What Are The Advantages And Disadvantages Of Privatisation?


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Larry Patterson Profile
Larry Patterson answered
It is always marketed as a cost savings but in most cases if you analyze the specifics in detail, the cost savings are minor.
One exception is for instance, building highways and bridges.  The amount of specialized equipment and expertise needed is beyond the scope of government entities.  Consider if a state had one large bridge over water and had to retain and maintain a 200 ton floating crane in order to be prepared to work on that one bridge when it became necessary.  The cost would be outrageous.  But a contractor who works on those types of bridges frequently for different governments and private entities could make serious money while owning it.
I biggest problem I saw at a State Highway Agency using consultants for design and inspection was the fact that the consultants had no real loyalty compared to the state employees.
There are only a few things that governments should be doing. Things such as operating the military and the court system are too important to be delegated to private enterprise but just about everything else should be.

When there is only a single source of some thing, the supplier of that thing isn't in competition with anyone and has no incentive to be efficient. When there are multiple sources of things the suppliers constantly work to ensure that they are the best and least expensive so that customers will choose what they have to offer.

When the government runs an enterprise the management and workers (not always but very often) tend to have the attitude "why should I work so hard, its not like we're going to go out of business?" This attitude detracts from efficiency and productivity which are the key factors to keeping costs down.

On the other hand things like the courts are places where we must have a completely (or as close to as possible) impartial system. Any organization that is responsible for guaranteeing or enforcing the constitution must be concerned with only that task to avoid conflicts of interest.

Here are some examples of public vs. Private operation of businesses:

Amtrak - has lost money every year since its creation
BNSF, UP - record profits every year

US Postal Service - constant price increases, legendary bad service
UPS, FedEx - best prices and extraordinary service
Anonymous Profile
Anonymous answered
Better efficiency

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