Privatization Fiction versus Fact


The advocates of privatization would have us believe there are a lot of benefits to privatization. Over the years, a lot of myths about the value and quality of public versus private sector services have evolved. The privatizers like to exploit those myths. It’s our job to help the public separate the fact from fiction.

Fiction: The private sector can do it cheaper and that means lower taxes and a reduced deficit.
Fact: When all the bills are in, the bottom line is that privatized services are rarely, if ever, delivered more cheaply than they were in the public sector.

Fiction: The private sector is more efficient and therefore will deliver a better quality product.
Fact: When it comes to efficiency it doesn’t hurt to remember that the Principal Group, Dome Petroleum and the automobile industry are all private sector operations. All have lost millions of dollars and, in all cases, it was the public sector that bailed them out or cleaned up the mess.
The fact is, when it comes to public services, the private sector cannot and does not deliver a better quality product whether it is road construction or support for abused children. Private sector companies are in the business of making profits. There are two ways to make money. One is higher charges to users. The second is cutting expenses. A private contractor’s basic objective is to provide the minimum level of service at the minimum price the market will bear. That’s the way the market works.

Fiction: Private sector workers are more motivated and will work harder.
Fact: While most people want to do a good job, the fact is that public sector workers are more experienced and are directly accountable to the public they serve.

Fiction: If we could just get the politics out of it, everything would run better.
Fact: Government is about being elected, about making decisions and being responsible. A department using contract employees is still headed by an elected politician. All they’ve done is put a buffer between themselves and the people who elected them. Politics soon becomes the art of pleasing business and contractors and not the art of pleasing people. When a private contractor takes over, local residents frequently do not know who is ultimately responsible for the public service. They do not recognize who to go to with their complaints. Politicians will sometimes try to pass buck on complaints. It’s not good enough. They were elected. They must maintain responsibility for the services they have been mandated to provide.

Fiction: All politicians are crooks and they only hire their friends or political pals. This doesn’t happen in the private sector.
Fact: Politicians are accountable for who they hire and the job they do. More than one Canadian politician has been thrown out of office for irresponsible patronage.

Fiction: There are too many people working in the government now. It wouldn’t hurt to privatize and get rid of some of those bureaucrats.
Fact: When the layoffs come from privatization it’s not the high paid political aides or deputy ministers that lose their jobs. It’s the nurses, highway workers or agricultural specialists who go.
The impact of these kinds of layoffs can be devastating on a family. Rural communities tend to suffer more than larger centres. The loss of 5 or 6 job or the removal of a few hundred thousand dollars from a small local economy can, and does, have a tremendous negative impact.

So Who Really Benefits From Privatization?
If privatization isn’t all it’s cracked up to be then why is the government doing it and who are the real winners?
The corporate sector is the big winner. Business likes privatization’s impact on the bottom line. And, since many large corporations pay no taxes they’re not worried about the bottom line facing taxpayers.
Thousands of businesses have benefited from government contracts, often without going through any public bidding process. Stockbrokers and consultants also pocket millions of dollars in fees for doing studies for government and acting as advisers for specific privatizations.

This article appeared in The Connexion Digest #54, February 1992.

Reprinted from
Impact, published by the Alberta Union of Provincial Employees.

(CX4348)

 

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