Wednesday, October 27, 2010

State Owned, or Privately Owned?

One of the greatest dilemmas in our societies and one of the main friction points between the main political ideologies, is the ownership of the public services. Should they be state owned, or must everything be liberalized and owned privately?

Until recently in most European countries, the main services were public. Telecommunications, health, education, pension schemes. The last few decades we see a surge in privatizations, everywhere in our continent. Is this the right way to move forward?

The public in general are very skeptical about liberalizations. Yet if you think about it, we are all customers of many private companies of telecommunications, one sector that has been deregulated widely in most of Europe. Most of us have subscribed with cheaper than the State owned services and companies, so why are we still complaining? 

Some do not have telephone landlines anymore, rather we receive our phone services through a modem of the digital TV and internet. There is a variety of companies offering a variety of services and different prices and budget bundles, so we have a lot to chose from. In other words deregulation is not necessarily something bad, but something that we all use and profit out of it.

Let us not be hypocrites, we all shop around and find the best quotes and sign up to the best offer. But perhaps it is when we have to deal with its side effects, like the loss of jobs in the public sector or their relocation out of our country, that we protest about it.

In Europe most of us have embraced capitalism and its free market, but can we do anything to protect ourselves from the negative effects of liberalization, while still reaping its benefits? 

If we privatize everything, then what will we be paying our governments for and what will be their responsibilities towards us if we can't hold them responsible for anything? They will provide us with very little if anything. And since many companies merge and buy each other off, if one big multinational corporation buys a whole sector, it can end up owning the whole health system for example of one country.

Small countries are particularly vulnerable here, since they have small public sectors and for a large multinational company is so easy to buy it off. But that will mean that gradually small nations may lose their independence and sovereignty not to another nation, but to a large corporation. Some believe that without a state intervention, they will be "freer!"

If we take the above in consideration, then we certainly free ourselves from the "evil" of state government but we throw ourselves at the mercy of rich private owners! To me that is going backwards to a new kind of feudalism that is not linked to land ownership rather to goods, services and commodities.

And as large corporations care little for anything if there is no profit to be made out of it, what will they do once they have full control of one sector? If one private this time company is owning a whole sector, aren't we going back to square one, where we had to deal with the monopoly of the state companies?

In other words we will need to place strong and effective rules to stop this from happening and protect the markets of the small nations, from being monopolized by large multinationals.

But can we liberalize everything and where do we draw the line? Some services and goods are a human right so why give it to the hands of a few, when if nothing else they should be free and available to all? Take water and sanitation services, education, pensions or social security for example.

If the state decided that it does not want to provide me with a pension, then it should not be taxing me as much and raise my salary. If I have a higher salary, then I can seek out a private pension scheme. Many claim that in the future the state will not be able, or should not provide its citizens with social protection and pensions.

We all must realize this and seek out a private pension scheme for security and better services, that the private sector is rumored to offer when compared with any public company. But even these private schemes are not safe. They can also go bust and all the money that you paid all those years, can just end up in the pockets of some devious folk that gambled with it or invested it badly.

The health,welfare and education of your people is the best investment you can make as a statesman. A healthy and educated population is an asset for the future, as it is productive and it attracts more  investments.

If you allow private companies to provide such basic rights to your people, then your nation is dependent on the interests of these providers and only the rich can get the best treatments or education. This of course will create an unchangeable, unequal society of those who can afford better health and those who will have to compromise to disease, because they can not afford it.

Privately owned education is still an issue and the status of its degrees or diplomas are not equally recognized as the state run universities in many countries. So while one spends a lot of money to attain a degree, he or she can have trouble in finding a job that will offer the same salary expectations with someone that holds a degree from a state run university.

And if the privately owned educational institution goes bust in the future, there are no guarantees that your degree will still be of any value in the business world.

Also what if at an old age you are informed that the life insurance company that you had a contract with, was bought off by another or went bust. Your money do not worth anything anymore and you must agree into another pension scheme or receive nothing at all. Can there be any guarantees that you are going to get a pension, even with a private insurance?


If we have a look to the U.K. when they liberalized their postal services, we will see that private companies are interested only in what is profitable. They are keen to provide service to large towns and cities and mainly packets and parcels that bring more profit. They are not really interested in postcards or letters addressed to small villages or isolated regions of the country.

They have to wait a disproportionate amount of time to receive these kind of services and in fact in those regions, the state owned mail services kept their market.

Rail way prices are extremely high in the U.K. and there is a fine mess with parking regulations, since each company tries to fine as many people as they can to raise more revenue. The traffic wards are pushed to stick to a quota of fines to make the business profitable. I do not think that this can be considered as "better service" rather an unjust money making business for some, while it should be in place to make sure that citizens abide by traffic laws.

We are being transformed into manic consumers, while we are being convinced that our "freedom" is our ability to keep buying and seek out new deals and budget services. It is another thing to try and provide better "services" and another thing to try and fleece people off their money in any way you can.


Even worse this economic system that we have adopted is expanding to new markets. Countries like India, Brazil and China are joining and adapting fast. So we in Europe not only are being fleeced of our money but our jobs as well, since the capitalists want always cheaper workforce and we with our higher living standards and demands, have deprived them from it.


To conclude deregulation in certain sectors has led to a booming of new technologies and industries the past few decades. In telecommunications, transportation and other former state owned sectors, privatizations were hugely beneficial. In some other sectors like the postal services the transition was not very successful and was handled badly in many countries.

But privatization can not be used as panacea for all sectors, especially those affecting the social structure of a society. Not that we should approve a "nanny" state that provides all and creates dependency, condemning certain social groups to chronic idleness. The state should encourage innovation and allow privately owned companies to blossom, but it should give equal importance to SMEs and local businesses as well, not just multinationals.


State intervention is needed, together with a free market so that each can control and influence the other. We do need some state laws to "regulate the deregulation,"or we ourselves will end up being treated as commodities in the end.

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