The underlying philosophy of this post is libertarianism. If you want to learn more about libertarianism, check out one of the following websites: the Libertarian Party of the United States; the Reason Foundation; the Cato Institute; Privatization.org; the Fraser Institute; the Ayn Rand Institute; and plenty of others. My belief is that the government’s role in society is to protect human security, private property and freedom, and to keep the economic playing field as level as possible, meaning that everyone can compete on the same grounds. In theory, the government should retain the ability to dissolve a corporation; but it should never exercise that right. The power of the market, the ability of consumers to speak and vote with their dollars, is the most powerful check against corporations, not government regulation. Most things that are today provided by government in most countries should be provided by the private sector unless it violates the above. And even most government services have expenses that could be reduced through competitive bidding (Chinese textile workshops could make army uniforms, Russian arms manufacturers could make their weapons—whoever is best and cheapest).
Why we should privatise everything:
1) Personal responsibility. If the government is no longer relied on for these things, people will take responsibility for their actions and will thus act differently.
2) Freedom. The less government intervention into the economy, the more business and labour can do what they feel is right and compete on a level playing field. The less government intervention into people’s lives, the more choices and responsibilities they have. The government does not always (or even very often) know best, and policies designed to protect people often end up punishing them. Many consumers have already realised that the government is not there for them and they must protect themselves. To this end, they have created ripoffreport.com, consumerreports.org, underdogs.ca and other independent watchdogs untainted by the biases of government or business.
3) Creating wealth. Pushing more responsibility for oneself will lead to people who realise they cannot simply count on others to take care of them. When they realise that, they will do more to create their own wealth. More people will own more assets and have more wealth to spread around. Moreover, publically owned corporations and government intervention in the economy requires bureaucracy: saving on bureaucracy saves on taxes and reduces the likelihood of corruption.
What shouldn’t be privatised:
To remain democratic, the three branches of government (executive, legislative and judicial) cannot be beholden to private interests. That said, here is a question for you to consider: should we be able to buy and sell votes?
Police and intelligence services:
As the most immediate insurers of human security, the police and intelligence services should remain in the hands of democratically elected government.
Although there could be benefits to privatising the fire department and making it a part of the insurance industry (you pay for fire protection and if you don’t pay, the fire department won’t come to you), it is an issue of human security and for that reason should be available to everyone, regardless of their wealth. Even though having to pay for fire service could reduce the reliance on the fire department and thus the risk of fire, that does not reduce the risk that someone else (who does not pay for fire protection) will start a fire that harms the security or property of others. So fire protection should be provided by the government to everyone.
What SHOULD be privatised:
Media and the arts:
All government subsidy of media and the arts is undemocratic. If the people do not demand Canadian television, Canadian art, Canadian books and so on enough to pay for them, they will not pay for them. If the government pays for them, they are taking money from people for things they would not otherwise pay for. That is undemocratic.
Welfare, childcare and low cost housing:
Welfare should be provided to those who simply cannot earn a living for and take care of themselves. No one else should be offered it. To everyone else it engenders dependency. Humans respond to incentives. If there is an incentive not to work, many people will take it. If welfare is eliminated for those who are capable of working, the dependency and entitlement mindsets will go with it over time.
When the government pays for childcare, it provides an incentive for parents to leave their children with other rather than take care of themselves and to have more children. Parents should be the primary caregivers and so should have incentives to stay home with the children rather than go out to work. People should not have incentives to have more children when there are enough people in the world already who will immigrate to countries in need of new workers. If they do, the taxes they pay can go to lower the taxes of the working parents to make up for the revenue lost by staying at home.
Like welfare, low cost housing tends to institutionalise poverty rather than relieving it. Like welfare, it creates dependency and does nothing to address the underlying problems of poverty, which are caused more by lack of education and defeatist or dependent mindsets than lack of money. The money spent on housing or childcare would be better given more directly to the poor in terms of lower taxes so that they can decide what to do with the money themselves.
I think foreign aid is generally a mistake and the whole idea (not just the method) should be overhauled. (That will be the subject of a later post.) Nevertheless, if governments insist on providing it (and can find a win win way of doing so), they should outsource it to NGOs. NGOs are motivated by the mission, and there are enough of them that they compete for government contracts just like corporations do. The government is motivated by the next election. That leads the aid they provide to comprise too many flashy projects that do not contribute to their societies. Leave it to the NGOs: outsource it.
Military operations should only be sanctioned by governments and only in defense. That said, there are plenty of private military firms that are capable of performing these operations, and the competition among them and contractual nature of private military work lowers the costs to the taxpayers. If you think this isn’t happening already, read this entry in Wikipedia. Of course, there is always the worry that they will start wars for the sake of the company owners. It is the responsibility of the government to keep them in check, and the institutions of democracy (such as the courts and the voters) to keep the government in check.
An article by the Reason Public Policy Institute shows that the privatisation of health care in Sweden, Germany, Australia and the UK can not only lower overall costs but also decrease treatment waiting times and increase hospital capacity for patient examination and care. The article also finds that, even today with quasi private health care in the United States, overregulation and mismanagement cause thousands of deaths and millions of wasted dollars every year. The Institute offers the various options available to governments that run hospitals and list the benefits and obstacles. I suggest that, if governments do not outright sell the hospital, they should at least outsource most of their functions. To anyone who wonders why hospital workers such as cafeteria and cleaning staff make at least twice as much as their counterparts in the private sector, the latter option at least should not sound outrageous.
All schools should be privatised to encourage competition among them, prompting the schools to provide not what the government wants but what the parents want. School fees and teachers’ salaries should not be determined by government regulators but by the market, like everything else. If the government wants to intervene into education, let them offer more scholarships so that those who work hardest get a leg up. But even that isn’t necessary because as the government pulls its hand out of education, business will fill the gaps with its own scholarships, which is already happening. And if you are afraid that the rich will get better education than everyone else, perhaps you should consider that is already happening as well. Privatising schools education will not necessarily increase the gaps between rich and poor; giving the poor the wrong education will. (What is the right curriculum? That is the subject of a later post.)
Endangered animals and habitat:
A lot of government regulation and “protection” has clearly not helped the environment. Another article from the Reason Public Policy Institute shows both the failures of the US Endangered Species Act and cites the merits of an ecotourism firm in Australia as an example of the successful—and profitable—privatisation of animal species threatened by extinction. The theory is that, if animals become private property, individuals, corporations or NGOs will protect them. Individuals and NGOs will protect them for the sake of protecting them, while corporations will be in check by a) the necessity of the animals for their long term profitability and b) the pressures of the market. The same goes for habitat: if it is at risk or can provide a financial benefit, they will keep it safe.
This post aimed to justify wide scale privatisation by addressing the most controversial issues in privatisation. What’s more, like most of this blog, it also aims to provoke. If you disagree with me, great! Let’s argue!