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The Failure of Privatization

jimtimmy2
Posts: 403
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7/28/2013 3:27:24 PM
Posted: 3 years ago
Indeed. State owned corporations are one of the most economically inefficient and uninnovative entities to ever exist. They block creative destruction and stifle the innovation process just to please entrenched interests (public unions).

Yet, privatization is oftentimes no better. This is odd because the problems with SOEs (state owned enterprises) is lack of real competition and lack of market forces to put incentives in the right place.

The reason, however, that privatization often fails is that privatization usually just means handing over a government owned corporation to private hands. This does not enter market forces into this market IF subsidies, anti competitive regulations, and advantages still exist.

You basically go from a state owned monopoly to a privately owned but state sanctioned monopoly which is no better.

Instead of "privatizing" state services, we need to bring "free market" reforms. The two are drastically different.

Indeed, if we were to bring free market reforms to some state owned sectors, those sectors may disappear. And, this is a good thing as it allows the process of creative destruction to take place.

The key thing is that lack of private ownership in state owned enterprises is a symptom of the deeper problem of lack of market forces. The introduction of market forces will certainly lead to private ownership but this is a result of market forces not the cause of them.

In order to fix SOEs we need to introduce markets not just hand them over to private companies that will continue a state sanctioned monopoly.
ZakYoungTheLibertarian
Posts: 253
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7/28/2013 9:17:44 PM
Posted: 3 years ago
You don't really get it. Handing over state assets to the private sector is exactly the goal. The only real issue is if then a grant of monopoly privilege is given to the new private corporation. Absent that there simply isn't a problem. Most of what is called privatization is not actually privatization.
the_croftmeister
Posts: 678
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7/28/2013 9:19:25 PM
Posted: 3 years ago
At 7/28/2013 9:17:44 PM, ZakYoungTheLibertarian wrote:
You don't really get it. Handing over state assets to the private sector is exactly the goal. The only real issue is if then a grant of monopoly privilege is given to the new private corporation. Absent that there simply isn't a problem. Most of what is called privatization is not actually privatization.

I think you don't get it, you claim he doesn't get it, then say exactly the same thing he said. His claim that privatization has failed was rooted in the idea that it wasn't done right, not that it was a bad idea.
jimtimmy2
Posts: 403
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7/28/2013 11:56:10 PM
Posted: 3 years ago
At 7/28/2013 9:19:25 PM, the_croftmeister wrote:
At 7/28/2013 9:17:44 PM, ZakYoungTheLibertarian wrote:
You don't really get it. Handing over state assets to the private sector is exactly the goal. The only real issue is if then a grant of monopoly privilege is given to the new private corporation. Absent that there simply isn't a problem. Most of what is called privatization is not actually privatization.

I think you don't get it, you claim he doesn't get it, then say exactly the same thing he said. His claim that privatization has failed was rooted in the idea that it wasn't done right, not that it was a bad idea.

Not exactly. What needs to be done is the introduction of genuine market forces.

A state sanctioned by privately owned monopoly is no better than a state monopoly. Both are bad.
jimtimmy2
Posts: 403
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7/28/2013 11:56:48 PM
Posted: 3 years ago
At 7/28/2013 9:17:44 PM, ZakYoungTheLibertarian wrote:
You don't really get it. Handing over state assets to the private sector is exactly the goal. The only real issue is if then a grant of monopoly privilege is given to the new private corporation. Absent that there simply isn't a problem. Most of what is called privatization is not actually privatization.

This is exactly what I am saying.
Lordknukle
Posts: 12,788
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7/29/2013 4:19:17 AM
Posted: 3 years ago
Although it's not ideal, the story of Air Canada proves that it's better than still keeping it as State owned.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
ZakYoungTheLibertarian
Posts: 253
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7/29/2013 10:47:09 PM
Posted: 3 years ago
This is exactly what I am saying.

This might have been what you MEANT to say but it certainly wasn't what you DID say.
ZakYoungTheLibertarian
Posts: 253
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7/29/2013 10:49:00 PM
Posted: 3 years ago
Then again your over all wording is so bizarre and poorly thought out it's virtually impossible for anyone to tell exactly what you are trying to say.
ZakYoungTheLibertarian
Posts: 253
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7/29/2013 10:50:08 PM
Posted: 3 years ago
Like all these nebulous references to "market forces". What do you even mean by that? It would be difficult for five thousand monkeys sitting in a room randomly smashing keyboards to come up with a worse paragraph. Incidentally, you have heard of paragraphs right? They're not typically a sentence or two long.