Privatization: The Road to Feudalism

In the modern political climate, terms like privatization often get thrown around with little explanation. A trusty political tool of “free-market” conservatives, privatization in particular is often associated with improving efficiency and eliminating corruption. Like many claims made by conservatives, these associations rest on an assumption that has not been proven: that the quality of goods and services is better when they are produced by private enterprises rather than government organizations. The evidence for this assumption is far from conclusive, so the effects of policies like privatization should be carefully considered before the policies are implemented. Privatization, although it can be useful in some situations, is a dangerous and irresponsible policy when applied to the public commons.

Privatization is the selling off of government assets to corporations. It has been a relatively common practice since the Reagan era, and has been particularly appealing during the ongoing recession. The government gains some short-term spending money, but it loses any revenue generated by the privatized asset. The idea is that the private sector will use the asset more efficiently, thus improving the overall economy.

Over the past few years, state and local governments have started to privatize the public commons. This includes everything from parks to highways. Even parking meters have been privatized in Chicago. In many cases, these sell-offs have turned out to be underpriced, meaning that the government lost money. It is also common for the new private owners to hike prices, which is what happened to the parking meters in Chicago. More than just an imprudent business decision, these instances of privatization erode the very foundation of the economy. They reduce the size and influcence of the public sector, which acts in the interests of the economy as a whole, while increasing the private sector, which acts as a set of independent self-interested actors.

Certain parts of the economy, like mass transportation and the postal service, are so beneficial to the public interest that it is worthwhile to run them at a loss. The money spent by the government on these services can be more than made up for by increased tax revenue from a booming economy. When these parts of the economy are privatized, they exist only for their own profit. They can no longer be run at a loss, so the new owners have to raise prices. This is like putting a toll on the lifeblood of the economy. The long-term costs of the privatization of the commons far outweigh the short-term gains.

Some people think that the economy should be completely privatized. We already have private armies, private police, and private prisons, so no sector of the economy is immune from the spread of privatization. If this were to happen, we would find ourselves in a world reminiscent of Medeival Europe. The economy would consist entirely of corporations acting in their own interest, so no one with influence would be looking out for the public good. Furthermore, since corporations have hierarchical leadership structures, there is feudal competition even within corporations for higher ranks and higher salaries. A world dominated by corporations would be a world of Bellum omnium contra omnes, the war of all against all.