<div dir="ltr"><div class="gmail_default" style="font-size:large"><br></div><br><div class="gmail_quote"><div dir="ltr" class="gmail_attr">From: <b class="gmail_sendername" dir="auto">Jomo</b> <span dir="ltr"><<a href="mailto:jomoks@yahoo.com">jomoks@yahoo.com</a>></span><br></div><div><div class="m_-7086083817016212673ydp3a4f3010yahoo-style-wrap" style="font-family:garamond,new york,times,serif;font-size:16px"><div id="m_-7086083817016212673ydp3a4f3010yiv9777581456"></div></div><div class="m_-7086083817016212673ydpbc976444yiv9777581456yqt8392383085" id="m_-7086083817016212673ydpbc976444yiv9777581456yqtfd26285"><div><div class="m_-7086083817016212673ydpbc976444yiv9777581456ydp809d9f49yahoo-style-wrap" style="font-family:garamond,new york,times,serif;font-size:16px"><br clear="none"></div><div class="m_-7086083817016212673ydpbc976444yiv9777581456ydpe8f3cc89yahoo_quoted" id="m_-7086083817016212673ydpbc976444yiv9777581456ydpe8f3cc89yahoo_quoted_5100030912"><div style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:13px;color:#26282a">
<div><div id="m_-7086083817016212673ydpbc976444yiv9777581456ydpe8f3cc89yiv3474335840"><div class="m_-7086083817016212673ydpbc976444yiv9777581456ydpe8f3cc89yiv3474335840yqt7137270386" id="m_-7086083817016212673ydpbc976444yiv9777581456ydpe8f3cc89yiv3474335840yqtfd81591"><div><div class="m_-7086083817016212673ydpbc976444yiv9777581456ydpe8f3cc89yiv3474335840ydp1bc24387yahoo-style-wrap" style="font-family:garamond,new york,times,serif;font-size:16px"><span style="color:rgb(38,40,42);font-family:Helvetica Neue,Helvetica,Arial,sans-serif;font-size:13px"><b>Has Privatization Benefitted the Public?</b></span><br clear="none"></div><div class="m_-7086083817016212673ydpbc976444yiv9777581456ydpe8f3cc89yiv3474335840ydpdff82ee9yahoo_quoted" id="m_-7086083817016212673ydpbc976444yiv9777581456ydpe8f3cc89yiv3474335840ydpdff82ee9yahoo_quoted_4531511511"><div style="font-family:'Helvetica Neue',Helvetica,Arial,sans-serif;font-size:13px;color:#26282a"><div><div dir="ltr"><i><br clear="none"></i></div><div dir="ltr"><i>Jomo Kwame Sundaram<br clear="none"></i></div><div dir="ltr"><br clear="none"></div><div dir="ltr">KUALA LUMPUR, Malaysia, Apr 02 (IPS) - In most cases of privatization, some outcomes benefit some, which serves to legitimize the change. Nevertheless, overall net welfare improvements are the exception, not the rule. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Never is everyone better off. Rather, some are better off, while others are not, and typically, many are even worse off. The partial gains are typically high, or even negated by overall costs, which may be diffuse, and less directly felt by losers.<br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Privatized monopoly powers<br clear="none"></div><div dir="ltr">Since many SOEs are public monopolies, privatization has typically transformed them into private monopolies. In turn, abuse of such market monopoly power enables more rents and corporate profits. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">As corporate profits are the private sector's yardstick of success, privatized monopolies are likely to abuse their market power to maximize rents for themselves. Thus, privatization tends to burden the public, e.g., if charges are raised. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">In most cases, privatization has not closed the governments' fiscal deficits, and may even worsen budgetary problems. Privatization may worsen the fiscal situation due to loss of revenue from privatized SOEs, or tax evasion by the new privatized entity. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Options for cross-subsidization, e.g., to broaden coverage are reduced as the government is usually left with unprofitable activities while the potentially profitable is acquired by the private sector. Thus, governments are often forced to cut essential public services.<br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">In most cases, profitable SOEs were privatized as prospective private owners are driven to maximize profits. Fiscal deficits have often been exacerbated as new private owners use creative accounting to avoid tax, secure tax credits and subsidies, and maximize retained earnings. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Meanwhile, governments lose vital revenue sources due to privatization if SOEs are profitable, and are often obliged to subsidize privatized monopolies to ensure the poor and underserved still have access to the privatized utilities or services.<br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Privatization burdens many<br clear="none"></div><div dir="ltr">Privatization burdens the public when charges or fees are not reduced, or when the services provided are significantly reduced. Thus, privatization often burdens the public in different ways, depending on how market power is exercised or abused. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Often, instead of trying to provide a public good to all, many are excluded because it is not considered commercially viable or economic to serve them. Consequently, privatization may worsen overall enterprise performance. ‘Value for money' may go down despite ostensible improvements used to justify higher user charges.<br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">SOEs are widely presumed to be more likely to be inefficient. The most profitable and potentially profitable are typically the first and most likely to be privatized. This leaves the rest of the public sector even less profitable, and thus considered more inefficient, in turn justifying further privatizations. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Efficiency elusive<br clear="none"></div><div dir="ltr">It is often argued that privatization is needed as the government is inherently inefficient and does not know how to run enterprises well. Incredibly, the government is expected to subsidize privatized SOEs, which are presumed to be more efficient, in order to fulfil its obligations to the citizenry. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Such obligations may not involve direct payments or transfers, but rather, lucrative concessions to the privatized SOE. Thus, they may well make far more from these additional concessions than the actual cost of fulfilling government obligations.<br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Thus, privatization of profitable enterprises or segments not only perpetuates exclusion of the deserving, but also worsens overall public sector performance now encumbered with remaining unprofitable obligations. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">One consequence is poorer public sector performance, contributing to what appears to be a self-fulfilling prophecy. To make matters worse, the public sector is then stuck with financing the unprofitable, thus seemingly supporting to the privatization prophecy. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Benefits accrue to relatively few<br clear="none"></div><div dir="ltr">Privatization typically enriches the politically connected few who secure lucrative rents by sacrificing the national or public interest for private profit, even when privatization may not seem to benefit them. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Privatization in many developing and transition economies has primarily enriched these few as the public interest is sacrificed to such powerful private business interests. This has, in turn, exacerbated corruption, patronage and other related problems.<br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">For example, following Russian voucher privatization and other Western recommended reforms, for which there was a limited domestic constituency then, within three years (1992-1994), the Russian economy had collapsed by half, and adult male life expectancy fell by six years. It was the greatest such recorded catastrophe in the last six millennia of recorded human history. <br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Soon, a couple of dozen young Russian oligarchs had taken over the commanding heights of the Russian economy; many then monetized their gains and invested abroad, migrating to follow their new wealth. Much of this was celebrated by the Western media as economic progress.<br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">***<br clear="none"></div><div dir="ltr">---------------------------------------<br clear="none"></div><div dir="ltr">Excerpt: To ensure public acceptability, some benefits accrue to many in the early stages of privatization in order to minimize public resistance. However, in the longer term, privatization tends to enrich a few but typically fails to deliver on its ostensible aims.<br clear="none"></div><div dir="ltr">Related Links<br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr">Visit this story at <a shape="rect" href="http://ipsnews.net/2019/04/privatization-benefitted-public" rel="nofollow" target="_blank">http://ipsnews.net/2019/04/privatization-benefitted-public</a><br clear="none"></div><div dir="ltr"><br clear="none"></div><div dir="ltr"><br clear="none"></div></div>
</div>
</div></div></div></div></div>
</div>
</div></div></div></div></div></div>