Okay, there's been the implicit thing in many debates regarding privatization. And I'd thought I'd get it out into the open.

There's been much talk about privatization of this and privatization of that, however I don't really believe it is privatization. The only difference between the "privatization" agenda and the non-privatization agenda as far as I can tell is how the money is spent. For example, for those who wish to "privatize" education (charter schools), they propose the government gives them money to spend how they wish. However, all this means is that government is spending the money in a different way than before. It's still government money from taxation (or more accurately incurred debt). You still need basically the same government infrastructure to oversee how the money is spent and whether or not it is spent "correctly"; you still need to spend the money on the act of educating. So, how may I ask is this really "privatization"? Such measures ought to be called efforts in improving "efficiency" rather than private/personal (assuming improved efficiency is what you get out of it which is altogether not clear).

If it really were about privatization, then the government would stay completely out of, say, education. It would be up to the individual citizen and families to determine how their children are educated. No government funds would be involved. Same thing for social security. Same thing for the military. Same thing for the transportation system. Same thing for law enforcement. Same thing for food/drug safety. Same thing for any government institution.

So, here's the debate question:

If the government spends the money, how have we achieved "privatization"?

That is a good question. I seem to agree that Bush's plan is not true privatization. It's more of a loan that Uncle Sam is going to take principal plus ~3.3% interest on back once you retire. The excess is yours(about $20k if you earn enough and are in the system ~25 years). That's it though.

To me it makes no difference if I personally get to choose from a whopping 5 options or if the government just invests the money(and I don't mean T-Bills - writing IOU's for future taxpayers to pay off is NOT investing).

Clinton actually considered having the government invest the surplus SS taxes being brought in each year in a mix of stocks and bonds back in 1998. Problem was, Monica happened and the House Republicans were about to impeach him. Needless to say, he had other things on his mind and it wasn't the best political climate to start discussing the 'third rail' of politics.

If the Democrats are smart, they will push(compromise to) this type of plan. It's a way to look responsible without giving Bush the appearance of a win since he didn't get his personal/private accounts.

This is something the current UK Labour government is very keen on.

The idea is to have competition within education, but provide basic education for all, so finding a middle ground between total state dominance of education (which tends to opt for egality over excellence) and total privatisation of education (which tends to lead to increase levels of inequality within society - children of poor people get bad education and remain poor).

It isn't true privatisation, but true privatisation might not be the best option in the case of certain functions.

It's privatization if the function is performed by a non-governmental corporation.

There's good privatization and bad privatization. Good privatization injects market choices that encourage good performance. Bad privatization injects distortions that encourage less than optimal performance.

If people were given a voucher for (food, healthcare, education, housing, etc.), and these vouchers were as good as cash for private providers of (...), then, yes, the process of providing (...) has been privatized.

If the government spends the money, how have we achieved "privatization"?

The key concept regarding privitization vs. pure government service is competition.

The government is a monopoly. When it runs things, what it says goes. In some cases, this may be advantageous, but in most cases a monopoly is bad for consumers (in this case, consumers of the government services). You get worse products which cost more under a monopoly. Ask any economist why a monopoly is a bad thing...

Privitizing certain industries or services will allow market forces to keep things competitive and well-run (in general). Let's use education as an example: Since companies need to compete for consumers (students in this case) it is in their best interest to put out a superior product (education) for less money. This is exactly what private schools do now. They put out a superior education vis a vis the public education system. Some of these schools cost more than public schools (with consumers, parents, willing to pay more for higher quality) some (such as my daughter's school) cost less. The problem comes in where the government offers everyone a free education, but only if they attend the government run (poorer quality) school. The inherent lack of choice brings down the quality of the end product and increases the price.

Similar arguments can be made for other "industries" that are government run, but not for all such industries. I'd hardly be in favor of "privitizing" the military, although I do feel that some functions that the military does in-house can be outsourced. The main mission of the military (protecting the country) cannot be privitized.

I agree with SWM28WDC here:



If the government deems that certain services are essential, giving people the means to achieve such services (through private channels) IS privitizing, since the choice lies with the consumer (the individual), not the provider (government).

I would tend to think that some things can never be privatized fully, and they tend to be related to courts, legislation, and public safety (including police & military, and to a lesser extent, fire protection and public health). But even within such industries there are functions that can be privatized: security, industrial fire brigades, built-in fire protection, perhaps even mercenaries for overseas oil protection.

I think the point of this question is not, whether privatization is good or bad, but what is privatization really.

It's an excellent point. However, there is one place we see it differently. The money the government is spending on anything is not, the governments money, but rather our money, collected from taxes on our incomes (and other sources) and funding our government.

Is it really privatization? That depends on which program you're looking at. Say school choice for example, since it has come up. The local government decides to allow individuals to choose what school their kids goto (including choosing to goto a different public school). The money used, is the money these individuals paid in property taxes (usually) towards education. Now, there are standards for charter schools and the like that all schools have to follow, and the public education system continues to exist. So, in essence, IMHO this is not privatization, because government run schools still exist. It is rather breaking the government monopoly on education.

True Privatization would be the government, exiting the business of providing the service. It does not require that the government stop regulating the service, as the government regulates all manners of private enterprise now (in some areas too heavily, in others too loosely).

What privatization does, is it puts the service in the hands of people with a profit motive. This is not always good, but frequently it is better then the bloated, sloth-like bureaucracies that exist in all levels of government, who's only true purpose frequently seems to be self-perpetuation.

By moving services to the private sector, they are theoretically streamlined to provide the best service / cost balance. However, the only way to truly see this is to open the service up to competition by other potential providers. All to often when we "privatize" all we are doing is making a private monopoly out of a public one.

Not all government services are suited for privatization (the Military for example), not all "private" services are suited for competition (some utilities for example), however, we should be taking a hard look at all of the services provided by the government. Determine which is best suited for "privatization" and make the move.

For the others, we have some serious work to do. We need to start examining how each department is run, and focus on streamlining. Perhaps the best approach would be to start running these operations with a business mindset. Promote Administrators who stay within or under their budget. Currently, government agencies purposefully go over budget every year to ensure their budget is increased next year.

Worse still, as I understand it, to way one is promoted at the higher government paygrades is based on how many people work for you. So it is beneficial for the Administrators if their people are inefficient, because not getting the job done is the basis for hiring more people for that department. Back in the early 90s, Perot said repeatedly that 20 years prior we had 4 million farms in America, and about 10,000 people working in the various agencies that administered farm related programs. Yet, in the early 90s, we had 1 million farms and 40,000 people working in the same agencies. This is absurd. And it cost millions of tax payer dollars. How many other services could we provide, how much better could we make the services we provide, how much easier would it be for the government to balance the budget if the various agencies treated their finances as any small business owner would?

Privatization has different levels, and not all programs are suited for it. But every program that remains in the hands of the government should be regularly audited and the management should be pushed to focus of efficiency and production, not bloat and corruption.

Two good views of privatization. This is all semantics here anyway, but I have to agree with OLS. The current Bush SS plan does not have the government exiting the business of providing retirement to people. So the system is not privitized. The accounts would be private except for the fact that Uncle Sam is not actually giving you your principle to keep. It is a loan that will be taken back from you at retirement is my understanding of the proposal.