Privatisation Means Endorsing
-
Upload
klairdeepika5602 -
Category
Documents
-
view
213 -
download
0
Transcript of Privatisation Means Endorsing
-
8/9/2019 Privatisation Means Endorsing
1/14
"Privatisation means endorsing / assigning the ownership of a public property/business to
a private party."
Uses:
1)Development would be faster(due to competetion with the other private parties)
2)Innovative solutions (due to again competetion with the other private parties)
3)effective & time bound results4)cost cuttings
5)improves quality in work
6)in turn more services to public are possible
7)increase the productivity8)significant Growth in the business
9)controlled monitoring of public property gives public in turn good services
possible Losses
1)allways a threat to working staff.
2)as private parties try to extract work from minimum resources,downsizing is the
common problem
3)un-employement increases4)if the private party is inefficent, there is every possiblity of the business winding up.
5)more restrictions on many things
6)purely commercial in natrure and lacks ethical / human morales at times
Privatization is the implementation of a decision to sell companies owned by the State
to private individuals/ companies.Benefits of privatization are making the erstwhile public sector commercial enterprise
survive in competitive markets through better efficiency, higher productivity, improved
product quality and customer service, and reduction of waste and leakages due to State
ownership.There are no limitations of privatization except that hitherto unproductive or less
productive labor would have learn afresh the art of servivng through hard work and
Privatization can be good if it eliminates the need for government monetarycontributions to a governmental entity. An example would be the privatization of the
United States Postal Service in the 1970's. Privatization can be bad if it raises the cost of
goods or services to a rate which the consumer cannot possibly afford. An example of
this would be the privatization of Bolivian water treatment plants in this decade.excellence.
Privatization is the incidence or process of transferring ownership of a business,
enterprise, agency or public service from the public sector (government) to the
private sector(business). In a broader sense, privatization refers to transfer of any
government function to the private sector including governmental functions like revenue
collection and law enforcement.[1]
http://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Privatization#cite_note-0http://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Private_sectorhttp://en.wikipedia.org/wiki/Privatization#cite_note-0 -
8/9/2019 Privatisation Means Endorsing
2/14
The term "Privatization" also has been used to describe two unrelated transactions. The
first is a buyout, by the majority owner, of all shares of apublic corporation orholding
company's stock, privatizing a publicly traded stock. The second is ademutualization of amutual organizationorcooperativeto form ajoint stock company.[2]
Contents
[hide]
1 Origin of the term
2 History
3 Types of privatisation
4 Arguments for and against privatisation
o 4.1 Pro-privatisation
o 4.2 Anti-privatization
5 Intermediate Views
o 5.1 Developed / Low corruption economieso 5.2 Underdeveloped &/or High corruption economies
6 Outcomes
7 Alternatives to total privatisation
o 7.1 Public Utility
o 7.2 Non-Profit
o 7.3 Municipalization
o 7.4 Outsourcing or Sub-contracting
o 7.5 Partial ownership
8 Notable privatisations
9 Negative responses to privatisation
10 Reverse privatisation
11 See also
12 References
13 For Further Reading
o 13.1 Unindexed
14 External links
[edit] Origin of the term
It has been claimed that the term was first used in the 1930s by The Economistincovering Nazi German economic policy.[3][4]
[edit] History
There is a long history of privatization dating from Ancient Greece when the government
contracted out almost everything to the private sector[5]. In the Roman Republicprivate
http://en.wikipedia.org/wiki/Public_corporationhttp://en.wikipedia.org/wiki/Public_corporationhttp://en.wikipedia.org/wiki/Holding_companyhttp://en.wikipedia.org/wiki/Holding_companyhttp://en.wikipedia.org/wiki/Demutualizationhttp://en.wikipedia.org/wiki/Demutualizationhttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Privatization#cite_note-crisis-1http://en.wikipedia.org/wiki/Privatization#cite_note-crisis-1http://toggletoc%28%29/http://en.wikipedia.org/wiki/Privatization#Origin_of_the_termhttp://en.wikipedia.org/wiki/Privatization#Historyhttp://en.wikipedia.org/wiki/Privatization#Types_of_privatisationhttp://en.wikipedia.org/wiki/Privatization#Arguments_for_and_against_privatisationhttp://en.wikipedia.org/wiki/Privatization#Pro-privatisationhttp://en.wikipedia.org/wiki/Privatization#Anti-privatizationhttp://en.wikipedia.org/wiki/Privatization#Intermediate_Viewshttp://en.wikipedia.org/wiki/Privatization#Developed_.2F_Low_corruption_economieshttp://en.wikipedia.org/wiki/Privatization#Underdeveloped_.26.2For_High_corruption_economieshttp://en.wikipedia.org/wiki/Privatization#Outcomeshttp://en.wikipedia.org/wiki/Privatization#Alternatives_to_total_privatisationhttp://en.wikipedia.org/wiki/Privatization#Public_Utilityhttp://en.wikipedia.org/wiki/Privatization#Non-Profithttp://en.wikipedia.org/wiki/Privatization#Municipalizationhttp://en.wikipedia.org/wiki/Privatization#Outsourcing_or_Sub-contractinghttp://en.wikipedia.org/wiki/Privatization#Partial_ownershiphttp://en.wikipedia.org/wiki/Privatization#Notable_privatisationshttp://en.wikipedia.org/wiki/Privatization#Negative_responses_to_privatisationhttp://en.wikipedia.org/wiki/Privatization#Reverse_privatisationhttp://en.wikipedia.org/wiki/Privatization#See_alsohttp://en.wikipedia.org/wiki/Privatization#Referenceshttp://en.wikipedia.org/wiki/Privatization#For_Further_Readinghttp://en.wikipedia.org/wiki/Privatization#Unindexedhttp://en.wikipedia.org/wiki/Privatization#External_linkshttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=1http://en.wikipedia.org/wiki/The_Economisthttp://en.wikipedia.org/wiki/Privatization#cite_note-2http://en.wikipedia.org/wiki/Privatization#cite_note-3http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=2http://en.wikipedia.org/wiki/Ancient_Greecehttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4http://en.wikipedia.org/wiki/Roman_Republichttp://en.wikipedia.org/wiki/Roman_Republichttp://en.wikipedia.org/wiki/Public_corporationhttp://en.wikipedia.org/wiki/Holding_companyhttp://en.wikipedia.org/wiki/Holding_companyhttp://en.wikipedia.org/wiki/Demutualizationhttp://en.wikipedia.org/wiki/Mutual_organizationhttp://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Joint_stock_companyhttp://en.wikipedia.org/wiki/Privatization#cite_note-crisis-1http://toggletoc%28%29/http://en.wikipedia.org/wiki/Privatization#Origin_of_the_termhttp://en.wikipedia.org/wiki/Privatization#Historyhttp://en.wikipedia.org/wiki/Privatization#Types_of_privatisationhttp://en.wikipedia.org/wiki/Privatization#Arguments_for_and_against_privatisationhttp://en.wikipedia.org/wiki/Privatization#Pro-privatisationhttp://en.wikipedia.org/wiki/Privatization#Anti-privatizationhttp://en.wikipedia.org/wiki/Privatization#Intermediate_Viewshttp://en.wikipedia.org/wiki/Privatization#Developed_.2F_Low_corruption_economieshttp://en.wikipedia.org/wiki/Privatization#Underdeveloped_.26.2For_High_corruption_economieshttp://en.wikipedia.org/wiki/Privatization#Outcomeshttp://en.wikipedia.org/wiki/Privatization#Alternatives_to_total_privatisationhttp://en.wikipedia.org/wiki/Privatization#Public_Utilityhttp://en.wikipedia.org/wiki/Privatization#Non-Profithttp://en.wikipedia.org/wiki/Privatization#Municipalizationhttp://en.wikipedia.org/wiki/Privatization#Outsourcing_or_Sub-contractinghttp://en.wikipedia.org/wiki/Privatization#Partial_ownershiphttp://en.wikipedia.org/wiki/Privatization#Notable_privatisationshttp://en.wikipedia.org/wiki/Privatization#Negative_responses_to_privatisationhttp://en.wikipedia.org/wiki/Privatization#Reverse_privatisationhttp://en.wikipedia.org/wiki/Privatization#See_alsohttp://en.wikipedia.org/wiki/Privatization#Referenceshttp://en.wikipedia.org/wiki/Privatization#For_Further_Readinghttp://en.wikipedia.org/wiki/Privatization#Unindexedhttp://en.wikipedia.org/wiki/Privatization#External_linkshttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=1http://en.wikipedia.org/wiki/The_Economisthttp://en.wikipedia.org/wiki/Privatization#cite_note-2http://en.wikipedia.org/wiki/Privatization#cite_note-3http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=2http://en.wikipedia.org/wiki/Ancient_Greecehttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4http://en.wikipedia.org/wiki/Roman_Republic -
8/9/2019 Privatisation Means Endorsing
3/14
individuals and companies performed the majority of services including tax collection,
army supplies, religious sacrifices and construction. However, theRoman Empire also
created state-owned enterprises for example, much of the grain was eventuallyproduced on estates owned by the Emperor. Some scholars suggest that the cost of
bureaucracy was one of the reasons for the fall of the Roman Empire[5].
In more recent times, Winston Churchill's government privatized the British steel
industry in the 1950s, and West Germany's government embarked on large-scaleprivatisation, including selling its majority stake in Volkswagento small investors in a
public share offering in 1961 [5]. In the 1970s General Pinochet implemented a significant
privatization program in Chile. However, it was in the 1980s under the leaderships ofMargaret Thatcherin theUKand Ronald Reagan in the USA, that privatization gained
worldwide momentum.
[edit] Types of privatisation
There are three main methods of privatisation:
Share issue privatisation (SIP) - selling shares on the stock market
Asset sale privatisation - selling the entire firms or part of it to a strategic investor,
usually by auction or using Treuhand model
Voucher privatisation - shares of ownership are distributed to all citizens, usuallyfor free or at a very low price.
Share issue privatisation is the most common type of privatisation.
Share issue can broaden and deepen domestic capital markets, boostingliquidityand
potentially economic growth, but if the capital markets are insufficiently developed itmay be difficult to find enough buyers, and transaction costs (e.g. underpricing required)
may be higher. For this reason, many governments elect for listings in the more
developed and liquid markets.Euronext, and theLondon,New Yorkand Hong KongStock Exchangesare popular because they are highly developed and sophisticated.
As a result of higher political and currency risk deterring foreign investors, asset sales are
more common in developing countries.
Voucher privatisation has mainly been used in the transition economies of Central and
Eastern Europe, such as Russia, Poland, the Czech Republic, and Slovakia.
A very substantial benefit to share or asset sale privatisations is that bidders compete to
offer the state the highest price, creating revenues for the state to redistribute in addition
to new tax revenue. Voucher privatisations, on the other hand, would be a genuine return
of the assets into the hands of the general population, and create a real sense ofparticipation and inclusion. Vouchers, like all other private property, could then be sold
on if preferred by what companies are offering.
http://en.wikipedia.org/wiki/Roman_Empirehttp://en.wikipedia.org/wiki/Roman_Empirehttp://en.wikipedia.org/wiki/Fall_of_the_Roman_Empirehttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4http://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4http://en.wikipedia.org/wiki/Winston_Churchillhttp://en.wikipedia.org/wiki/West_Germanyhttp://en.wikipedia.org/wiki/West_Germanyhttp://en.wikipedia.org/wiki/Volkswagenhttp://en.wikipedia.org/wiki/Volkswagenhttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4http://en.wikipedia.org/wiki/Augusto_Pinochethttp://en.wikipedia.org/wiki/Chilehttp://en.wikipedia.org/wiki/Margaret_Thatcherhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/Ronald_Reaganhttp://en.wikipedia.org/wiki/USAhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=3http://en.wikipedia.org/w/index.php?title=Share_issue_privatisation&action=edit&redlink=1http://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/w/index.php?title=Asset_sale_privatisation&action=edit&redlink=1http://en.wikipedia.org/wiki/Auctionhttp://en.wikipedia.org/w/index.php?title=Treuhand_model&action=edit&redlink=1http://en.wikipedia.org/wiki/Voucher_privatisationhttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/Developing_countrieshttp://en.wikipedia.org/wiki/Developing_countrieshttp://en.wikipedia.org/wiki/Transition_economieshttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Polandhttp://en.wikipedia.org/wiki/Czech_Republichttp://en.wikipedia.org/wiki/Slovakiahttp://en.wikipedia.org/wiki/Slovakiahttp://en.wikipedia.org/wiki/Roman_Empirehttp://en.wikipedia.org/wiki/Fall_of_the_Roman_Empirehttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4http://en.wikipedia.org/wiki/Winston_Churchillhttp://en.wikipedia.org/wiki/West_Germanyhttp://en.wikipedia.org/wiki/Volkswagenhttp://en.wikipedia.org/wiki/Privatization#cite_note-handbook-4http://en.wikipedia.org/wiki/Augusto_Pinochethttp://en.wikipedia.org/wiki/Chilehttp://en.wikipedia.org/wiki/Margaret_Thatcherhttp://en.wikipedia.org/wiki/UKhttp://en.wikipedia.org/wiki/Ronald_Reaganhttp://en.wikipedia.org/wiki/USAhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=3http://en.wikipedia.org/w/index.php?title=Share_issue_privatisation&action=edit&redlink=1http://en.wikipedia.org/wiki/Stock_markethttp://en.wikipedia.org/w/index.php?title=Asset_sale_privatisation&action=edit&redlink=1http://en.wikipedia.org/wiki/Auctionhttp://en.wikipedia.org/w/index.php?title=Treuhand_model&action=edit&redlink=1http://en.wikipedia.org/wiki/Voucher_privatisationhttp://en.wikipedia.org/wiki/Liquidityhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Euronexthttp://en.wikipedia.org/wiki/London_Stock_Exchangehttp://en.wikipedia.org/wiki/New_York_Stock_Exchangehttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/Hong_Kong_Stock_Exchangehttp://en.wikipedia.org/wiki/Developing_countrieshttp://en.wikipedia.org/wiki/Transition_economieshttp://en.wikipedia.org/wiki/Russiahttp://en.wikipedia.org/wiki/Polandhttp://en.wikipedia.org/wiki/Czech_Republichttp://en.wikipedia.org/wiki/Slovakia -
8/9/2019 Privatisation Means Endorsing
4/14
[edit] Arguments for and against privatisation
[edit] Pro-privatisation
Proponents of privatisation believe that private market factors can more efficiently
deliver many goods or service than government due to free marketcompetition. Ingeneral, it is argued that over time this will lead to lower prices, improved quality, more
choices, less corruption, less red tape, and quicker delivery. Many proponents do not
argue that everything should be privatised. According to them,market failures andnatural monopoliescould be problematic. However, some Austrian school economists
andanarcho-capitalistswould prefer that everything be privatised, including the state
itself.
The basic economic argument given for privatisation is that governments have fewincentives to ensure that the enterprises they own are well run. One problem is the lack of
comparison in state monopolies. It is difficult to know if an enterprise is efficient or not
without competitors to compare against. Another is that the central governmentadministration, and the voters who elect them, have difficulty evaluating the efficiency of
numerous and very different enterprises. A private owner, often specializing and gaining
great knowledge about a certain industrial sector, can evaluate and then reward or punishthe management in much fewer enterprises much more efficiently. Also, governments
can raise money by taxation or simply printing money should revenues be insufficient,
unlike a private owner.
If there are both private and state owned enterprises competing against each other, thenthe state owned may borrow money more cheaply from the debt markets than private
enterprises, since the state owned enterprises are ultimately backed by the taxation and
printing press power of the state, gaining an unfair advantage.
Privatising a non-profitable company which was state-owned may force the company toraise prices in order to become profitable. However, this would remove the need for the
state to provide tax money in order to cover the losses.
Performance. State-run industries tend to bebureaucratic. A political
government may only be motivated to improve a function when its poorperformance becomes politically sensitive, and such an improvement can be
reversed easily by another regime.
Increased efficiency. Private companies and firms have a greater incentive to
produce more goods and services for the sake of reaching acustomer base andhence increasing profits. A state-owned firm would not be as productive due to
the lack of financing allocated by the entire government's budget that mustconsider other areas of the economy.
Specialisation A privatebusiness has the ability to focus all relevant human and
financial resources onto specific functions. A state-owned firm does not have the
necessary resources to specialise its goods and services as a result of the generalproducts provided to the greatest number of people in thepopulation.
http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=4http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=5http://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Competitionhttp://en.wikipedia.org/wiki/Market_failurehttp://en.wikipedia.org/wiki/Market_failurehttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Austrian_schoolhttp://en.wikipedia.org/wiki/Anarcho-capitalistshttp://en.wikipedia.org/wiki/Anarcho-capitalistshttp://en.wikipedia.org/wiki/Anarcho-capitalistshttp://en.wikipedia.org/wiki/Incentiveshttp://en.wikipedia.org/wiki/Bureaucratichttp://en.wikipedia.org/wiki/Bureaucratichttp://en.wikipedia.org/wiki/Goods_and_serviceshttp://en.wikipedia.org/wiki/Customer_basehttp://en.wikipedia.org/wiki/Customer_basehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Departmentalizationhttp://en.wikipedia.org/wiki/Populationhttp://en.wikipedia.org/wiki/Populationhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=4http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=5http://en.wikipedia.org/wiki/Free_markethttp://en.wikipedia.org/wiki/Competitionhttp://en.wikipedia.org/wiki/Market_failurehttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Austrian_schoolhttp://en.wikipedia.org/wiki/Anarcho-capitalistshttp://en.wikipedia.org/wiki/Incentiveshttp://en.wikipedia.org/wiki/Bureaucratichttp://en.wikipedia.org/wiki/Goods_and_serviceshttp://en.wikipedia.org/wiki/Customer_basehttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Departmentalizationhttp://en.wikipedia.org/wiki/Population -
8/9/2019 Privatisation Means Endorsing
5/14
Improvements. Conversely, the government may put off improvements due to
political sensitivity and special interests even in cases of companies that are
run well and better serve their customers' needs.
Corruption. A monopolized function is prone to corruption; decisions are made
primarily for political reasons, personal gain of the decision-maker (i.e. "graft"),
rather than economic ones. Corruption (orprincipal-agent issues) during theprivatisation process - however - can result in significant underpricing of the
asset. This allows for more immediate and efficient corrupt transfer of value - not
just from ongoing cash flow, but from the entire lifetime of the asset stream.Often such transfers are difficult to reverse.
Accountability. Managers of privately owned companies are accountable to their
owners/shareholders and to the consumer, and can only exist and thrive where
needs are met. Managers of publicly owned companies are required to be moreaccountable to the broader community and to political "stakeholders". This can
reduce their ability to directly and specifically serve the needs of their customers,
and can bias investment decisions away from otherwise profitable areas. Civil-liberty concerns. A company controlled by the state may have access to
information or assets which may be used against dissidents or any individuals
who disagree with their policies.
Goals. A political government tends to run an industry or company forpoliticalgoals rather than economic ones.
Capital. Privately held companies can sometimes more easily raise investment
capital in the financial markets when such local markets exist and are suitablyliquid. While interest rates for private companies are often higher than for
government debt, this can serve as a useful constraint to promote efficient
investments by private companies, instead of cross-subsidizing them with the
overall credit-risk of the country. Investment decisions are then governed bymarket interest rates. State-owned industries have to compete with demands from
other government departments and special interests. In either case, for smaller
markets,political riskmay add substantially to the cost of capital.
Security. Governments have had the tendency to "bail out" poorly run businesses,
often due to the sensitivity of job losses, when economically, it may be better to
let the business fold.
Lack of market discipline. Poorly managed state companies are insulated fromthe same discipline as private companies, which could go bankrupt, have their
management removed, or be taken over by competitors. Private companies are
also able to take greater risks and then seek bankruptcy protection againstcreditors if those risks turn sour.
Natural monopolies. The existence ofnatural monopolies does not mean that
these sectors must be state owned. Governments can enact or are armed with anti-trust legislationand bodies to deal with anti-competitive behavior of all
companies public or private.
Concentration of wealth. Ownership of and profits from successful enterprisestend to be dispersed and diversified -particularly in voucher privatisation. The
http://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Principal-agenthttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Economichttp://en.wikipedia.org/wiki/Political_riskhttp://en.wikipedia.org/wiki/Political_riskhttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Anti-trust_legislationhttp://en.wikipedia.org/wiki/Anti-trust_legislationhttp://en.wikipedia.org/wiki/Anti-trust_legislationhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Principal-agenthttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Economichttp://en.wikipedia.org/wiki/Political_riskhttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Anti-trust_legislationhttp://en.wikipedia.org/wiki/Anti-trust_legislation -
8/9/2019 Privatisation Means Endorsing
6/14
availability of more investment vehicles stimulates capital markets and promotes
liquidity and job creation.
Political influence. Nationalized industries are prone to interference frompoliticians forpoliticalorpopulist reasons. Examples include making an industry
buy supplies from local producers (when that may be more expensive than buying
from abroad), forcing an industry to freeze its prices/fares to satisfy the electorateor control inflation, increasing its staffing to reduce unemployment, or moving its
operations to marginal constituencies.
Profits. Corporations exist to generate profits for their shareholders. Privatecompanies make a profit by enticing consumersto buy their products in
preference to their competitors' (or by increasingprimary demand for their
products, or by reducing costs). Private corporations typically profit more if they
serve the needs of their clients well. Corporations of different sizes may targetdifferent market niches in order to focus on marginal groups and satisfy their
demand. A company with good corporate governance will therefore be
incentivized to meet the needs of its customers efficiently.
[edit] Anti-privatization
Opponents of privatisation dispute the claims concerning the alleged lack of incentive forgovernments to ensure that the enterprises they own are well run, on the basis of the idea
that governments are proxy owners answerable to the people. It is argued that a
government which runs nationalized enterprises poorly will lose public support and votes,while a government which runs those enterprises well will gain public support and votes.
Thus, democratic governments do have an incentive to maximize efficiency in
nationalized companies, due to the pressure of future elections.
Opponents of certain privatisations believe certain parts of the social terrain shouldremain closed to market forces in order to protect them from the unpredictability and
ruthlessness of the market (such asprivate prisons, basichealth care, and basic
education). Another view is that some of the utilities which government provides benefitsociety at large and are indirect and difficult to measure or unable to produce a profit,
such as defense. Still another is that natural monopolies are by definition not subject to
competition and better administrated by the state.
The controlling ethical issue in the anti-privatisation perspective is the need forresponsible stewardship of social support missions. Market interactions are all guided by
self-interest, and successful actors in a healthy market must be committed to charging the
maximum price that the market will bear. Privatisation opponents believe that this modelis not compatible with government missions for social support, whose primary aim isdelivering affordability and quality of service to society.
Many privatisation opponents also warn against the practice's inherent tendency toward
corruption. As many areas which the government could provide are essentially profitless,the only way private companies could, to any degree, operate them would be through
contracts or block payments. In these cases, the private firm's performance in a particular
http://en.wikipedia.org/wiki/Politicianshttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Populismhttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Constituencyhttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/w/index.php?title=Primary_demand&action=edit&redlink=1http://en.wikipedia.org/wiki/Corporate_governancehttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=6http://en.wikipedia.org/wiki/Private_prisonshttp://en.wikipedia.org/wiki/Health_carehttp://en.wikipedia.org/wiki/Health_carehttp://en.wikipedia.org/wiki/Educationhttp://en.wikipedia.org/wiki/National_securityhttp://en.wikipedia.org/wiki/Natural_monopolieshttp://en.wikipedia.org/wiki/Politicianshttp://en.wikipedia.org/wiki/Politicalhttp://en.wikipedia.org/wiki/Populismhttp://en.wikipedia.org/wiki/Inflationhttp://en.wikipedia.org/wiki/Unemploymenthttp://en.wikipedia.org/wiki/Constituencyhttp://en.wikipedia.org/wiki/Consumerhttp://en.wikipedia.org/w/index.php?title=Primary_demand&action=edit&redlink=1http://en.wikipedia.org/wiki/Corporate_governancehttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=6http://en.wikipedia.org/wiki/Private_prisonshttp://en.wikipedia.org/wiki/Health_carehttp://en.wikipedia.org/wiki/Educationhttp://en.wikipedia.org/wiki/National_securityhttp://en.wikipedia.org/wiki/Natural_monopolies -
8/9/2019 Privatisation Means Endorsing
7/14
project would be removed from their performance, and embezzlement and dangerous cost
cutting measures might be taken to maximize profits.
Furthermore, large corporations can paypublic relationsprofessionals to convincedecision-makers that privitazation is a sensible idea, whether or not this is actually the
case. Corporations typically have far more resources for expert testimony,advertisements, conferences and otherpropagandaefforts than anti-privatisation
advocates. Of course, this fact has no bearing on the merits of privatisation itself.
Some would also point out that privatising certain functions of government might hamper
coordination, and charge firms with specialized and limited capabilities to perform
functions which they are not suited for. In rebuilding a war torn nation's infrastructure,
for example, a private firm would, in order to provide security, either have to hiresecurity, which would be both necessarily limited and complicate their functions, or
coordinate with government, which, due to a lack of command structure shared between
firm and government, might be difficult. A government agency, on the other hand, would
have the entire military of a nation to draw upon for security, whose chain of command isclearly defined. Opponents would say that this is a false assertion: numerous books refer
to poor organization between government departments (for example the HurricaneKatrina incident).
Furthermore, opponents of privatisation argue that it is undesirable to transfer state-
owned assets into private hands for the following reasons:
Performance. A democratically elected government is accountable to the people
through a legislature, Congress orParliament, and is motivated to safeguardingthe assets of the nation. The profit motive may be subordinated to social
objectives. Improvements. the government is motivated to performance improvements as
well run businesses contribute to the State's revenues.
Corruption. Government ministers and civil servants are bound to uphold the
highest ethical standards, and standards of probity are guaranteed through codesof conduct and declarations of interest. However, the selling process could lack
transparency, allowing the purchaser and civil servants controlling the sale to gain
personally.
Accountability. The public does not have any control or oversight of private
companies.
Civil-liberty concerns. A democratically elected government is accountable to
the people through aparliament, and can intervene when civil liberties arethreatened.
Goals. The government may seek to use state companies as instruments to further
social goals for the benefit of the nation as a whole.
Capital. Governments can raise money in the financial markets most cheaply to
re-lend to state-owned enterprises.
http://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Propagandahttp://en.wikipedia.org/wiki/Propagandahttp://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Public_relationshttp://en.wikipedia.org/wiki/Propagandahttp://en.wikipedia.org/wiki/Parliamenthttp://en.wikipedia.org/wiki/Parliament -
8/9/2019 Privatisation Means Endorsing
8/14
Lack of market discipline. Governments have chosen to keep certain
companies/industries under public ownership because of their strategic
importance or sensitive nature.
Cuts in essential services. If a government-owned company providing an
essential service (such as the water supply) to all citizens is privatised, its new
owner(s) could lead to the abandoning of the social obligation to those who areless able to pay, or to regions where this service is unprofitable.
Natural monopolies. Privatisation will not result in true competition if a natural
monopoly exists.
Concentration of wealth. Profits from successful enterprises end up in private,
often foreign, hands instead of being available for the common good.
Political influence. Governments may more easily exert pressure on state-owned
firms to help implementing government policy. Downsizing. Private companies often face a conflict between profitability and
service levels, and could over-react to short-term events. A state-owned company
might have a longer-term view, and thus be less likely to cut back on maintenance
or staff costs, training etc, to stem short term losses. Many private companieshave downsized while making record profits.
Profit. Private companies do not have any goal other than to maximize profits. Aprivate company will serve the needs of those who are most willing (and able) to
pay, as opposed to the needs of the majority, and are thus anti-democratic. The
more necessary a good is, the lower theprice elasticity of demand, as people will
attempt to buy it no matter the price. In the case of price elasticity of demand iszero (perfectly unelastic good), demand part of supply and demand theories does
not work.
Privatisation and Poverty. It is acknowledged by many studies that there arewinners and losers with privatisation. The number of losers which may add up
to the size and severity of povertycan be unexpectedly large if the method and
process of privatisation and how it is implemented are seriously flawed (e.g. lackof transparency leading to state-owned assets being appropriated at minuscule
amounts by those with political connections, absence of regulatory institutions
leading to transfer of monopoly rents from public to private sector, improperdesign and inadequate control of the privatisation process leading to asset
stripping.[6]
Job Loss. Due to the additional financial burden placed on privatized companies
to succeed without any government help, unlike the public companies, jobs couldbe lost to keep more money in the company.
[edit] Intermediate ViewsOthers don't dispute that well run for-profit entities with sound corporate governance may
be considerably more efficient than an inefficient governmentalbureaucracyorNGO,however many implementations of privatization can - in practice - lead to the firesaleof
public assets, and/or to inefficient or corrupt - for profit management.
[edit] Developed / Low corruption economies
http://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Necessity_goodhttp://en.wikipedia.org/wiki/Price_elasticity_of_demand#Elasticity_and_revenuehttp://en.wikipedia.org/wiki/Asset_strippinghttp://en.wikipedia.org/wiki/Asset_strippinghttp://en.wikipedia.org/wiki/Privatization#cite_note-5http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=7http://en.wikipedia.org/wiki/Corporate_governancehttp://en.wikipedia.org/wiki/Bureaucracyhttp://en.wikipedia.org/wiki/Bureaucracyhttp://en.wikipedia.org/wiki/Bureaucracyhttp://en.wikipedia.org/wiki/NGOhttp://en.wikipedia.org/wiki/NGOhttp://en.wikipedia.org/wiki/Firesalehttp://en.wikipedia.org/wiki/Firesalehttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=8http://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Necessity_goodhttp://en.wikipedia.org/wiki/Price_elasticity_of_demand#Elasticity_and_revenuehttp://en.wikipedia.org/wiki/Asset_strippinghttp://en.wikipedia.org/wiki/Asset_strippinghttp://en.wikipedia.org/wiki/Privatization#cite_note-5http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=7http://en.wikipedia.org/wiki/Corporate_governancehttp://en.wikipedia.org/wiki/Bureaucracyhttp://en.wikipedia.org/wiki/NGOhttp://en.wikipedia.org/wiki/Firesalehttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=8 -
8/9/2019 Privatisation Means Endorsing
9/14
It is fairly easy for a top executive to reduce the perceived value of an asset - due to
information asymmetry. The executive can accelerate accounting of expected expenses,
delay accounting of expected revenue, engage inoff balance sheet transactions to makethe company's profitability appear temporarily poorer, or simply promote and report
severely conservative (eg. pessimistic) estimates of future earnings. Such seemingly
adverse earnings news will be likely to (at least temporarily) reduce sale price. (This isagain due to information asymmetries since it is more common for top executives to do
everything they can to window dresstheir earnings forecasts). There are typically very
few legal risks to being 'too conservative' in one's accounting and earnings estimates.
When the entity gets taken private - at a dramatically lower price - the new private ownergains a windfall from the former top executive's actions to surreptitiously reduce the sales
price. This can represent 10s of billions of dollars (questionably) transferred from
previous owners (the public) to the takeover artist. The former top executive is thenrewarded with a golden handshake for presiding over the firesale that can sometimes be
in the 10s or 100s of millions of dollars for one or two years of work. (This is
nevertheless an excellent bargain for the takeover artist, who will tend to benefit fromdeveloping a reputationof being very generous to parting top executives).
When a publicly held asset, mutual ornon-profit organizationundergoes privatization,
Top executives often reap tremendous monetary benefits. The executives can facilitate
the process by making the entity appear to be in financial crisis - this reduces the saleprice (to the profit of the purchaser), and makes non-profits and governments more likely
to sell.
Ironically, it can also contribute to a public perception that private entities are more
efficiently run reinforcing the political will to sell of public assets. Again, due to
asymmetric information, policy makers and the general public see a government ownedfirm that was a financial 'disaster' - miraculously turned around by the private sector (and
typically resold) within a few years.
[edit] Underdeveloped &/or High corruption economies
In a society with substantial corruption, privatization allows the government currently in
power and its backers to siphon a large portion of the entire net present value of stateassets away from the public and into the accounts of their favored power brokers.
Without privatization, corrupt officials would have to slowly harvest their corrupt
earnings over time. As such, efficient privatization depends on their being a very low of
current corruption among the current government officials since it allows for far more'efficient' extraction of corrupt rents.
Of course, corrupt governments can also extract corrupt rents quite efficiently in other
ways - particularly by borrowing extensively to engage in spending on overly favorablecontracts with their backers (or on tax shelters, subsidies or other give-aways).
Generations of subsequent taxpayers are then left with paying back the debt incurred for
http://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Information_asymmetrieshttp://en.wikipedia.org/wiki/Window_dresshttp://en.wikipedia.org/wiki/Window_dresshttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Firesalehttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Mutualhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Asymmetric_informationhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=9http://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Tax_sheltershttp://en.wikipedia.org/wiki/Information_asymmetryhttp://en.wikipedia.org/wiki/Off_balance_sheethttp://en.wikipedia.org/wiki/Information_asymmetrieshttp://en.wikipedia.org/wiki/Window_dresshttp://en.wikipedia.org/wiki/Golden_handshakehttp://en.wikipedia.org/wiki/Firesalehttp://en.wikipedia.org/wiki/Reputationhttp://en.wikipedia.org/wiki/Mutualhttp://en.wikipedia.org/wiki/Non-profit_organizationhttp://en.wikipedia.org/wiki/Asymmetric_informationhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=9http://en.wikipedia.org/wiki/Net_present_valuehttp://en.wikipedia.org/wiki/Tax_shelters -
8/9/2019 Privatisation Means Endorsing
10/14
corrupt transfers made decades previously. Naturally, this may lead to the sale of public
assets....
In the end, the public is left with a government that taxes them heavily, and gives themnothing in return. Debt repayment is enforced by international agreements and agencies
such as the IMF. Infrastructure and upkeep is sacrificed - leading to a further decay in theeconomic efficiency of the country over time.
[edit] Outcomes
This article or section has multiple issues. Please help improve the articleor
discuss these issues on the talk page.
Its neutrality is disputed. Tagged since March 2008.
Its factual accuracy isdisputed.Tagged since March 2008.
Literature reviews [7][8] find that in competitive industries with well-informed consumers,privatisation consistently improves efficiency. Such efficiency gains mean a one-off
increase in GDP, but through improved incentives to innovate and reduce costs also tend
to raise the rate ofeconomic growth. The type of industries to which this generally
applies include manufacturingand retailing. Although typically there are social costsassociated with these efficiency gains[9], many economists argue that these can be dealt
with by appropriate government support through redistributionand perhaps retraining.
In sectors that are natural monopoliesorpublic services, the results of privatisation are
much more mixed, as a private monopoly behaves much the same as a public one in
liberal economic theory. In general, if the performance of an existing public sectoroperation is sufficiently bad, privatisation (or threat thereof) has been known to improve
matters. Changes may include,inter alia, the imposition of related reforms such as greatertransparency and accountability of management, improved internal controls, regulatory
systems, and better financing, rather than privatisation itself.
Regardingpolitical corruption, it is a controversial issue whether the size of the public
sector per se results in corruption. TheNordic countries have low corruption but largepublic sectors. However, these countries score high on the Ease of Doing Business Index,
due to good and often simple regulations, and forpolitical rights and civil liberties,
showing high government accountabilityand transparency. One should also notice the
successful, corruption-free privatisations and restructuring of government enterprises inthe Nordic countries. For example, dismantling telecommunications monopolies have
resulted in several new players entering the market and intense competition with priceand service.
Also regarding corruption, the sales themselves give a large opportunity for grand
corruption. Privatisations in Russia and Latin America were accompanied by large-scale
corruption during the sale of the state-owned companies. Those with political connections
http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=10http://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/wiki/Talk:Privatizationhttp://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_viewhttp://en.wikipedia.org/wiki/Wikipedia:NPOV_disputehttp://en.wikipedia.org/wiki/Wikipedia:Accuracy_disputehttp://en.wikipedia.org/wiki/Wikipedia:Accuracy_disputehttp://en.wikipedia.org/wiki/Wikipedia:Accuracy_disputehttp://en.wikipedia.org/wiki/Privatization#cite_note-6http://en.wikipedia.org/wiki/Privatization#cite_note-7http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Retailinghttp://en.wikipedia.org/wiki/Privatization#cite_note-8http://en.wikipedia.org/wiki/Redistributionhttp://en.wikipedia.org/wiki/Redistributionhttp://en.wikipedia.org/wiki/Retraininghttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Public_serviceshttp://en.wikipedia.org/wiki/Monopolyhttp://en.wikipedia.org/wiki/Economic_liberalismhttp://en.wikipedia.org/wiki/Inter_aliahttp://en.wikipedia.org/wiki/Inter_aliahttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Nordic_countrieshttp://en.wikipedia.org/wiki/Ease_of_Doing_Business_Indexhttp://en.wikipedia.org/wiki/Freedom_in_the_Worldhttp://en.wikipedia.org/wiki/Freedom_in_the_Worldhttp://en.wikipedia.org/wiki/Accountabilityhttp://en.wikipedia.org/wiki/Accountabilityhttp://en.wikipedia.org/wiki/File:Ambox_content.pnghttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=10http://en.wikipedia.org/w/index.php?title=Privatization&action=edithttp://en.wikipedia.org/wiki/Talk:Privatizationhttp://en.wikipedia.org/wiki/Wikipedia:Neutral_point_of_viewhttp://en.wikipedia.org/wiki/Wikipedia:NPOV_disputehttp://en.wikipedia.org/wiki/Wikipedia:Accuracy_disputehttp://en.wikipedia.org/wiki/Privatization#cite_note-6http://en.wikipedia.org/wiki/Privatization#cite_note-7http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Economic_growthhttp://en.wikipedia.org/wiki/Manufacturinghttp://en.wikipedia.org/wiki/Retailinghttp://en.wikipedia.org/wiki/Privatization#cite_note-8http://en.wikipedia.org/wiki/Redistributionhttp://en.wikipedia.org/wiki/Retraininghttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Public_serviceshttp://en.wikipedia.org/wiki/Monopolyhttp://en.wikipedia.org/wiki/Economic_liberalismhttp://en.wikipedia.org/wiki/Inter_aliahttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Regulationhttp://en.wikipedia.org/wiki/Political_corruptionhttp://en.wikipedia.org/wiki/Nordic_countrieshttp://en.wikipedia.org/wiki/Ease_of_Doing_Business_Indexhttp://en.wikipedia.org/wiki/Freedom_in_the_Worldhttp://en.wikipedia.org/wiki/Accountability -
8/9/2019 Privatisation Means Endorsing
11/14
unfairly gained large wealth, which has discredited privatisation in these regions. While
media have reported widely the grand corruption that accompanied the sales, studies have
argued that in addition to increased operating efficiency, daily petty corruption is, orwould be, larger without privatisation, and that corruption is more prevalent in non-
privatised sectors. Furthermore, there is evidence to suggest that extralegal and unofficial
activities are more prevalent in countries that privatised less.[10]
[edit] Alternatives to total privatisation
[edit] Public Utility
The enterprise can remain as a public utility.
[edit] Non-Profit
The enterprise could be managed by a private non-profit organization.
[edit] Municipalization
Transferring control to municipal government
[edit] Outsourcing or Sub-contracting
It is possible that national services may sub-contract or out-source functions to private
enterprises. A notable example of this is in the United Kingdom, where manymunicipalities have contracted out their garbage collection or administration of parking
fines to private companies. In addition, the British government has involved the privatesector more in the workings of theNational Health Service principally throughoutsourcing the construction and operation of new hospitals to private companies. There
are also moves to refer patients to private surgeries to ease the load on existing NHS
human resources, and covering the cost of this.
See also:private finance initiative
[edit] Partial ownership
An enterprise may be privatised, with a number of shares in the company being retained
by the state. This is a particularly notable phenomenon in France, where the state oftenretains a "blocking stake" in private industries. In Germany, the state privatised Deutsche
Telekom in small tranches, and still retains about a third of the company. As of 2005, thestate ofNorth Rhine-Westphalia is also planning to buy shares in the energy company
E.ON in what is claimed to be an attempt to control spiraling costs.
Whilst partial privatisation could be an alternative, it is more often a stepping stone to full
privatisation. It can offer the business a smoother transition period during which it can
http://en.wikipedia.org/wiki/Privatization#cite_note-9http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=11http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=12http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=13http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=14http://en.wikipedia.org/wiki/Municipalityhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=15http://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Municipalitieshttp://en.wikipedia.org/wiki/National_Health_Servicehttp://en.wikipedia.org/wiki/Private_finance_initiativehttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=16http://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Deutsche_Telekomhttp://en.wikipedia.org/wiki/Deutsche_Telekomhttp://en.wikipedia.org/wiki/North_Rhine-Westphaliahttp://en.wikipedia.org/wiki/E.ONhttp://en.wikipedia.org/wiki/Privatization#cite_note-9http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=11http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=12http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=13http://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=14http://en.wikipedia.org/wiki/Municipalityhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=15http://en.wikipedia.org/wiki/United_Kingdomhttp://en.wikipedia.org/wiki/Municipalitieshttp://en.wikipedia.org/wiki/National_Health_Servicehttp://en.wikipedia.org/wiki/Private_finance_initiativehttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=16http://en.wikipedia.org/wiki/Francehttp://en.wikipedia.org/wiki/Deutsche_Telekomhttp://en.wikipedia.org/wiki/Deutsche_Telekomhttp://en.wikipedia.org/wiki/North_Rhine-Westphaliahttp://en.wikipedia.org/wiki/E.ON -
8/9/2019 Privatisation Means Endorsing
12/14
gradually adjust to market competition. Some state-owned companies are so large that
there is the risk of sucking liquidity from the rest of the market, even in the most liquid
marketplaces, and thus must be sold off bit by bit. The first tranche of a multi-stepprivatisation would also in the first instance establish a valuation for the enterprise to
mitigate complaints of under-pricing.
In some instances of partial privatisation of contracted services, provision of some
portion(s) of the state-owned service are provided by private-sector contactors, but thegovernment retains the capacity to self-operate at contract intervals, if it so chooses. An
example of partial privatisation would be some forms ofschool bus service contracting,
such as arrangements where equipment and other resources purchased with governmentcapital funds and/o those already owned by a governmental entity are used by the
contractor for a period of time in providing services, but ownership is retained by the
governmental unit. This form of partial privatisation eases concerns that once anoperation is contracted, the government may be unable to obtain sufficient competitive
bids, and be subjected to terms less desirable than the prior operation under state-
ownership. Under that scenario, a reverse privatisation would be more feasible for thegovernment. (see section below)
See also: Public-private partnership
[edit] Notable privatisations
See also: List of privatisations
The largest privatisation in history was Japan Post. It was the nation's largest employer
and one third of all Japanese government employees worked for Japan Post. Japan Post
was often said to be the largest holder of personal savings in the world.
The Prime MinisterJunichiro Koizumi wanted to privatise it because it was thought to be
an inefficient and a source for corruption. In September 2003, Koizumi's cabinetproposed splitting Japan Post into four separate companies: a bank, an insurance
company, a postal service company, and a fourth company to handle the post offices as
retail storefronts of the other three.
After privatisation was rejected by upper house, Koizumi scheduled nationwide electionsto be held on September 11,2005. He declared the election to be a referendum on postal
privatisation. Koizumi subsequently won this election, gaining the necessary
supermajority and a mandate for reform, and in October 2005, the bill was passed toprivatise Japan Post in 2007.[11]
Nippon Telegraph and Telephone's privatisation in 1987 was the largest share offering in
financial history at the time.[12] 15 of the world's 20 largest public share offerings have
been privatisations of telecoms.[12]
http://en.wikipedia.org/wiki/School_bus_contractorhttp://en.wikipedia.org/wiki/Public-private_partnershiphttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=17http://en.wikipedia.org/wiki/List_of_privatisationshttp://en.wikipedia.org/wiki/Japan_Posthttp://en.wikipedia.org/wiki/Junichiro_Koizumihttp://en.wikipedia.org/wiki/Japan_general_election,_2005http://en.wikipedia.org/wiki/September_11http://en.wikipedia.org/wiki/2005http://en.wikipedia.org/wiki/2005http://en.wikipedia.org/wiki/Supermajorityhttp://en.wikipedia.org/wiki/Privatization#cite_note-10http://en.wikipedia.org/wiki/Nippon_Telegraph_and_Telephonehttp://en.wikipedia.org/wiki/Nippon_Telegraph_and_Telephonehttp://en.wikipedia.org/wiki/Privatization#cite_note-megginson205-11http://en.wikipedia.org/wiki/Privatization#cite_note-megginson205-11http://en.wikipedia.org/wiki/School_bus_contractorhttp://en.wikipedia.org/wiki/Public-private_partnershiphttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=17http://en.wikipedia.org/wiki/List_of_privatisationshttp://en.wikipedia.org/wiki/Japan_Posthttp://en.wikipedia.org/wiki/Junichiro_Koizumihttp://en.wikipedia.org/wiki/Japan_general_election,_2005http://en.wikipedia.org/wiki/September_11http://en.wikipedia.org/wiki/2005http://en.wikipedia.org/wiki/Supermajorityhttp://en.wikipedia.org/wiki/Privatization#cite_note-10http://en.wikipedia.org/wiki/Nippon_Telegraph_and_Telephonehttp://en.wikipedia.org/wiki/Privatization#cite_note-megginson205-11http://en.wikipedia.org/wiki/Privatization#cite_note-megginson205-11 -
8/9/2019 Privatisation Means Endorsing
13/14
The United Kingdom's largest public share offerings were privatisations ofBritish
Telecom andBritish Gas. The largest public share offering in France was France
Telecom. Privatisation in Europe has led to genuine competition: the formerstate-ownedenterprises lost their monopolies due to legislation and technological change, competitors
entered the market, and prices forbroadband access and telephone calls fell dramatically.[citation needed]
[edit] Negative responses to privatisation
Privatisation proposals in keypublic servicesectors such aswaterandelectricity are in
many cases strongly resisted by opposition political parties and civil society groups,
many of which regard them asnatural monopolies. Campaigns typically involvedemonstrations and democratic political activities; sometimes the authorities attempt to
suppress opposition using violence (e.g. Cochabamba protests of 2000 in Bolivia and
protests in Arequipa, Peru, in June 2002). Opposition is often strongly supported by tradeunions. Opposition is usually strongest to water privatisation as well as Cochabamba,
recent examples include Haiti, GhanaandUruguay (2004). In the latter case a civil-society-initiated referendum banning water privatisation was passed in October 2004.
[edit] Reverse privatisation
A reversion from contracted ownership of an enterprise and/or services to governmental
ownership and/or provision is called reverse privatisation ornationalization. Such a
situation most often occurs when a privatisation contractor fails financially and/or the
governmental unit has been unable to purchase satisfactory service at prices it regards asless than with state-ownership or self-operation of services. Another circumstance may
occur when greater control than viable under privatisation is determined to be in thegovernmental unit's best interest.
National security concerns may be the source of reverse privatisation actions when the
most likely providers are non-domestic or international corporations or entities. For
example, in 2001, in response to the September 11th attacks, the then-private airport
security industry in the United States was nationalized[citation needed] and put under theauthority of the Transportation Security Administration.
[edit] See also
Cooperative Deregulation Gated community
Marketization
Megaproject
Megaprojects and risk
Nationalization - the reverse process
Private sector development
http://en.wikipedia.org/wiki/British_Telecomhttp://en.wikipedia.org/wiki/British_Telecomhttp://en.wikipedia.org/wiki/British_Gashttp://en.wikipedia.org/wiki/British_Gashttp://en.wikipedia.org/wiki/France_Telecomhttp://en.wikipedia.org/wiki/France_Telecomhttp://en.wikipedia.org/wiki/State-owned_enterprisehttp://en.wikipedia.org/wiki/State-owned_enterprisehttp://en.wikipedia.org/wiki/State-owned_enterprisehttp://en.wikipedia.org/wiki/Broadbandhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=18http://en.wikipedia.org/wiki/Public_serviceshttp://en.wikipedia.org/wiki/Public_serviceshttp://en.wikipedia.org/wiki/Waterhttp://en.wikipedia.org/wiki/Waterhttp://en.wikipedia.org/wiki/Waterhttp://en.wikipedia.org/wiki/Electricityhttp://en.wikipedia.org/wiki/Electricityhttp://en.wikipedia.org/wiki/Civil_societyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Cochabamba_protests_of_2000http://en.wikipedia.org/wiki/Boliviahttp://en.wikipedia.org/wiki/Arequipahttp://en.wikipedia.org/wiki/Arequipahttp://en.wikipedia.org/wiki/Trade_unionhttp://en.wikipedia.org/wiki/Trade_unionhttp://en.wikipedia.org/wiki/Water_privatisationhttp://en.wikipedia.org/wiki/Water_privatisationhttp://en.wikipedia.org/wiki/Haitihttp://en.wikipedia.org/wiki/Ghanahttp://en.wikipedia.org/wiki/Ghanahttp://en.wikipedia.org/wiki/Uruguayhttp://en.wikipedia.org/wiki/Uruguayhttp://en.wikipedia.org/wiki/Referendumhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=19http://en.wikipedia.org/wiki/Nationalizationhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Transportation_Security_Administrationhttp://en.wikipedia.org/wiki/Transportation_Security_Administrationhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=20http://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Deregulationhttp://en.wikipedia.org/wiki/Gated_communityhttp://en.wikipedia.org/wiki/Marketizationhttp://en.wikipedia.org/wiki/Megaprojecthttp://en.wikipedia.org/wiki/Megaprojects_and_riskhttp://en.wikipedia.org/wiki/Nationalizationhttp://en.wikipedia.org/wiki/Private_sector_developmenthttp://en.wikipedia.org/wiki/British_Telecomhttp://en.wikipedia.org/wiki/British_Telecomhttp://en.wikipedia.org/wiki/British_Gashttp://en.wikipedia.org/wiki/France_Telecomhttp://en.wikipedia.org/wiki/France_Telecomhttp://en.wikipedia.org/wiki/State-owned_enterprisehttp://en.wikipedia.org/wiki/State-owned_enterprisehttp://en.wikipedia.org/wiki/Broadbandhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=18http://en.wikipedia.org/wiki/Public_serviceshttp://en.wikipedia.org/wiki/Waterhttp://en.wikipedia.org/wiki/Electricityhttp://en.wikipedia.org/wiki/Civil_societyhttp://en.wikipedia.org/wiki/Natural_monopolyhttp://en.wikipedia.org/wiki/Cochabamba_protests_of_2000http://en.wikipedia.org/wiki/Boliviahttp://en.wikipedia.org/wiki/Arequipahttp://en.wikipedia.org/wiki/Trade_unionhttp://en.wikipedia.org/wiki/Trade_unionhttp://en.wikipedia.org/wiki/Water_privatisationhttp://en.wikipedia.org/wiki/Haitihttp://en.wikipedia.org/wiki/Ghanahttp://en.wikipedia.org/wiki/Uruguayhttp://en.wikipedia.org/wiki/Referendumhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=19http://en.wikipedia.org/wiki/Nationalizationhttp://en.wikipedia.org/wiki/Wikipedia:Citation_neededhttp://en.wikipedia.org/wiki/Transportation_Security_Administrationhttp://en.wikipedia.org/w/index.php?title=Privatization&action=edit§ion=20http://en.wikipedia.org/wiki/Cooperativehttp://en.wikipedia.org/wiki/Deregulationhttp://en.wikipedia.org/wiki/Gated_communityhttp://en.wikipedia.org/wiki/Marketizationhttp://en.wikipedia.org/wiki/Megaprojecthttp://en.wikipedia.org/wiki/Megaprojects_and_riskhttp://en.wikipedia.org/wiki/Nationalizationhttp://en.wikipedia.org/wiki/Private_sector_development -
8/9/2019 Privatisation Means Endorsing
14/14
Privatisation in Russia
Privatisation of British Rail
Privatization of public toilets
Public ownership
Securitization
Special Economic Zone Urban Enterprise Zone
Voucher privatisation
Welfare state
http://en.wikipedia.org/wiki/Privatisation_in_Russiahttp://en.wikipedia.org/wiki/Privatisation_of_British_Railhttp://en.wikipedia.org/wiki/Privatization_of_public_toiletshttp://en.wikipedia.org/wiki/Public_ownershiphttp://en.wikipedia.org/wiki/Securitizationhttp://en.wikipedia.org/wiki/Special_Economic_Zonehttp://en.wikipedia.org/wiki/Urban_Enterprise_Zonehttp://en.wikipedia.org/wiki/Voucher_privatisationhttp://en.wikipedia.org/wiki/Welfare_statehttp://en.wikipedia.org/wiki/Privatisation_in_Russiahttp://en.wikipedia.org/wiki/Privatisation_of_British_Railhttp://en.wikipedia.org/wiki/Privatization_of_public_toiletshttp://en.wikipedia.org/wiki/Public_ownershiphttp://en.wikipedia.org/wiki/Securitizationhttp://en.wikipedia.org/wiki/Special_Economic_Zonehttp://en.wikipedia.org/wiki/Urban_Enterprise_Zonehttp://en.wikipedia.org/wiki/Voucher_privatisationhttp://en.wikipedia.org/wiki/Welfare_state