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OP-ED: The conundrum of privatization

  • Published at 07:19 am April 6th, 2021
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Which choice is better? BIGSTOCK

Privatizing everything does not solve the problem of meeting people’s needs

Recently, our government has decided to hand over operations of 25 state-owned jute mills to the private sector. The state-owned jute mills were shut down in 2020 after incurring monetary losses for many years. 

These jute mills are now to be leased out to private companies instead of resumption of operations under the Bangladesh Jute Mills Corporation or any other government institutions. Similar privatization drives in other sectors took place previously and some are performing better. Nonetheless, there is more to look for than just what meets the eyes.

Over the years, we have developed a fascination with privatization -- the transfer of ownership and control of businesses, industries, or services from the public sector to the private sector. A perception bias that private companies supply better services than the public companies has caused massive privatization globally. 

In Bangladesh, we seem to prefer private initiatives in education, health, hospitality, banking, asset management, transportation, energy, industries, and so on. Whenever a public initiative is not performing “as expected,” we suggest and support transferring the responsibility to the private sector. 

Since the 1980s -- the Margaret Thatcher and Ronald Reagan era -- expansion of the neoliberal form of capitalism has led to speedy privatization of public goods and common property. As a result, private businesses encroached into the realm of basic needs of human life -- so, food, health care, housing, education, etc became commodities. 

Moreover, energy resources and power, land, banking, food production, etc all have been systematically privatized. This increased the cost of living and made people vulnerable by reducing essential securities of life. 

Privatization is supported by an implicit aim of making things “efficient and rational.” Ironically, with our journey towards privatization, the number of billionaires/super rich have increased who dominate the public policies. Global institutions like the World Bank and the International Monetary Fund promote a similar agenda of privatization. 

A principal logic of privatization originates from the conviction that state institutions do not have the capacity to perform certain special activities and because of a lack of expertise, state run companies sustain continuous economic loss. 

Therefore, the mantra that can rescue us is to let the private companies take over while state institutions would remain as the regulators. But the absurdity in this plan is that the more a state comes off the scene, the more a state and its different apparatus lose its ability even to monitor or regulate private companies. Therefore, the task of monitoring also goes to the private sectors. 

The more we relegate the state’s roles to private companies the more we become dependent on them. Overall, the public suffers due to privatization. 

The way Bangladesh performed in the vaccination for Covid-19 in comparison to the testing, tracing, and treatment reveals the flaws with privatization of health care. This is not unique to our country; even in Britain and in the Italian region of Lombardy, the response to Covid-19 caused huge human loss as just 60% of all health care providers were public endeavours.

Private initiatives do not stay “just” and “inclusive” because of its profit motive. As private companies are motivated by the margin of profit, primary and preventive health care do not get much attention. Thereby, when many people turned to Covid-19 related care, it overwhelmed the system. 

In the book, The Privatized State, Chiara Cordelli argued privatization does not only lead to inequality or profit for the rich and loss for the poor but there is more that should concern us. In a democracy, people generally choose their representatives who may sometimes not serve up to our expectation. 

However, privatizing does not solve the problem of meeting people’s needs. Additionally, privatization of public services undermines fundamental democratic values. There are three crucial issues that we should keep in mind.

Firstly, if public services are privatized, important decisions about the services are taken by the companies rather than the people’s representatives. The private firms have their own goals and have obligations to their shareholders more than ensuring the public good. 

Once public services are outsourced, we always blame the government that they cannot get delivery of services/products from the contractors or ensure completion of projects on time. But we must take into consideration that public services are generally outsourced when they are facing loss or as a cost cutting measure. 

Therefore, governments cannot always use funds to ensure enough monitoring. Hence, private companies get the opportunity of working under almost no supervision/regulation. The very logic of privatization itself gradually erodes away a government’s capacity of implementation or supervision.

Secondly, a rush towards privatization is also responsible for growing cronyism. We always hear complaints of corruption and contracts being awarded to imposters having connections with the political or administrative powers while lacking substantial experience in the field. 

Even when it does not directly lead to corruption, privatization does not benefit the public as it makes a government dependent on private firms that may force it to accept policies that are not in its citizens’ interests. For instance: Huge tax cuts for the rich and deregulation of the financial sector in the US caused the financial collapse of 2008, and in India, recent policies regulating agriculture would invariably benefit the large private corporations making farmers vulnerable to the market forces.

Last but not the least, a drive towards privatization slowly makes the government invisible to its citizens. When a big company gets a contract, they usually outsource the responsibility to smaller companies and a layer of private firms comes between the state and the citizens. Once government spending and activities are operationalized by private companies, the state gradually becomes hidden from public view. 

Privatization does not only create provision for private profit and increase inequality but also creates a form of civic apathy. As private enterprises are supposedly taking over the crucial roles of the government, there is a possibility that people will gradually stop caring about the government and eventually undermine the very possibility of democracy.

Mohammad Tareq Hasan is an anthropologist and teaches at the University of Dhaka.

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