Privatization is a powerful and promising phenomenon that is spreading rapidly throughout the world--in developing and developed countries, democracies and dictatorships, and capitalist, socialist, and communist nations.
Proponents see privatization as a means to curb the excesses of overly intrusive governments, a way to make government more efficient and effective, and a tool for economic growth. On the other hand, opponents deride it as a simplistic and primitive call to turn over government functions and government property to private businesses, and they summon forth the brutal image of a dog-eat-dog world where only the fittest survive and the masses are left to grovel for charity.
Privatization means relying more on the private sector and less on government to satisfy people's needs. The private sector includes many of the basic institutions of society: the marketplace; the family; and voluntary associations such as churches, neighborhood organizations, cooperatives, and fraternal and ethnic clubs.
Privatization encompasses many familiar forms. For example, local governments may contract with private firms to finance, construct, and operate water-treatment plants or prisons, or to collect trash or sweep the streets; or they may contract with nonprofit organizations to provide "meals on wheels" to elderly shut-ins. It is also privatization when the federal government gets out of the business of lending money, running railroads, or insuring farm crops and home mortgages and lets the marketplace fill these needs. Issuing housing vouchers and food stamps to the poor, thereby enabling them to buy these necessities in the marketplace, is far better than building public-housing ghettos and establishing state-run farms and grocery stores. This, too, is privatization. And so is awarding a bus franchise to a private firm, replacing a government-run commuter service.
Urban dwellers practice privatization when they form a neighborhood safety patrol, and so do suburbanites who join volunteer fire departments. And it is also privatization when a government-owned airline, steel mill, or telephone system is denationalized and sold to the public.
Privatization is as old as government itself. It was a private entrepreneur, under contract to the Spanish monarchs, who sailed to the New World in 1492. The Jamestown colony was a commercial enterprise funded by private investors, not the British Crown. Several years later, Plymouth colony was founded as a joint venture between religious dissidents and a London joint-stock company. A private contractor was collecting garbage in New York City as early as 1676. Lacking funds for an adequate navy during the War of Independence, the Continental Congress issued franchises to privateers, authorizing them to attack and capture enemy ships and to keep and proceeds as compensation for their public service.
Documented efforts to promote privatization aggressively as a deliberate public policy to improve government performance in the United States date back to 1969 at the latest. The term privatize was coined in 1948, although it did not appear in a dictionary until 1983. By now it has become a commonplace buzzword, but it is often misunderstood and, particularly among ideological liberals and in countries with socialist traditions, the word evokes reflexive
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