Why Privatization Should Be In The Public Sector

It has been 20 years since the privatisation of British Rail occurred in Great Britain. This is when the government’s ownership and infrastructure of the railway where passed on to the private sector in order for them to try make it a better efficient market. The government have multiple regulations in order to keep this industry from falling back in to a monopoly. There has been many benefits and problems that have occurred to both the producer and consumer while the government have tried to intervene in order control the pricing of rail tickets.

Once a clear set of instructions can be created for a job which allows quality to be easily and rigorously monitored, lower cost labor can be taught how to perform that job function. These lower cost options may include computer automation, robots, or low cost labor in foreign countries. This makes many forms of procedural based jobs good candidates for outsourcing. Specialization has allowed “personal outsourcing” in which a whole department is not outsourced, but just the specific tasks that could be classified as tedious or time-consuming and may provide a better benefit if the person who is meant to work on the task focuses on other higher-valued activities, while the outsourced contractor takes responsibility over the lower-value given task. This paves way for levels in efficiency and effectiveness because though it might be more cost efficient to keep just the one employee, but it might not be effective if the employee cannot meet posted deadlines due to the time needed to complete

There are two kinds of privatization, private provision of service with a “public” character and the process of returning to the private sector property’s or functions previously owned or performed by government. (Shafritz/Russell/Borick pg. 106-107). The private sector is guided by the motive of money and in the United States, where there is more of a free economy, the private sector is wider in comparison to countries like China. Some argue certain public goods and services should remain primarily in the hands of government. An example of this, is law enforcement, basic health care, and basic education. In comparison, some feel that government should steer rather than row.

Savas (2005) argued that privatization initiatives had reached their fruition, realizing that public interest viewed the public/private partnership were strong opposition among labor unions and believed that the proposed contracts threaten employment. Situations such as perceived abuse in political power became a common place for grass root organizations advocating progressive change to the free enterprise markets by organizing campaigns to block elected officials who supported public/private partnerships. However, some of the service contracts which dominated the privatization methods were sheer volume activity; that thirty-two of the sixty-six privatization contracts were not a mixed of the private-public partnership; out of the $1, 148 million

UNDER the scheme, since the public funds are fairly easily available i.e 80 % of the project cost is provided by central and 10 % by state government, hence it is also observed that most of the ULBs are going in for long-distance expensive projects for water supply. For example in Khandwa and Shivpuri towns of Madhya Pradesh, the ULBs have gone for projects costing Rs 106 crores and Rs 80 crores respectively for water supply augmentation.

Many people might not be familiar with the idea of privatization. The term privatization, as the name suggested, is the act of taking over any public or government owned properties or businesses, usually by a private party. In other words, it is the transfer of ownership from the government to the private parties, making a business for profit. Thus, the government will no longer has control over the property as it will be operating under the private party. For example, if companies have stocks that are publicly traded before being privatized, those stocks would all be taken by the private party as their own, turning the company fully into a privately held company. Privatization also occurs during the change in ownership of a piece of land from the government to a private party, the acquisition of a publicly held company by a private sector as mentioned before, the transition of a public school into a private school and many other similar activities.

According to Quote Addicts.com,’’The regulatory framework of missiles, much of which is new and untested, possesses significant challenges and resource implications for the private sector.’’ This quote explains that the making of missiles and the framework of missiles have evolved and are being constructed in a more advanced way. Missiles are made up of many different parts, which help them to do many things such as to fly,to navigate,and to communicate with their controller. For example,the patriot missile has a jet engine with air intake which helps the missile fly through the air. The patriot is just one missile type. Interestingly, there are many different kinds of missiles which are designed in different ways for various purposes. Overall, this is what the quote by Quote Addicts explains.

The question is not why the public sector can’t continue to administer the SIR program, it is how the private sector can do it better. The public sector

Privatization may have advantages on some business, but it also brings out some problems in another categories. Firstly, it actually reduces government revenue in long run. The government originally owned some shopping centres and carparks before the privatization of them to The Link, these shops actually make profit. Operating them require operation cost but the revenue generated by selling the products to people and renting spaces for shop owners can cover the cost. Profit could be made if they operate well. All revenues and expenditures will be taken charge by Link REIT after the privatization. In short run, the cost and expenditure of running the shopping centres and carparks are reduced so it can save government’s money. But in long run, the government will lose the profit generated by these shopping malls that could be originally earned by it if it does not privatize these centres to The Link.

Public-Private Partnership (PPP) practice has been increasingly prevalent in modern infrastructure delivery and public service provision, such as in transportation, electric power, waste management, health care, and other industries (Broadbent and Iaughlin, 2004; Essig and Batran, 2005; Hodge and Greve, 2007; Wang, 2015; Zhang et al., 2015). Popularity of PPPs is mainly attributed to some inherent efficiency advantages (Grimsey and Lewis, 2007; Hart, 2003; Yang and Wang, 2013). Unlike conventional public procurement, PPP takes an integration of financing, construction, operation and maintenance that granted to private sector. This internalizes previous stage’s external effect to subsequent one, since the private is responsible for the additional

In recent years government services such as health, sanitation and education have been particularly target for privatisation in many countries.

The focus on this paper will be on privatization and the role it has plated in different avenues and situations. In this case, each of the provided articles shows a different concept and understanding of privatization; however, one common thing is that the overall understanding is that it entails private ownership. In the first article, on privatizing of social security, the definition that is given in this paper is that it is investing in Social Security funds in a way that shows equity in the investments, which is by allowing workers to elect and to direct the investment of all or a portion of their social security contributions to a variety of options. The article on who owns water shows a different perception but in the idea

Beginning in the 1980s, many jurisdictions started to seek third-party alternatives to provide public service under the pressure for cost savings and the call for government efficiency. Private organizations are known for their expertise in specific fields – if leverage private sector know-how well, it can bring success to public sector – high quality public services can be delivered with lower costs. Therefore, public organizations can concentrate on solving critical tasks when they contract out the mundane work to private sector. Outsourcing waste management is one of the effective privatization solutions for public organizations given its easy-to-measure nature, and it continues to be popular among local governments. Nevertheless, the success of privatizing government services is not guaranteed. If not manage privatization well, it could result in increased costs, organization structure and culture change or legal liabilities. In addition, take advantage of privatizing public services redefines the nature of government service and governance as it creates a partnership between private and public sector. With the rapid pace of technology development and the obligation of government to spend taxpayer’s money strategically, privatizing government services has gained unstoppable momentum.

This then being the case there is need to consider the history and the main theories relating with privatization.

As most consumers assume, typical product pricing relies on the basic rules of supply and demand. But you may sometimes pay more or less for a product because the company that produces it has implemented different, highly strategic pricing tactics. One of these tactics is called product-cost cross-subsidization. Through cross-subsidization, the government is able to harmonize the divergent socio-economic groups in society in providing their basic needs. This paper seeks to explore the consequences of cross-subsidization. The argument for and against privatization of public enterprises is brought to the fore as the paper examines the effect of equity and efficiency on national social security systems.