Part of the series on Capitalism

Movements Anarcho-capitalism Corporatism Libertarianism Liberalism Neoliberalism Social democracy Schools of economics Classical economics Austrian school Keynesianism Neoclassical economics Chicago school Monetarism Supply-side economics New Keynesian economics Origins Physiocrats Mercantilism Feudalism Age of Enlightenment Industrial Revolution People Adam Smith Milton Friedman John Maynard Keynes Ayn Rand John Stuart Mill David Ricardo Theories Comparative advantage Invisible hand Market Spontaneous order Supply and demand Ideas Competition law Deregulation Economic freedom Free markets Free trade Freedom of contract Limited government Private property Privatization Topics History Criticism Anti-capitalism History of theory of capitalism Philosophy Portal Politics Portal  v • d • e

Privatization is the incidence or process of transferring ownership of business from the public sector (government) to the private sector (business). Capitalism is the Economic system in which the Means of production are owned by private Persons and operated for Profit and where Anarcho-capitalism (also known as Free-market anarchism) is an individualist anarchist Political philosophy that advocates the elimination Historically corporatism (corporativismo refers to a political or Economic system in which power is held by civic assemblies that represent Economic Libertarianism is a term used by a broad spectrum of political philosophies which prioritize individual Liberty and seek to minimize or even abolish the Liberalism is a broad array of related ideas and theories of Government that consider individual Liberty to be the most important political goal Originally coined by its critics and opponents " neoliberalism " is a label referring to the recent reemergence of Economic liberalism or Classical liberalism Social democracy is a Political ideology of the left and centre-left Classical economics is widely regarded as the first modern school of economic thought. The Austrian School, also known as the “ Vienna School ” or the “ Psychological School ” is a heterodox school of economics that advocates In Economics Keynesian economics (ˈkeɪnziən also Keynesianism and Keynesian Theory) is based on the ideas of twentieth-century British economist Neoclassical economics is a term variously used for approaches to Economics focusing on the determination of prices outputs and income distributions in markets Monetarism is a school of economic thought concerning the determination of national income and monetary Economics. Supply-side economics is an arguably heterodox school of Macroeconomic thought that argues that economic growth can be most effectively created using incentives for New Keynesian economics is a school of contemporary Macroeconomics that strives to provide microeconomic foundations for Keynesian economics. The physiocrats were a group of Economists who believed that the wealth of nations was derived solely from the value of land Agriculture or land development Mercantilism is the idea that a colony should export more goods than it imports and that a colony should sell at higher prices and buy at lower prices Feudalism, a term first used in the early modern period (17th century in its most classic sense refers to a Medieval Europe Political system composed The Age of Enlightenment or The Enlightenment is a term used to describe a phase in Western philosophy and cultural life centered upon the eighteenth century The Industrial Revolution was a period in the late 18th and early 19th centuries when major changes in agriculture manufacturing and transportation had a profound effect on the Adam Smith ( baptised 16 June 1723 – 17 July 1790) was a Scottish moral philosopher and a pioneer of Political economy. Milton Friedman (July 31 1912 November 16 2006 was an American Nobel Laureate Economist and Public intellectual. John Maynard Keynes 1st Baron Keynes CB (ˈkeɪnz "cains" (5 June 1883 &ndash 21 April 1946 was a British Economist whose ideas Ayn Rand (ˈaɪn ˈrænd &ndash March 6 1982 born Alisa Zinov'yevna Rosenbaum (Алиса Зиновьевна Розенбаум was a Russian born American John Stuart Mill (20 May 1806 &ndash 8 May 1873 British Philosopher, political economist, civil servant and Member of Parliament, was an influential David Ricardo (18 April 1772 &ndash 11 September 1823 was an English political economist, often credited with systematizing economics and was one of the most influential In international trade the principle of comparative advantage refers to the fact that although one country may have an absolute disadvantage with another value can be created for both The invisible hand is a Metaphor coined by the Economist Adam Smith. Sao Paulo Stock Exchangejpg|thumb| Virtual market arena where buyer and seller are not present and trade via intemediates and electronical information See also the closely related articles Emergence and Self-organization. Supply and demand is an Economic model describing effects on price and quantity in a Market. Deregulation, a term which gained widespread currency in the period 1970-2000 can be seen as a process by which governments remove reduce or simplify Restrictions on Business Economic freedom is freedom to produce trade and consume any goods and services acquired without the use of force fraud or theft A free market is a Market in which property rights are voluntarily exchanged at a price arranged completely by the mutual consent of sellers and buyers Free trade is a system in which the trade of goods and services between or within countries flows unhindered by government-imposed restrictions Freedom of contract or contractualism is the idea that individuals should be free to bargain among themselves the terms of their own contracts without government interference Limited Government is a government structure where any more than minimal governmental intervention in personal liberties and the economy is not usually allowed by Law, usually Property is any physical or virtual entity that is owned by an individual The history of Capitalism dates back to early forms of Merchant capitalism practiced in the Middle East and Western Europe during the Capitalism has been critiqued from many perspectives during its history Anti-capitalism describes a wide variety of movements ideas and attitudes which oppose Capitalism. The public sector is the part of economic and administrative life that deals with the delivery of goods and services by and for the Government, whether national Regional In Economics, the private sector is that part of the economy which is both run for private Profit and is not controlled by the State. In a broader sense, privatization refers to transfer of any government function to the private sector including governmental functions like revenue collection and law enforcement. ^[1]

The term "Privatization" also has been used to describe two unrelated transactions. The first is a buyout, by the majority owner, of all shares of a public corporation or holding company's stock, privatizing a publicly traded stock. A public company usually refers to a company that is permitted to offer its registered securities ( Stock, bonds, etc A holding company is a company that owns part all or a majority of other companies' outstanding Stock. The second is a demutualization of a mutual organization or cooperative to form a joint stock company. Demutualization, also commonly referred to as demutualisation, is the process by which a customer-owned Mutual organization ( mutual) or Co-operative A mutual, mutual organization, or mutual society is an Organization (which is often but not always a company or Business) based A joint stock company (JSC is a type of business entity it is a type of Corporation or Partnership. ^[2]

It has been claimed that the term was first used in 1930s by The Economist in covering German economic policy. The Economist is an English-language weekly news and International affairs publication owned by The Economist Newspaper Ltd and edited in London ^[3][4]

Contents 1 Types of privatization 2 Arguments for and against privatization 2.1 Pro-privatization 2.2 Anti-privatization 3 Outcomes 4 Alternatives to total privatization 4.1 Municipalization 4.2 Outsourcing or Sub-contracting 4.3 Partial ownership 5 Notable privatizations 6 Negative responses to privatization 7 Reverse privatization 8 See also 9 References 9.1 Unindexed 10 External links

Types of privatization

There are three main methods of privatization:

• Share issue privatization (SIP) - selling shares on the stock market
• Asset sale privatization - selling the entire firms or part of it to a strategic investor, usually by auction or using Treuhand model
• Voucher privatization - shares of ownership are distributed to all citizens, usually for free or at a very low price. A stock market, or (equity market is a private or public market for the trading of company Stock and derivatives of company "Auctioneer" redirects here For the DC Comics supervillain see Auctioneer (comics. Voucher privatization is a Privatization method where citizens are given or can inexpensively buy a book of Vouchers that represent potential shares in any State-owned

Share issue privatization is the most common type of privatization.

Share issue can broaden and deepen domestic capital markets, boosting liquidity and potentially economic growth, but if the capital markets are insufficiently developed it may be difficult to find enough buyers, and transaction costs (e. Market liquidity is a Business, Economics or Investment term that refers to an Asset 's ability to be easily converted through an act of buying Economic growth is the increase in the amount of the goods and services produced by an economy over time g. underpricing required) may be higher. For this reason, many governments elect for listings in the more developed and liquid markets. Euronext, and the London, New York and Hong Kong Stock Exchanges are popular because they are highly developed and sophisticated. Euronext NV is a pan- European Stock exchange based in Paris and with subsidiaries in Belgium, France, Netherlands The London Stock Exchange or LSE is a Stock exchange located in London, England. The New York Stock Exchange ( NYSE) is a Stock exchange based in New York City. The Hong Kong Stock Exchange ( also 港交所 abbreviated as HKEX;) is the Stock exchange of Hong Kong.

As a result of higher political and currency risk deterring foreign investors, asset sales are more common in developing countries. Developing countries are countries that haven't reached Western-style standards of democratic government free market economy industrialization social programs and human rights guaranties

Voucher privatization has mainly been used in the transition economies of Central and Eastern Europe, such as Russia, Poland, the Czech Republic, and Slovakia. A transition economy or transitional economy is an economy which is changing from a centrally planned economy to a Free market. Russia (Россия Rossiya) or the Russian Federation ( Rossiyskaya Federatsiya) is a transcontinental Country extending Poland (Polska officially the Republic of Poland The Czech Republic ( ˈt͡ʃɛskaː ˈrɛpuˌblɪka short form in Česko ˈt͡ʃɛskɔ also called Czechia, Slovakia (long form Slovak Republic; Slovak:, long form, is a Landlocked country in Central Europe with a population of over five million

A very substantial benefit to share or asset sale privatizations is that bidders compete to offer the state the highest price, creating revenues for the state to redistribute in addition to new tax revenue. Voucher privatizations, on the other hand, would be a genuine return of the assets into the hands of the general population, and create a real sense of participation and inclusion. Vouchers, like all other private property, could then be sold on if preferred by what companies are offering.

Arguments for and against privatization

Pro-privatization

Proponents of privatization believe that private market actors can more efficiently deliver many goods or service than government due to free market competition. A free market is a Market in which property rights are voluntarily exchanged at a price arranged completely by the mutual consent of sellers and buyers Competition is a rivalry between individuals groups nations or animals for territory or resources In general, it is argued that over time this will lead to lower prices, improved quality, more choices, less corruption, less red tape, and quicker delivery. Many proponents do not argue that everything should be privatized; the existence of problems such as market failures and natural monopolies may limit this. Market failure is a concept within economic theory wherein the allocation of goods and services by a Free market is not efficient. Natural monopoly is a term used in Economics to refer to two different things However, a small minority thinks that everything can be privatized, including the state itself.

The basic economic argument given for privatization is that governments have few incentives to ensure that the enterprises they own are well run. In Economics, an incentive is any factor (financial or non-financial that provides a motive for a particular course of action or counts as a reason for preferring one choice One problem is the lack of comparison in state monopolies. It is difficult to know if an enterprise is efficient or not without competitors to compare against. Another is that the central government administration, and the voters who elect them, have difficulty evaluating the efficiency of numerous and very different enterprises. A private owner, often specializing and gaining great knowledge about a certain industrial sector, can evaluate and then reward or punish the management in much fewer enterprises much more efficiently. Also, governments can raise money by taxation or simply printing money should revenues be insufficient, unlike a private owner.

If there are both private and state owned enterprises competing against each other, then the state owned may borrow money more cheaply from the debt markets than private enterprises, since the state owned enterprises are ultimately backed by the taxation and printing press power of the state, gaining an unfair advantage.

Privatizing a non-profitable company which was state-owned may force the company to raise prices in order to become profitable. However, this would remove the need for the state to provide tax money in order to cover the losses.

• Performance. State-run industries tend to be bureaucratic. Bureaucracy is the structure and set of regulations in place to control activity usually in large organizations and government A political government may only be motivated to improve a function when its poor performance becomes politically sensitive, and such an improvement can be reversed easily by another regime.
• Improvements. Conversely, the government may put off improvements due to political sensitivity and special interests — even in cases of companies that are run well and better serve their customers' needs.
• Corruption. A monopolized function is prone to corruption; decisions are made primarily for political reasons, personal gain of the decision-maker (i. Political corruption is the use of governmental powers by government officials for illegitimate private gain e. "graft"), rather than economic ones. Corruption (or principal-agent issues) during the privatization process - however - can result in significant underpricing of the asset. In political science and Economics, the principal-agent problem or agency dilemma treats the difficulties that arise under conditions of incomplete and asymmetric This allows for more immediate and efficient corrupt transfer of value - not just from ongoing cash flow, but from the entire lifetime of the asset stream. Often such transfers are difficult to reverse.

• Accountability. Managers of privately owned companies are accountable to their owners/shareholders and to the consumer, and can only exist and thrive where needs are met. Managers of publicly owned companies are required to be more accountable to the broader community and to political "stakeholders". This can reduce their ability to directly and specifically serve the needs of their customers, and can bias investment decisions away from otherwise profitable areas.
• Civil-liberty concerns. A company controlled by the state may have access to information or assets which may be used against dissidents or any individuals who disagree with their policies.
• Goals. A political government tends to run an industry or company for political goals rather than economic ones. Politics Politics is the process by which groups of people make decisions An economy is the realized social system of production exchange distribution and consumption of goods and services of a country or other area
• Capital. Privately held companies can sometimes more easily raise investment capital in the financial markets when such local markets exist and are suitably liquid. While interest rates for private companies are often higher than for government debt, this can serve as a useful constraint to promote efficient investments by private companies, instead of cross-subsidizing them with the overall credit-risk of the country. Investment decisions are then governed by market interest rates. State-owned industries have to compete with demands from other government departments and special interests. In either case, for smaller markets, political risk may add substantially to the cost of capital. Political risk is a type of Risk faced by Investors, Corporations, and Governments.

• Security. Governments have had the tendency to "bail out" poorly run businesses, often due to the sensitivity of job losses, when economically, it may be better to let the business fold.
• Lack of market discipline. Poorly managed state companies are insulated from the same discipline as private companies, which could go bankrupt, have their management removed, or be taken over by competitors. Private companies are also able to take greater risks and then seek bankruptcy protection against creditors if those risks turn sour.
• Natural monopolies. The existence of natural monopolies does not mean that these sectors must be state owned. Natural monopoly is a term used in Economics to refer to two different things Governments can enact or are armed with anti-trust legislation and bodies to deal with anti-competitive behavior of all companies public or private. United States antitrust law is the body of Laws that prohibits anti-competitive behavior (monopoly and Unfair business practices.
• Concentration of wealth. Ownership of and profits from successful enterprises tend to be dispersed and diversified -particularly in voucher privatization. The availability of more investment vehicles stimulates capital markets and promotes liquidity and job creation.
• Political influence. Nationalized industries are prone to interference from politicians for political or populist reasons. A politician (from Greek " Polis " is an individual who is involved in influencing public decision making through the influence of Politics or a person Politics Politics is the process by which groups of people make decisions Examples include making an industry buy supplies from local producers (when that may be more expensive than buying from abroad), forcing an industry to freeze its prices/fares to satisfy the electorate or control inflation, increasing its staffing to reduce unemployment, or moving its operations to marginal constituencies. In economics inflation or price inflation is a rise in the general level of prices of goods and services over a period of time Unemployment occurs when a person is available to work and currently seeking work but the person is without work. A constituency is any cohesive corporate unit or body bound by shared structures goals or loyalty
• Profits. Corporations exist to generate profits for their shareholders. Private companies make a profit by enticing consumers to buy their products in preference to their competitors' (or by increasing primary demand for their products, or by reducing costs). Consumers refers to individuals or households that use goods and services generated within the economy. Private corporations typically profit more if they serve the needs of their clients well. Corporations of different sizes may target different market niches in order to focus on marginal groups and satisfy their demand. A company with good corporate governance will therefore be incentivized to meet the needs of its customers efficiently. Corporate governance is the set of Processes customs Policies, laws and institutions affecting the way a Corporation is directed administered or controlled

Anti-privatization

Opponents of privatization dispute the claims concerning the alleged lack of incentive for governments to ensure that the enterprises they own are well run, on the basis of the idea that governments are proxy owners answerable to the people. It is argued that a government which runs nationalized enterprises poorly will lose public support and votes, while a government which runs those enterprises well will gain public support and votes. Thus, democratic governments do have an incentive to maximize efficiency in nationalized companies, due to the pressure of future elections.

Opponents of certain privatizations believe certain parts of the social terrain should remain closed to market forces in order to protect them from the unpredictability and ruthlessness of the market (such as private prisons, basic health care, and basic education). A private prison', jail or detention center is a place in which individuals are physically confined or interned for profit Health care is the prevention treatment and management of illness and the preservation of mental health through the services offered by the medical, Nursing Education encompasses both the Teaching and Learning of Knowledge, proper conduct, and technical competency Another view is that some of the utilities which government provides benefit society at large and are indirect and difficult to measure or unable to produce a profit, such as defense. National security is the entire scope of measures undertaken by the Governments of Nation-states in providing assurance of national Sovereignty Still another is that natural monopolies are by definition not subject to competition and better administrated by the state. Natural monopoly is a term used in Economics to refer to two different things

The controlling ethical issue in the anti-privatization perspective is the need for responsible stewardship of social support missions. Market interactions are all guided by self-interest, and successful actors in a healthy market must be committed to charging the maximum price that the market will bear. Privatization opponents believe that this model is not compatible with government missions for social support, whose primary aim is delivering affordability and quality of service to society.

Many privatization opponents also warn against the practice's inherent tendency toward corruption. As many areas which the government could provide are essentially profitless, the only way private companies could, to any degree, operate them would be through contracts or block payments. In these cases, the private firm's performance in a particular project would be removed from their performance, and embezzlement and dangerous cost cutting measures might be taken to maximize profits.

Some would also point out that privatizing certain functions of government might hamper coordination, and charge firms with specialized and limited capabilities to perform functions which they are not suited for. In rebuilding a war torn nation's infrastructure, for example, a private firm would, in order to provide security, either have to hire security, which would be both necessarily limited and complicate their functions, or coordinate with government, which, due to a lack of command structure shared between firm and government, might be difficult. A government agency, on the other hand, would have the entire military of a nation to draw upon for security, whose chain of command is clearly defined. Opponents would say that this is a false assertion: numerous books refer to poor organization between government departments (for example the Hurricane Katrina incident).

Furthermore, opponents of privatization argue that it is undesirable to transfer state-owned assets into private hands for the following reasons:

• Performance. A democratically elected government is accountable to the people through a legislature, Congress or Parliament, and is motivated to safeguarding the assets of the nation. TalkParliament#Screen-size. -->A  parliament is a Legislature, especially in those The profit motive may be subordinated to social objectives.
• Improvements. the government is motivated to performance improvements as well run businesses contribute to the State's revenues.
• Corruption. Government ministers and civil servants are bound to uphold the highest ethical standards, and standards of probity are guaranteed through codes of conduct and declarations of interest. However, the selling process could lack transparency, allowing the purchaser and civil servants controlling the sale to gain personally.
• Accountability. The public does not have any control or oversight of private companies.
• Civil-liberty concerns. A democratically elected government is accountable to the people through a parliament, and can intervene when civil liberties are threatened. TalkParliament#Screen-size. -->A  parliament is a Legislature, especially in those
• Goals. The government may seek to use state companies as instruments to further social goals for the benefit of the nation as a whole.
• Capital. Governments can raise money in the financial markets most cheaply to re-lend to state-owned enterprises.
• Lack of market discipline. Governments have chosen to keep certain companies/industries under public ownership because of their strategic importance or sensitive nature.
• Cuts in essential services. If a government-owned company providing an essential service (such as the water supply) to all citizens is privatized, its new owner(s) could lead to the abandoning of the social obligation to those who are less able to pay, or to regions where this service is unprofitable.
• Natural monopolies. Privatization will not result in true competition if a natural monopoly exists. Natural monopoly is a term used in Economics to refer to two different things
• Concentration of wealth. Profits from successful enterprises end up in private, often foreign, hands instead of being available for the common good.
• Political influence. Governments may more easily exert pressure on state-owned firms to help implementing government policy.
• Downsizing. Private companies often face a conflict between profitability and service levels, and could over-react to short-term events. A state-owned company might have a longer-term view, and thus be less likely to cut back on maintenance or staff costs, training etc, to stem short term losses. Many private companies have downsized while making record profits.
• Profit. Private companies do not have any goal other than to maximize profits. A private company will serve the needs of those who are most willing (and able) to pay, as opposed to the needs of the majority, and are thus anti-democratic.
• Privatisation and Poverty. It is acknowledged by many studies that there are winners and losers with privatization. The number of losers —which may add up to the size and severity of poverty—can be unexpectedly large if the method and process of privatization and how it is implemented are seriously flawed (e. g. lack of transparency leading to state-owned assets being appropriated at minuscule amounts by those with political connections, absence of regulatory institutions leading to transfer of monopoly rents from public to private sector, improper design and inadequate control of the privatization process leading to asset stripping. ^[5]

Outcomes

Literature reviews ^[6][7] find that in competitive industries with well-informed consumers, privatization consistently improves efficiency. Such efficiency gains mean a one-off increase in GDP, but through improved incentives to innovate and reduce costs also tend to raise the rate of economic growth. Economic growth is the increase in the amount of the goods and services produced by an economy over time The type of industries to which this generally applies include manufacturing and retailing. Manufacturing (from Latin manu factura, "making by hand" is the use of tools and labor to make things for use or sale Although typically there are social costs associated with these efficiency gains^[8], many economists argue that these can be dealt with by appropriate government support through redistribution and perhaps retraining. Retraining is the process of learning a new skill or trade often in response to a change in the economic environment

In sectors that are natural monopolies or public services, the results of privatization are much more mixed, as a private monopoly behaves much the same as a public one in liberal economic theory. Natural monopoly is a term used in Economics to refer to two different things Public services is a term usually used to mean services provided by Government to its Citizens, either directly (through the Public sector) or In Economics, a monopoly (from Greek monos, alone or single + polein, to sell exists when a specific individual or enterprise has sufficient In general, if the performance of an existing public sector operation is sufficiently bad, privatization (or threat thereof) has been known to improve matters. Changes may include, inter alia, the imposition of related reforms such as greater transparency and accountability of management, improved internal controls, regulatory systems, and better financing, rather than privatization itself. F G H I L This article is for the legal term For regulation of genes see Regulation of gene expression.

Regarding political corruption, it is a controversial issue whether the size of the public sector per se results in corruption. Political corruption is the use of governmental powers by government officials for illegitimate private gain The Nordic countries have low corruption but large public sectors. The Nordic countries make up a region in Northern Europe called the Nordic region, consisting of Denmark, Finland, Iceland, However, these countries score high on the Ease of Doing Business Index, due to good and often simple regulations, and for political rights and civil liberties, showing high government accountability and transparency. The Ease of Doing Business Index is an index created by the World Bank. Freedom in the World is a yearly report by US-based Freedom House that attempts to measure the degree of Democracy and political freedom Accountability is a concept in Ethics with several meanings It is often used synonymously with such concepts as answerability enforcement responsibility, blameworthiness One should also notice the successful, corruption-free privatizations and restructuring of government enterprises in the Nordic countries. For example, dismantling telecommunications monopolies have resulted in several new players entering the market and intense competition with price and service.

Also regarding corruption, the sales themselves give a large opportunity for grand corruption. Privatizations in Russia and Latin America were accompanied by large-scale corruption during the sale of the state-owned companies. Those with political connections unfairly gained large wealth, which has discredited privatization in these regions. While media have reported widely the grand corruption that accompanied the sales, studies have argued that in addition to increased operating efficiency, daily petty corruption is, or would be, larger without privatization, and that corruption is more prevalent in non-privatized sectors. Furthermore, there is evidence to suggest that extralegal and unofficial activities are more prevalent in countries that privatized less. ^[9]

With recent cost increases in some industries people are beginning to question whether privitisation is good value for money with the cost of certain survices increasing rapidly but the service provided either staying constant or if not decreasing and yet not justifying the cost increase imposed.

Alternatives to total privatization

Municipalization

Transferring control of a nationalized business to municipal government is an alternative sometimes proposed to privatization. Nationalization, also spelled nationalisation, is the act of taking an industry or assets into the Public ownership of a national government A municipality is an administrative entity composed of a clearly defined territory and its population and commonly denotes a City, Town, or Village, or

Outsourcing or Sub-contracting

It is possible that national services may sub-contract or out-source functions to private enterprises. A notable example of this is in the United Kingdom, where many municipalities have contracted out their garbage collection or administration of parking fines to private companies. The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located A municipality is an administrative entity composed of a clearly defined territory and its population and commonly denotes a City, Town, or Village, or In addition, the British government is debating the possibility of involving the private sector more in the workings of the National Health Service, principally by referring patients to private surgeries to ease the load on existing NHS human resources, and covering the cost of this. The National Health Service is the name commonly used to refer to the four Publicly-funded healthcare systems of the United Kingdom collectively or individually (although

Partial ownership

An enterprise may be privatized, with a number of shares in the company being retained by the state. This is a particularly notable phenomenon in France, where the state often retains a "blocking stake" in private industries. This article is about the country For a topic outline on this subject see List of basic France topics. In Germany, the state privatized Deutsche Telekom in small tranches, and still retains about a third of the company. Deutsche Telekom AG (,) ( English translation German Telecom) (abbreviated DTAG) is a Telecommunications company headquartered in As of 2005, the state of North Rhine-Westphalia is also planning to buy shares in the energy company E.ON in what is claimed to be an attempt to control spiraling costs. Year 2005 ( MMV) was a Common year starting on Saturday (link displays full calendar of the Gregorian calendar. North Rhine-Westphalia (Nordrhein-Westfalen usually shortened to NRW, official short form NW is the westernmost and - in terms of population and economic output - the EON AG ( an energy corporation based in Düsseldorf, Germany, is the largest of the 30 members of the DAX Stock index of major

Whilst partial privatization could be an alternative, it is more often a stepping stone to full privatization. It can offer the business a smoother transition period during which it can gradually adjust to market competition. Some state-owned companies are so large that there is the risk of sucking liquidity from the rest of the market, even in the most liquid marketplaces, and thus must be sold off bit by bit. The first tranche of a multi-step privatization would also in the first instance establish a valuation for the enterprise to mitigate complaints of under-pricing.

In some instances of partial privatization of contracted services, provision of some portion(s) of the state-owned service are provided by private-sector contactors, but the government retains the capacity to self-operate at contract intervals, if it so chooses. An example of partial privatization would be some forms of school bus service contracting, such as arrangements where equipment and other resources purchased with government capital funds and/o those already owned by a governmental entity are used by the contractor for a period of time in providing services, but ownership is retained by the governmental unit. A school bus contractor is a private company or proprietorship which provides School bus service to a school district or non-public school This form of partial privatization eases concerns that once an operation is contracted, the government may be unable to obtain sufficient competitive bids, and be subjected to terms less desirable than the prior operation under state-ownership. Under that scenario, a reverse privatization would be more feasible for the government. (see section below)

See also Public-private partnership. Public-private partnership ( PPP) describes a government service or private business venture which is funded and operated through a partnership of government and one or more

Notable privatizations

See also: List of privatizations

Privatization programs have been undertaken in many countries across the world, falling into three major groups. This list of privatizations provides links to notable and/or major privatizations The first is privatization programs conducted by transition economies in Central and Eastern Europe after 1989 in the process of instituting a market economy. A transition economy or transitional economy is an economy which is changing from a centrally planned economy to a Free market. Year 1989 ( MCMLXXXIX) was a Common year starting on Sunday (link displays 1989 Gregorian calendar) A market economy is a realized Social system based on the Division of labour in which the prices of Goods and Services are determined in a The second is privatization programs carried out in developing countries under the influence of international financial institutions such as the World Bank and IMF. Developing countries are countries that haven't reached Western-style standards of democratic government free market economy industrialization social programs and human rights guaranties The World Bank is an internationally supported Bank that provides financial and technical assistance to developing countries for development programs (e The International Monetary Fund ( IMF) is an International organization that oversees the Global financial system by following the Macroeconomic The third is privatization programs carried out by developed country governments, the most comprehensive probably being those of New Zealand and the United Kingdom in the 1980s and 1990s. New Zealand is an Island country in the south-western Pacific Ocean comprising two main landmasses (the North Island and the South Island The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom, the UK or Britain,is a Sovereign state located

Privatization has been partially successful in telecommunications in Europe because genuine competition has arisen: the former state-owned enterprises lost their monopolies due to legislation and technological change, competitors entered the market, and prices for broadband access and telephone calls fell dramatically. A government-owned corporation, state-owned enterprise or government business enterprise is a legal entity created by a Government to undertake commercial The term broadband can have different meanings in different contexts However, in the Republic of Ireland the former state owned telecommunications company Telecom Éireann was privatised in an IPO in 1999 under the Fianna Fáil Government. Ireland ( Irish: Éire, ˈeːrʲə is a country in north-western Europe. Telecom Éireann, or formally Bord Telecom Éireann - The Irish Telecommunications Board, was created by the Postal & Telecommunications Services Act 1983 from the Initial public offering (IPO, also referred to simply as a "public offering" is when a company issues Common stock or shares to the public for the first Fianna Fáil – The Republican Party (Fianna Fáil – An Páirtí Poblachtánach shortened to Fianna Fáil ( is currently the largest Political party in the The company was subsequently renamed Eircom. eircom Group plc is the largest Telecommunications operator in the Republic of Ireland. Ireland's former Telecommunications Minister Noel Dempsey has stated that the privatisation was a mistake. Noel Dempsey (Nollaig Ó Díomasaigh born 6 January 1953 is a senior Irish Fianna Fáil politician ^[10] Ireland ranked 23rd in a recent OECD broadband survey^[11] Eircom have offered the Irish Government a stake in its nationwide Copper network infrastructure^[12]. Should the state accept it will reverse the privatisation of Ireland's communications network.

A controversial privatization was the privatization of British railways. The Privatisation of British Rail was the result of the Railways Act 1993 introduced by John Major 's Conservative government The UK track-owning company Railtrack, in effect a natural monopoly, was effectively repossessed by the British government. For the generic term see Rail tracks. Railtrack was a group of companies that owned the track, signalling, Tunnels Train operation remains in the hands of private operators with franchises awarded by the Department for Transport (except for Merseyrail the franchise of which is awarded by Merseyside Passenger Transport Executive). There are a number of companies operating trains in the United Kingdom. In the United Kingdom, the Department for Transport (or DfT) ( Welsh: Adran am Drafnidiaeth) is the government department Merseyrail is the name given to the electric metro-style commuter Train network centred on Liverpool in the metropolitan county of Merseyside The Merseyside Passenger Transport Executive ( MPTE, or Merseytravel, as it is branded is the Passenger Transport Executive responsible for the coordination

There are various precedents in history which some would claim as examples in which improper privatization, or the failure of government to conduct certain functions, caused various complications.

1. In the reconstruction of Iraq, the government decided to contract out many different reconstruction functions to private firms. Shortly thereafter, those firms have been accused of cutting corners and being generally ineffective in reconstructing the country. Halliburton, in particular, was accused of, among other things, skimping on the cost of providing meals to soldiers. Halliburton Energy Services ( is a US -based Multinational corporation with operations in more than 70 countries Various other complaints include the lagging reconstruction of water and electricity utilities, and providing defective equipment to soldiers.
2. Many, such as Dick Polman of The Philadelphia Inquirer, noted that prior to Hurricane Katrina, the government had "privatized many of FEMA's basic functions". The Philadelphia Inquirer is a morning daily Newspaper that serves the Philadelphia, Pennsylvania, metropolitan area of the United Hurricane Katrina of the 2005 Atlantic hurricane season was the costliest hurricane, as well as one of the five deadliest in the history of the United States The purpose of FEMA is to coordinate the response to a Disaster which has occurred in the United States and which overwhelms the resources of local and state authorities The uncoordinated action between private emergency relief agencies, as well as the military (which would often turn back relief trucks) resulting in the poor response to the storm that many would claim was a result of this privatization.

With reference to privatization of the process of revenue collection in Bangladesh, privatization has been termed as a fatal remedy. As the revenue department became extremely corrupt, the government of Bangladesh privatized part of collection of customs duties, its major source of revenue, by way of engaging Pre-shipment Inspection agencies for physical examination of the cargo and for determining the assessable value. The policy partly privatized in the Customs department but the in effect, it backfired. The PSI agencies proved to be more corrupt and more venal than the Customs officials. ^[13].

Negative responses to privatization

Privatization proposals in key public service sectors such as water and electricity are in many cases strongly opposed by opposition political parties and civil society groups. Public services is a term usually used to mean services provided by Government to its Citizens, either directly (through the Public sector) or Water is a common Chemical substance that is essential for the survival of all known forms of Life. Civil society is composed of the totality of voluntary civic and social organizations and institutions that form the basis of a functioning Society as opposed to the force-backed Usually campaigns involve demonstrations and political means; sometimes they may become violent (e. g. Cochabamba Riots of 2000 in Bolivia; Arequipa, Peru, June 2002). The Cochabamba protests of 2000, also known as "The Cochabamba Water Wars" were a series of protests that took place in Cochabamba, Bolivia 's third largest The Republic of Bolivia (República de Bolivia) named after Simón Bolívar, is a Landlocked country in central South America. For the Cactus Genus, see Oreocereus. Arequipa is the capital of the Arequipa Region in southern Peru Opposition is often strongly supported by trade unions. A trade union or labour union is an organization of workers who have banded together to achieve common goals in key areas such as wages hours and working conditions forming Opposition is usually strongest to water privatization - as well as Cochabamba (2000), recent examples include Ghana and Uruguay (2004). Water privatization is a short-hand for private sector participation in the provision of water services and Sanitation, although more rarely it refers to privatization The Republic of Ghana is a country in West Africa. It borders Côte d'Ivoire (Ivory Coast to the west Burkina Faso to the north Togo to the Uruguay.(official full name in República Oriental del Uruguay;, Oriental Republic of Uruguay) is a country located in the southeastern part of South America In the latter case a civil-society-initiated referendum banning water privatization was passed in October 2004. A referendum (plural referendums or referenda) ballot question, or plebiscite (from Latin plebiscita

Reverse privatization

A reversion from contracted ownership of an enterprise and/or services to governmental ownership and/or provision is called reverse privatization or nationalization. Such a situation most often occurs when a privatization contractor fails financially and/or the governmental unit has been unable to purchase satisfactory service at prices it regards as less than state-ownership or self-operation of services. Another circumstance may occur when greater control than viable under privatization is determined to be in the governmental unit's best interest. An example would be the nationalization of energy and telecommunications in Venezuela as announced by President Hugo Chávez in January 2007. Venezuela has the largest conventional oil reserves and the second-largest Natural gas reserves in the Western Hemisphere Compañía Anónima Nacional de Teléfonos de Venezuela ( CANTV) was one of the first telephone service enterprises in Venezuela, founded in 1930 Venezuela (ˌvɛnəˈzweɪlə) officially the Bolivarian Republic of Venezuela (Spanish República Bolivariana de Venezuela) is a country on the Hugo Rafael Chávez Frías (ˈuɰo rafaˈel ˈtʃaβ̞es ˈfɾias (born July 28 1954 is the current President of Venezuela. January 2007 is the first month of that year It began on a Monday and 31 days later ended on a Wednesday.

National security concerns may be the source of reverse privatization actions when the most likely providers are non-domestic or international corporations or entities. For example, in 2001, in response to the September 11th attacks, the then-private airport security industry in the United States was nationalized and put under the authority of the Transportation Security Administration. The Transportation Security Administration ( TSA) is a US government agency that was created as part of the Aviation and Transportation Security Act

When a state-owned enterprise or service has been nationalized or privatized, and then is reverted to state-ownership or service provision, the process of reverse privatization may be called denationalization. Nationalization, also spelled nationalisation, is the act of taking an industry or assets into the Public ownership of a national government

See also

• Nationalization - the reverse process

• Cooperative
• Deregulation
• Gated community
• Public ownership ("government ownership")
• LIBM theory
• Reprivatization
• Securitization (see "government securitization")
• Welfare state
• Marketization
• Special Economic Zone
• Urban Enterprise Zone
• National security privatization
• Private sector development
• Privatisation of British Rail
• Privatization in Russia
• Voucher privatization

References

Unindexed

• Kosar, Kevin R. (2006), "Privatization and the Federal Government: An Introduction", Report from the Congressional Research Service
• Bel, Germà (2006), "The coining of `privatization´and Germany's National Socialist Party", Journal of Economic Perspectives 20(3), 187-194
• Clarke, Thomas (ed. ) (1994) "International Privatisation: Strategies and Practices" Berlin and New York: Walter de Gruyter, ISBN 3-11-013569-8
• Clarke, Thomas and Pitelis, Christos (eds. ) (1995) "The Political Economy of Privatization" London and New York: Routledge, ISBN 0-415-12705-X
• Mayer, Florian (2006) Vom Niedergang des unternehmerisch tätigen Staates: Privatisierungspolitik in Großbritannien, Frankreich, Italien und Deutschland, VS Verlag, Wiesbaden, ISBN 3-531-14918-0
• Juliet D’Souza, William L. Megginson (1999), "The Financial and Operating Performance of Privatized Firms during the 1990s", Journal of Finance August 1999
• von Hayek, Friedrich, (1960) The Constitution of Liberty
• Smith, Adam (1994) The Wealth of Nations
• Stiglitz, Joseph Globalization and its Discontents
• David T. Beito, Peter Gordon, and Alexander Tabarrok (editors); foreword by Paul Johnson (2002). The voluntary city: choice, community, and civil society. Ann Arbor: University of Michigan Press/The Independent Institute. ISBN 0-472-08837-8.  

von Weizsäcker, Ernst, Oran Young, and Matthias Finger (editors): Limits to Privatization. Earthscan, London 2005 ISBN 1-84407-177-4

External links

• Privatization page on the NCPA website
• Privatization of Social Security The original 1983 Cato/Heritage plan—now almost complete.
• Privatization Database - World Bank data on privatization in developing countries (1988 to 2003).
• Reports of the Public Services International Research Unit at the University of Greenwich Research database with many articles on the effects of privatization
• How and How Not to Desocialize, by Murray Rothbard
• Libertarian Property and Privatization: An Alternative Paradigm, by Kevin Carson
• A Primer on Public-Private Partnerships

Murray Newton Rothbard (March 2 1926 – January 7 1995 was an American economist of the Austrian School who helped define modern Libertarianism

© 2009 citizendia.org; parts available under the terms of GNU Free Documentation License, from http://en.wikipedia.org
Dapyx Software network: MP3 Explorer | Ebook Manager | Zenithic