2 - Privatization, Efficiency, and the Distribution of Economic Power

Summary

Proponents of privatization tend to rest their case on a strikingly simple line of argument. Compared to the mighty private sector, they maintain, the state is hopelessly inefficient at providing goods and services. Trains, hospitals, schools, and even prisons perform better when private corporations take charge, energized by the dynamic logic of competition, rather than the rigid, monopolistic state. We all do better by relying on the private sector whenever possible, they conclude, including for the provision of goods and services that were traditionally viewed as the state’s exclusive responsibility.

Resting one’s entire case on such a straightforward argument can seem unimaginative in some contexts, but here it mostly denotes confidence in the strength of the underlying considerations. And the confidence is understandable. If the state is inefficient compared to the private sector, then privatization promises the same quality of services at a lower cost – or, alternatively, a higher quality at the same cost.