Privatization Solution is the Problem

Advocates made exaggerated claims that privatization would reduce governments’ fiscal problems while ensuring more efficient, productive and competitive economies by promoting private entrepreneurship, innovation and investments. Led by Margaret Thatcher and the Washington-based international financial institutions from the 1980s, privatization proponents pushed for more private property. Real problems of state-owned enterprises were often misrepresented and exaggerated to make the case for privatization. To minimize public resistance and ensure public acceptability, some benefits accrued to many in the early stages of privatization. However, in the longer term, privatization enriched a few while typically failing to deliver its promised benefits. Privatization was expected by many to promote competition and eliminate corruption. In practice, the converse has often been true as beneficiaries have engaged in new types of corruption to maximize their own gains instead. As the failures and abuses of privatization became apparent, public–private partnerships have been promoted, ostensibly to mobilize private finance for the public purpose. In all too many cases, these partnerships have instead socialized costs and losses while enhancing private financial gains.