The Pros And Cons Of Privatization

The private sector is mostly known to be more efficient and capable at many things than the public sector. Some people believe that in order to fully and efficiently utilize resources and to get the maximum profit out of government owned entities, privatization is a necessity while some seems to have a different opinion of supporting the public sector. Well one cannot argue that privatization is entirely good or bad. It has its pros and cons. However privatization can be defined as a process by which a state owned company, enterprise, public service, agency or bureau’s ownership is transferred from public sector to the private sector. In most of the countries this concept is very much encouraged by governments even for goods and services that are most commonly known to be provided by the public sector. 

Privatization is done either fully or partially. There are certain entities that are jointly owned by the government and the private sector. There are three methods for the process of privatization. It can be done through share issue privatization, asset privatization and voucher privatization. A privatization process cannot happen overnight. The government with the help of corporate due diligence services takes measures to investigate the stability and the sustainability of the potential buyers. A process of privatization can take a long time. This is also known as denationalization or disinvestment as well. However all three terms refer to the shift of the ownership and control of state owned entities from the public to private sectors.

However much the modern day governments encourages privatization in most of the countries, there are certain pressure groups and individuals who argue against this phenomenon. Governments that seek the allegiance of the public to remain in power for a long time wish to privatize as the responsibility of state entities fall under them. As any of such entities are poorly run, they could deny taking the blame. The private sector is profits oriented and have no concern over social welfare and environment. Therefore, privatization of certain services and entities can be harmful to the society. There could be times when the corporate due diligence services can fail and the private sector organizations that took over can turn out to be a greater failure than the public sector. Also, the poor and the low income earners can be mostly affected by a privatization policy, also check this corporate investigation services.

There are also a vast amount of benefits associated with the privatization process. Governments monopolies most of the time are susceptible for corruption. Therefore privatization is encouraged to avoid the misuse of public wealth. Also most of the state owned companies are running at a loss. There is no motivation to improve the efficiency as their ultimate target is not profits but social welfare. For example in the nationalized health services in most of the countries, there are long waiting lists for surgeries. Privatization of such services such as health and education improves the standard and the quality of services as well as it contributes to the development of sub services such as insurance.