Privatization creates more problems than it tackles
Admittedly, all familiar assumptions recommend that the private sector is more efficient than the public sector and that competition invariably improves quality. Nevertheless, just the acknowledgement that there is another point of view, and even the slightest recognition that it should be heard, represents a refreshing change from the monolithic approach of many official international bodies dealing with privatization.
This point of view can be manifested through those two main themes:
1. The social aspects of privatization.
2. Competition and regulation of privatized monopolies.
The social impact has been tagged on as an afterthought because of the effects of privatization, rather than being built into the design of public sector reform programs and particular measures from start to finish. This was mainly because of the underlying assumption that privatization would improve societys economic welfare and that the limit of social responsibility was, therefore, to provide, on a short-term basis, for the victims of change. In reality, however, the neo-liberal model is failing to deliver long-term, either economically or socially, for the vast majority of people, and giving due weight to the social dimension therefore requires a fundamental redesign. The objectives and process of privatization had to be rethought. This is because just as democracy requires the fullest participation of all people in the political processes affecting their lives, so corresponding economic systems should have as their objective that the whole of society be enabled to contribute to and benefit from them. Reliance on free markets and the private sector failed that test by excluding large numbers through unemployment and poverty. To the extent that privatization could, in some countries and in some sectors, contribute, in efficient and equitable ways, to the achievement of full employment and poverty reduction. Even in that context, there might be victims of change for whom supportive provision must be made. But if such measures continued to be seen as all there was to the social dimension of privatization, while privatization continued overwhelmingly to worsen the economic and social welfare and the prospects of millions, the package as a whole would continue to create more social problems than it tackled. Apparently, social objectives and considerations are essential for the success of privatization, and they should form an integral part of