| ManusJustus said: Privtization is not a good thing for public goods. To familarize those unfamiliar with public goods: http://www.economist.com/research/economics/alphabetic.cfm?letter=P#publicgoods Essentially, the definition of a public good is one that would not be provided efficiently, or at all, by the private market. Roads are probably the best example, there is a reason that almost every road is publicly owned, its because a private company could never make any money off of building or maintaining a road, so they don't. Other examples where privitization is a bad idea is where there are regional monopolies, such as a water utility company. The water company has no competitors, so like a movie theatre selling popcorn they can charge you whatever they want to maximize their profits. The government has to step in and either own such a utility or decide for a private water company what prices they are allowed to charge, effectively eliminating any advantages the private market has over the public sector. |
This. Lots of this.
Something else that doesn't benefit from privatisation is things where it is desirable for society that a minimum standard is provided to all. Education and healthcare are examples of this. Even for someone very rich who doesn't depend on the state directly, it is desirable to them that everyone else in the country [not just, say, 95%] meets a standard of literacy and numeracy and is healthy enough to go to work. I believe it makes sense in thsoe cases to offer a universal baseline service, then people can go to private firms for things above that (private schools for small-group tuition and extra-curriculars, or private healthcare for shorter waiting times and cosmetic surgery).
Just going by ManusJustus's category though: water, electrcity, gas, buses, trains, refuse collection.
My category: Education, healthcare, public safety (police v. private security companies).
Other places where it doesn't work is like the regional monopolies but instead being a single-supplier, or worse a government-mandated single supplier. For example the UK spun off its government/military research unit into Qinetiq, a private company, but then mandated that all government research contracts of certain kinds MUST be purchased from them. Thus there is no competition but you get all the downsides of a private entity.
A lot of government outsoucing is wasteful too. Especially when the outsourced firm doesn't employ anyone really and just hires people when they get paid to (see the UK's Capita, Serco, and many others). It would just be more efficient for the government to hire the workers directly as needed, same outcome. The reason they don't is that the government likes to delegate and defer responsibility so they can't be blamed when it goes wrong (see: many national IT projects) and have an excuse to not inspect the work or make the expenditure accountable which ought to happen.
