A process by which state
es are put under non-government control
. Privatization has been primarily encouraged by the World Bank
, although the IMF
has also often made it a requirement for receiving IMF assistance.
The primary goal of privatization is to increase efficiency. The reasoning is that businesses that have monopoly control of a market have little reason to improve their service. The secondary goal of privatization is to provide the government with money for fiscal spending.
Unfortunately, the goal is often forgotten and only the method is remembered. There is currently a lawsuit
instigated by UPS in an attempt to dismantle the Canadian Postal Service - an attempt to use the concept of privatization to reduce competition and gain monopoly power.
The usual method of privatization is to sell off the business to various financiers. The problem with this kind of privatization is that although new competition may be created, the control over these businesses has been lost. While representative governments have as their charter to treat their employees fairly, the handing over of control to individual capitalists (rather than the employees) results in a move toward a less representative society.
In addition, these businesses are often sold to foreign investors in return for foreign exchange. This short-term gain for the government results in long-term loss by the nation, as profits from their businesses are taken out of the country by the financiers.
See also comments on privatization in:
The World Bank is the opiate of the masses