Privatization
To fully appreciate and understand the concept of privatization, Kwamina (1988) remarks, that it is first necessary to go back several centuries to the eighteenth century, to the economic doctrine of Adam Smith and the classical economists, since privatization is seen as a modern day restatement of this doctrine. This doctrine stresses the virtues of economic individualism and private enterprise and sees competition and impersonal market forces as determining and regulating the economic system (prices, wages, employment levels etc.). Indeed, although privatization might be the new 'buzz' word, Pack (1987:532) asserts that it is important to recognize that it is not a new phenomenon. It has been found, (Chamberlin and Jackson, 1987:586; Kwamina, 1988:5) that the doctrine of privatization was actively practiced and promoted by the Ford, Carter and Reagan administrations in the United States of America and the Thatcher Administration in Britain. Interest for privatization thus grew from the widely heralded deregulation initiatives espoused by these administrations, particularly minimizing the responsibility of the state or public sector and transferring this responsibility to the private sector.
Indeed, some privatization exponents (Kwamina, 1988: 19-20; Kikeri, 1992: 1; Savas, 2000) assert that providing governmental services through the market encourages competition, which will lead to better quality at lower prices; economies of scale and greater consumer voice and choice. Moreover, economists are then forced to declare that some countries are becoming overly dependent on foreign tenders to finance chronic budget deficits. wider share ownership; frees public resources for investment in infrastructure and social programs and re-establishes true capitalism. Kwamina (1988: 92-94) asserts that privatization brings about unemployment and retrenchment and heavy social costs, which are borne by the mass of people, penetrating the spiritual and cultural fabric of the nation. Indeed, the literature reveals that these forms are principal aspects of privatization and are regularly used by advocates to reinforce their arguments, which basically expound that governments have shown themselves to be incapable of efficiently and effectively managing the enterprises which they have controlled, resulting in a severe drain on their respective treasuries and a burden on the taxpayers (Kwamina, 1988). Others have claimed (Pack, 1989:22; Birch and Haar, 2000:1; Poole and Fixler, 1987: 615-617) that disadvantages such as higher than anticipated costs which cause firms to compromise the quality of their output and lower than anticipated quality resulting in increasing costly monitoring activities on the government abound. Furthermore, privatization is also thought to brew and bring corruption, unrealistic or low pricing or bids for the state assets to be sold, lack of transparency and accountability in some procedures, poor quality and reduced service to the poor. Thus, some have noted (Warner and Hebdon, 2001; Miranda, 1994) that the focus of much research on privatization as the primary alternative to providing the public with services (Boyne, 1998; Ferris, 1996; Greene, 1996; Hirsch, 1995; Stein, 1990) reflects the call for increased dependence on the market for the provision of public goods and services. Among them is divestment; denationalization/divestiture; leasing and contracting out activities which the state has previously been involved into the private sector; market liberalization & deregulation; utilization of vouchers; encouraging alternative institutions; encouraging exit from state provision and buying out existing interest groups (Kwamina, 1988:12-18; Birch and Haar, 2000:2). Ideally, they signify the ending of government monopoly in particular areas through competition, by allowing private interests to also carry out these functions. It asserts the primacy of risk and uncertainty in the management of public business, with the public sector seen as an instrument of a minimal set of tasks.
Common topics in this essay:
Warner Hebdon,
Contracting Pack,
Poole Fixler,
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Nevertheless Caribbean,
Similarly Kwamina,
Adam Smith,
Administration Britain,
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ramanadham 1989,
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1987 kwamina 1988,
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Acceptance Essays
