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Limits to Privatization
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Limits to Privatization

How to Avoid Too Much of a Good Thing

Ernst von Weizsäcker, Oran Young, Matthias Finger and Roger Levett
Earthscan, 2005
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Editorial Rating

8

Qualities

  • Innovative
  • Eye Opening
  • Well Structured

Recommendation

Privatization was in vogue during the eighties and nineties. It aimed to eliminate, or at least reduce, corruption, inefficiency and the politicization of economic matters - and it often succeeded. However, in some cases, such as the World Bank, it failed so egregiously that even its erstwhile supporters began to have second thoughts about the wisdom of encouraging the state to manage basic infrastructures and industries. Authors Ernst Ulrich von Weizsäcker, Oran R. Young, Matthias Finger and Marianne Beisheim explore the experience of privatization and investigate the factors that have led to some of its successes and failures. They are not entirely free from bias, but the pro-privatization forces have so long dominated the public discussion that getAbstract finds this well-supported counterargument refreshing, and recommends this book to public and private sector executives and managers as well as to political officials.

Summary

The Middle Path

In any privatization program, different social groups have different interests. The poor often advocate a greater role for the public sector, while the rich want the opportunity to own and control the infrastructure.

Politicians must find the right balance between the two extremes because privatization affects a wide range of social and governmental functions:

  • The administration of justice.
  • The management of infrastructure and the financial system.
  • The provision of life-or-death necessities, such as water.

The compelling question for the present is whether governments have good reasons to maintain public ownership and control of important resources - when does that work, and when are private agents the most efficient, equitable operators?

Defining Privatization

If you define privatization as any attempt to expand the private sector’s role in society by paring back the public sector’s role, privatization is rampant around the world. Frequently, but not always, privatization involves an outright change in ownership from public to private.

Privatization can also occur when governments purchase...

About the Authors

Ernst Ulrich von Weizsäcker chairs the Environment Committee in the German parliament and is a noted expert on sustainable development. His previous books include Earth Politics. Oran R. Young is a professor of environmental science and management at the University of California Santa Barbara. Matthias Finger is a professor at the Swiss Federal Institute of Technology College of Management, and dean of the School of Continuing Education. Marianne Beisheim is an assistant professor of political science at the Free University Berlin.

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