better than massive governments, it’s efficiency.) This would lead to an Orwellian society on a frighteningly fast and unregulated scale, only big brother would be Shell Oil or Coca-Cola, instead of the government.

Balance is the key to any ideology. Our government once had balance — or at least our founding fathers tried to establish a balance. The Economist article says, “Without robust regulation, sell-offs enrich insiders and lead to backlashes… Nevertheless, for governments that are serious about bringing their spending in line with revenues, privatisation[sic] is a useful tool.” A tool, not an answer.

Absolute privatization will never be the answer, nor will absolute an endless list of rules and regulations. The ability to sell and buy at will and stripped down, simplification of law will provide the best resolution. Maybe I want to have my cake and eat it too, but the answer is clear, even if it isn’t easy.

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