Privatization of Government Services

Date:  2021-03-10 02:29:12
7 pages  (1806 words)
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Public policy can be described as the various laws and different actions taken by governments and the regulations that reflect certain attitudes, positions, or cultural ideals that are generally accepted as the ideals. Essentially, public policy guides the actions taken by government officials to ensure they are consistent with both the law and institutional customs. As such, public policy is founded on constitutional laws and regulations. Therefore, public policy is often considered strong when it helps to solve problems effectively and efficiently. Good public policies are meant to support government institutions and encouraging active citizenship. Public policy can be looked at as a complex but dynamic and interactive system of governance where issues affecting the public are identified through creation of new policies or reformation of existing public policies. Within the broader scheme of public policy are different interest groups and individuals who collaborate and compete to influence the decisions that policy makers take at any particular time. The different actors in public policy include politicians, lobbyists, civil servants, domain experts, and representatives from various industries. These players use a wide range of tactics to promote their claims and advocate for their courses publicly while also mobilizing likeminded individuals to support a particular view that they hold.

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Privatization is one of the most controversial issues in public policy and governance today. Privatization refers to the process of transferring the ownership of public agencies, businesses, enterprises, or properties to private individuals. It also includes transforming public organizations into either profit or not for profit organizations. Privatization takes two forms. Firstly, there is the sale of all the shares of a public corporation to a single private entity. This process is known as private equity. The second form of privatization occurs through demutualization of either a corporative or a mutual organization to form a joint-stock company.

There are four main methods of privatization namely share issue privatization, asset sale privatization, voucher privatization, and privatization from below. Share issue privatization involves the sale of shares of a public organization to the stock market. On the other hand, share sale privatization involves selling an entire public organization or even part of it to an investor through auction or by the use of the Treuhand model to identify the right strategic partner. Voucher privatization, on the other hand involves the distribution of shares of public entities to citizens either for free or at a lower cost. Finally, privatization from below entails the formation of new start-up businesses in countries that were previously socialist nations. Nonetheless, the choice of appropriate forms of privatization depends on various factors including economic, political, and other organization-specific factors. For example, the Share issue privatization (SIP) is more plausible in instances where the capital markets are underdeveloped and there is widespread income inequality.

The question of whether privatization is beneficial for the members of the public through privatization is one of the most debated issues in economics and other social sciences. While privatization is intended to help the members of the public embark on a mission to develop their economies and enhance their social and political systems, there is sufficient evidence alluding to the fact that this process is often misused and that it does not achieve its objectives. As such, many scholars and commentators have questioned the need to continue supporting privatization in the wake of the realization that it does not fulfill what it intends to achieve (Awdsley, Savage, & Kim, 35). However, for some scholars, privatization is considered a necessary evil that, despite being ineffective, it has to be given out in the hope that it will benefit the targeted populations. This essay analyzes the impact of privatization on development of the constituents.

Negative Impact of Privatization

In some instances, privatization can result in long-term problems for the recipient populations and citizens. This is because instead of resolving the existing challenges, privatization may either come with lots of strings attached or be used inefficiently in a way that it does not benefit the targeted people. Some scholars argue that as a result of this, privatization should be outlawed in order to enable developing nations to create appropriate solutions for their problems. Conversely, the amount of privatization in developing nations has increased tremendously within the past decade regardless of the emerging challenges. This is in most cases attributed to the recent increase in number of citizens willing to give out a share of their national income to help other nations come up. Recently developed nations such as Japan and China are some of the biggest advocates of privatization today.

However, one of the biggest arguments raised against privatization is the fact that there is little to account for in terms of development despite privatization having been in place for so many years. Most of the citizens that have been receiving privatization since the end of World War II are still categorized as either poor or developing nations. One is forced to ponder whether privatization has achieved any meaningful development. Only Ghana and Vietnam are cited as the two best examples where privatization has actually contributed positively towards the countrys development. On the contrary, many other nations continue to languish in poverty without any meaningful development. Since there is very little to account for in terms of meaningful development, privatization can be considered a strategic failure in terms of trying to help poor citizens to realize their potential.

Also, privatization is less ineffective in contributing to meaningful development projects in the recipient citizens because it rarely reaches to the targeted population or development projects. It is common knowledge that corruption is rampant in most of the developing citizens (Herzer, & Morrissey, 730). Unless this issue is addressed properly, it can be very difficult for privatization to achieve its intended objectives. In the poor and developing nations, a huge chunk of the money given out through privatization is often consumed by greedy leaders and politicians, who use the money for their own selfish interests (Gulrajani, 200). With this realization, it is completely meaningless to continue giving out privatization when it is clear that corruption among state officials is a major stumbling block for development. Local politicians and leaders use the money designated as privatization to achieve their own political goals at the expense of helping the wider population (Paul & Vandeninden, 290). Therefore, with this in mind, it is clear that privatization is not useful for development as it is intended, hence, it should be abolished and a new strategy for development put in place.

Counter Arguments

Conversely, there are many other scholars and commentators who feel that privatization is necessary and that it has contributed effectively to development of the poor nations. For instance, privatization is crucial in times of emergencies such as national disasters like earthquakes, violence, and diseases among others. Humanitarian assistance in times of crisis has helped save lives of thousands of individuals in the developing countries (Brown & Swiss, 740). The developed nations have an international responsibility to save lives of other people in order to ensure global peace. Therefore, privatization has helped achieve this goal through offering humanitarian assistance that has had tangible results over the years. Millions of people have rebuilt their lives after facing disasters with the help of privatization (Doucouliagos, & Paldam, 444). Therefore, it may not be right to discredit the importance of privatization.

Also, privatization is only meant to initiate or speed up development in the developing countries. In fact, the approach most widely used today is viewing both the receiving nations and the donors as partners aiming at achieving a common objective. As such, it is unwise to expect development aid to be the litmus test for development in any country. There are several other factors that come in mind when assessing national development (Bearce, 420). The failure of some nations to achieve meaningful development despite receiving privatization may be due to other factors such as poor governance, but not entirely due to the privatization itself. Therefore, the objective should not be to scrap off privatization, but rather find other means of ensuring good leadership and governance to ensure the development realized from privatization is well protected for the benefit of the masses (Rady, 125).

Theoretical Approach

Different businesses have taken varying opinions on how the matter should be resolved. The two main diverging views are privatization and anti-privatization. Privatization requires that accounts be set up for individual employees, where the employees can invest and then be paid at after retirement in terms of annuities that have been funded by individual accounts. Such accounts can also be inherited by the hires of the contributors. This kind of system has been implemented in many citizens including Sweden, Chile, and the UK. In the US, this approach is considered a conservative argument that has been fronted by organizations such as Cato Institute and the Heritage Foundation. On the other hand, the anti-privatization argument is considered a liberal position that has been supported by many organizations on Wall Street. The liberal approach assumes that there is equal opportunity only when all individuals are able to compete for the rewards freely. According to this approach, privatization should only focus on merit of individuals rather than being placed in the hands of a few individuals who will benefit from the returns they generate from the businesses or agencies that once belonged to the public.

Reasons for Privatization

Privatization occurs as a result of various factors. For example, some municipalities or state governments feel obliged to outsource or sale some of their public properties to private individuals because it can generate more revenues and offer better services when such properties are managed by private individuals. For example, when a government sells its shares to private individuals, it generates lots of revenues that it can use to fund other services. As such, privatization can be looked at as a means through which a government can improve its fiscal position as it will be able to finance its debt deficit and improve on its management of public services with returns generated for privatization. Economically, privatization enables governments to operate in a more manageable manner. This is because public servants are perceived to provide slower and les effective services to the masses. However, when such services are given to the hands of private individuals, there is bound to be more accountability and improved service delivery to the public. Therefore, privatization is mainly used to achieve economic efficiency, especially in an industry or public agency that is marred with allegations of mismanagement and poor service delivery.

In as much as the rate and magnitude of organizational change appears to be moving very fast in both public and the private sectors, much of the research available only focuses on developments in the private sector (Derek Gill 26). Most scholars and researchers of organizational change often approach this topic from the point of view of private companies while completely n...

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