You can see the word “privatization” quite often while watching the news on TV, surfing through the Internet or reading the newspapers. What is it and why do people talk about it so much? Basically, by the term “privatization” we mean the sale of governmental facilities to certain corporations or other private companies. The government may sell an enterprise partially or completely – it depends on how much money the budget of the country needs at the moment. So why is the topic of privatization so controversial? Let’s find out!
Pros of Privatization
If you try and look for a country that does not have a governmental privatization program, you will most possibly fail. So what are the positive features of privatization? Why is it such a common tool for the government?
- The process of privatization makes it possible to sell public sector enterprises, which brings nothing else, but losses. Privatization does not only allow the government to get some losses costs back, it also makes it possible to prevent getting even more debts because of unprofitable facility.
- Thanks to privatization, the government can make one public enterprises pay taxes. Even more money for the country budget.
- Privatization allows turning failing enterprises into profitable ones. The new owners of the facility will put all their energy into making their new project successful – at least, because they themselves will benefit from its development.
- Privatization improves the general state of private sector by increasing the level of competitiveness for owners of various enterprises.
- What is important – in most cases the people, who work at public sector, are left unharmed during the privatization process: even if anyone gets fired by a new employer, the government makes sure he gets hired somewhere in the public sector again.
Cons of Privatization
Things seem so shiny and bright after you see the list of pros of privatization. But everything is not as simple as it seems. There is the negative side to privatization as well:
- When a public sector enterprise turns private, the great rise of prices may take place. The government might have suppressed the growth of prices, but new owners will try to get their costs back as soon as possible.
- While the prices will most inevitably rise, one cannot say for sure that the same thing will happen to the quality of services/products provided by the enterprise.
- Though, as it has already been said before, in most cases public enterprise’s staff does not suffer from the process of privatization, unfortunately, when the scope of the privatization is remarkable, it can be a cause of unemployment. This, in its turn, leads to the increasing quantity of crimes.
- The enterprise, which became private, will not follow the previous direction of development. New owners will not care, whether the government and the country will profit from their actions, all they care about is their own benefits.
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