Privatization's Bad Name Isn't Totally Deserved

By Nancy Birdsall and John Nellis | The Christian Science Monitor, September 26, 2002 | Go to article overview

Privatization's Bad Name Isn't Totally Deserved


Nancy Birdsall and John Nellis, The Christian Science Monitor


Outside last month's UN Conference on Sustainable Development in Johannesburg, privatization was a dirty word. Outside the annual meetings of the World Bank and the International Monetary Fund here this weekend, the tirade will continue. That's too bad.

Protesters and antiglobalizers say privatization of state-run businesses has hurt the poor. And the common assessment in developing and transition countries - from Argentina to Russia to Sri Lanka - is that privatization has enriched the few at the expense of the many, increased consumer prices, and reduced jobs - and hasn't delivered on the promise to boost production and growth.

Influential thinkers concur with the negative popular perception. Joseph Stiglitz, the former World Bank chief economist, excoriates the IMF across the board, but reserves particular scorn for the way it and other international financial institutions pushed for massive and speedy privatization of state-owned industries and utilities, especially in Russia. Mr. Stiglitz argues that privatization in the absence of institutional safeguards - coherent laws; competent, impartial courts, the decisions of which are enforced; a civil service that is at least basically civil and that actually serves rather than extracts - is a recipe for enriching the privileged via corruption.

Certainly, privatization was oversold as the solution. A number of corrupt and incompetent governments made a hash of the process; and international financial institutions and some advisers pushed mechanically for privatization long after they should have known better.

Nonetheless, this is a case where the baby ought not be thrown out with the bath water. Our study of the effects of privatization suggests that ending - or worse, reversing - privatization would hurt the world's poor.

In the short-run, privatization worsens wealth and income distribution. Assets formerly held (in theory) for the public at large are now held by a small number of owners - in the worst cases, a tiny group, such as the Russian oligarchs. Jobs are usually lost. In most countries the losses are small, but it's the older and women workers who end up worse off. Prices go up for electricity and water. Aggressive collection of fees hits the poor and middle class. And often the windfall from sales revenue is eaten up by the rising cost of public debt.

Benefits to new private owners are large and immediate. Benefits to consumers and citizens are smaller and uncertain, sometimes never emerging at all - as in privatized toll roads in Mexico, and water in Bolivia and Argentina. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Privatization's Bad Name Isn't Totally Deserved
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.