Wednesday, June 20, 2012

Governance and Privatization

A modern democratic government that values the lives and living standards of its citizens has to have some form of privatization so as to deliver services in a manner consistent with the demands of those it serves. Privatization allows private enterprises to deliver services where the government failed to penetrate. It is not a bad idea for a government to contract out some task to some of its citizens that have the courage and capability to deliver on time. It has been acknowledged that a government cannot deliver on its own without help from the citizenry. Martimort (2005) contends that privatization is the delegation of a task and that the trend skyrocketed in the last few decades after dissatisfaction with government monopolies increased among unstable citizens who perceived government services as inferior. Privatization evolves out of state inability to provide necessary services and products, hold-ups resulting from underinvestment, budgetary constraints resulting from political and economic plunders, governmental fragmentation, and lack of benevolence on the part of governments (Martimort, 2005).

There are problems associated with privatization that deserve to be tackled if business is to be made to persist as usual. Some problems associated with privatization include lack of faith and commitment and the inability of politicians to deliver the right services to public. Schmidt (1995) argues that privatization got heightened in countries where enterprises were state-owned and that privatization got off the ground with tremendous speed in the 80s. Privatization came to the fore when William’s (1985) theorized what he referred to as ‘selective intervention’. According to Boycko, Shleifer, and Vishny (1995) privatization evolved after public government enterprises became ineffective due to meddling by politicians. In the U.S., private enterprises have transformed into restorers of law and order with some even getting contracts that are meant to correct prisoner behavior and contain overcrowding in dungeons. Others private investors have been fortunate enough to be rewarded with contracts meant to oversee subsidized public housing. These corrective endeavors serve as guiding lights for the ordinary citizen after government bureaucracy became inefficient in its commitments.

The main objective of politicians when soliciting votes is to find alternative jobs for their votes. It is this mindset that leads to the abandonment of vital services demanded by the public. Privatization is another form of political reformation since it deals with altering the living conditions of the suffering mass. Allowing the well-organized and responsible ordinary citizen to partake in the transformation of other citizens is a good idea. Many countries have been inspired by the art of privatization and the benefits that come with it. Britain under Margaret Thatcher experienced economic growth after the prime minister embarked on the privatization of its airways in the 80s. The Czech Republic under Vaclav Klaus and Mexico under Carlos Salinas also experienced massive privatization in their times (Boycko, Shleifer, & Vishny, 1996). Privatizing prison houses and public housing are noble ideas and should be encouraged.


Martimort, D. (2005). An agency perspective on the costs and benefits of privatization. Journal of Regulatory Economics. Retrieved from

Schmidt, K.M. (1995). Incomplete contracts and privatization. Journal of Economic Literature Classification, L33, 150. Discussion Paper No. A-480.

Williamson, O. (1985). The economic institutions of capitalism. Free Press: New York.

Boycko, M.., Shleifer, A., and Vishny, R.W. (1995). A theory of privatization. The Economic Journal, 106, 309-319.

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