The Future of Privatization

By Linowes, David F. | National Forum, Spring 1990 | Go to article overview

The Future of Privatization


Linowes, David F., National Forum


Much of our nation has become entangled in its own power, stifling creativity and productivity. Government agencies responsible for serving the people have become muscle-bound, almost to the point of paralysis, when it comes to considering more effective performance.

At the same time, other government agencies have reached out beyond the realm of governance by injecting themselves into business operations, to the detriment of both government and business. These trends cannot continue if our free enterprise democratic society is to survive and thrive. "The danger," John Gardner warns, is the creeping disaster that overtakes a society which little by little loses a commanding grip on its problems and the future."

The proper role of government in a democracy has been raised and debated in the United States since our nation was founded over 200 years ago. That same debate has endured throughout the world, in every nation of every culture. It is that debate, raising essential political and economic questions, that has given birth to the privatization movement.

Privatization, the transfer of government assets and/or operations to private business interests, is a recognition that government in any guise cannot be all things to all people. In many nations, it is a reaction against the socialist and Marxist vision that has exerted so much influence in the twentieth century.

To consider the issue, however, requires a determination of the proper limits of government as compared to business. Where do the responsibilities of each begin and end?

Each plays a critical role in creating and maintaining a productive posture and a powerful presence in world affairs. Each must jealously protect its own prerogatives, and at the same time protect the rights and obligations of the other. Each strengthens the other, and in so doing serves the people-for people constitute the strength of a nation.

The responsibility of government is to govern, the political function of policymaking and administration. The responsibility of business is the production of goods and services, that is, commercial and industrial economic activity.

President's Commission on Privatization. Privatization was an important part of the Reagan Administration's agenda, and is being continued by the Bush Administration. Because for years the issue had become bogged down in ideological debate, in September 1987 President Reagan established the President's Commission on Privatization to help resolve the question of the proper division of responsibility between business and government. The twelve-member body was made up of Republicans, Democrats, and Independents. In March 1988, as its Chairman, I presented our report to the President and Congress.

The report found that too many government agencies are trying to solve today's social and fiscal problems with outmoded structural designs and solutions. We must break away from archaic concepts and apply constructive alternatives, if we are to respond to the poor who need housing; to students who need better education; to prisoners who need rehabilitation; to travelers who need efficient air traffic control; and to taxpayers who need and deserve fair value for government's bulging expenditures.

The Commission unanimously concluded that the key constructive alternative to solve the problems that have overtaken our society is privatization." It embraces several dimensions.

Contracting Out. First, government should reach out by opening its operations to bring in the creative talents and drive of entrepreneurs and executives in the private sector. They can help solve some of the major problems of our day. Today, only those who work for the government, often under outmoded operational constraints, can participate in trying to solve the needs in medical care, education, poverty, and transportation. Our nation is trying to cope with some of the most intractable problems with one hand tied behind its back. …

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