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The Merits of Privatization - Research Paper Example

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Due to the ongoing financial crises, European debt crises and high deficits many economists and financial gurus believe that privatization is the only way out. Though privatization has benefitted consumers numerously, the government too should not shy away from responsibility…
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The Merits of Privatization
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Merits of Privatization School Affiliation Due to the ongoing financial crises, European debt crises and high deficits many economists and financial gurus believe that privatization is the only way out. Though privatization has benefitted consumers numerously, the government too should not shy away from responsibility and accountability after privatization.

Merits of Privatization
Privatization is a process in which government functions and responsibilities are transferred to private entities. The transfer can be either a complete one or it can be a part of a government function.
Privatization is not new to United States, transcontinental railroad constructed by public and private partnerships during the nineteenth century is one of the earliest examples of privatization in the US. The transcontinental public private partnership is always cited as an example by the people who support privatization. Privatization not only brings efficiency but it also helps in curtailing costs and reduces bureaucracy. (Loulakis, 2003)
The recent financial downturn and government bailouts have severely affected the American economy. With the government deficits and costs of borrowing increasing day by day, many leading economists have advocated privatization of government functions which would bring budgetary discipline and would reduce government’s financial burden.
Though the consumers are greatly benefited by the reduction in the costs of goods and services due to privatization, the only point which may negatively affect the citizens is accountability. Citizens do not have any control over private companies and cannot punish them, like they can punish the government by not voting for them in state or central elections.
Another point of concern with privatization is that private firms operate with only one motive that is profitability, which is secondary in government owned and operated firms. Though, privatization has greatly improved product quality and cost, there are certain services which should not be privatized. Sectors like defense, law enforcement, education and basic healthcare should always be under State control.
The future of the country depends a lot on the above mentioned sectors and therefore, the motive of cost cutting, profitability and competition should not come into consideration. However, certain functions like sourcing of certain products can be outsourced.
Another reason why these sectors should be under State control is because in case of any adverse events the government must have the capacity and the control to handle the situation quickly and affectively. Events like natural calamities, wars and widespread public panic can be handled properly only if the government has the resources to handle the situation calmly without loosing any human life which is far more important for the country than material wealth or profit.
Though privatization reduced government involvement, even then the government must be accountable for the services provided to the citizens through privatizations. The government must set up regulators and watchdogs that should regularly monitor their activities. (Parket & Saal, 2003)
Under no circumstances the government must shy away from their duties. The government is installed for maintaining law and order, security and to bring the prosperity to all the sections of the society. Even after delegating part of its day to day operations to private bodies, the government must be accountable for the actions taken by the private sector.
Before the government plans out privatization, the government must chart out strategies to tackle situations in case the privatization fails to deliver. Proper mechanisms must be laid out in order to avoid any chaos that may cause huge inconvenience to the general public.
It is to be remembered that the Government of the country is elected not for making money but to serve its people. Privatizations should only be considered as the most viable option for bring prosperity without compromising on national security and country’s future.
Works Cited
Loulakis, M. (2003). Design-Build for the Public Sector. New York: Aspen Publishers Inc.
Parket, D., & Saal, D. (Eds.). (2003). International Handbook on Privatization. London: Edward Elgar Publishing Limited Read More
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