US Privatization Politically Tough

By Francis, David R. | The Christian Science Monitor, April 21, 1989 | Go to article overview

US Privatization Politically Tough


Francis, David R., The Christian Science Monitor


ONE irony in Washington is that the Bush administration urges third-world nations to privatize government-owned companies while ducking many of the same issues at home.

The government is talking out of both sides of its mouth, says Robert Poole Jr., president of Reason Foundation, a public-policy research group based in Santa Monica, Calif.

Both directly and indirectly through the International Monetary Fund and the World Bank, the United States has been advising developing countries to unload lossmaking state-owned enterprises to make their economies more efficient.

But in the US, privatization moves at a turtle pace.

The job of the associate director for privatization in the Office of Management and Budget has been downgraded. The position was created under President Reagan in 1987 with the goal of selling off government assets and contracting more government work to private enterprise. Now the appointee to that position has been given several other unrelated functions.

"That [privatization] effort has just about collapsed," says Mr. Poole. Unless pushed, the bureaucracy prefers the status quo to turning over government services or projects to usually more efficient and cheaper private companies.

In a new study, the Reason Foundation lists $316 billion of government assets that could be privatized. If all these assets were sold, the government would not only get the one-time return from their sale but could reduce annual interest on the federal debt by $28.6 billion, eliminate federal subsidies of $6.4 billion, and add $1.5 billion to its revenues from the corporate income tax, the foundation says.

The House of Representatives did move Tuesday on the sale of one group of assets - surplus military bases. It voted 381 to 43 to back a plan to close 86 military bases and scale back five more, thereby accepting the December recommendations of the Commission on Base Realignment and Closure.

The commission projected savings of $694 million in the first year and $5.6 billion over 20 years.

In other nations, privatization is thriving. The Reason Foundation calculates that $43 billion of government assets were sold last year. That makes a cumulative worldwide total of $160 billion over the past five years.

Britain and Japan continued to be the leading sellers, with British Steel and Nippon Telegraph & Telephone the largest of last year's share offerings.

The list of developing nations privatizing state enterprises is long. …

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