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Why governments should never privatize.

Updated on February 3, 2016
TessSchlesinger profile image

Growing up in a political family, Tessa joined her first political party at 14. Her interest in progressive politics & economics continues.

The start of privatisation

It was Ronald Reagan and Margaret Thatcher in the mid 80s who started the movement to privatise government assets which were built by people’s taxes. Without permission from the people, they sold off numerous resources, ranging from rail, through air, energy, housing, and medical care. The results, thirty years down the road are disastrous for the vast majority of people.

The idea behind privatisation

In the 80s, various governments noted that expenses were increasing. Rather than searching for the reasons for this (increased population, lower tax rates, corruption), government bought into the idea that business spent its money better and produced better results for less money. As time has demonstrated, this simply is not true. What business does is pay people substantially less (which has resulted in social deprivation at a high level) as well as lowering of standards and a decrease in the quality of life for most people.

Never privatise National Parks!

The goals of business and government differ

The goals of business and government differ profoundly, and they are often in conflict. The goal of government is (or should be) the betterment of the life of the people. At basic levels, this would include, but is not limited to the following:

  1. The safety of the people, i.e. the prevention of military invasion and crime, etc.
  2. A solid infrastructure, i.e. bridges, roads, dams, etc.
  3. Essential services, i.e. public transport, phone, internet, radio, electricity, education, medical services, etc.

The goal of any business is to enrich the owner/s. Since the 80s, the mantra of business has been ‘The business of business is profit.’ In other words, business does not have a social obligation to humanity, and that whatever it takes to make a profit is acceptable. This means that paying someone a wage which is not possible to live on is acceptable in the pursuit of profit. Another unethical practice is charging the highest price business can get away with (what the market will bear) rather than relating the price to the cost of production.

Ergo, the goals of business and government are very different.

Criminalize as much behaviour as possible for private profit

Privatizing electricity and gas means people spend more...

The goals of business and government are in conflict with each other

There are some massive conflicts of interests between business and government. These included medical practice, weapon production, and energy production.

Those who manufacture weapons have a vested interest in war as well as a need to sell as many weapons as possible to anyone who would purchase them. They, therefore, will encourage people to believe that there is a need for weapons. The goals of government is to keep people and situations peaceful, ergo governments and the private sector are in conflict at this area. Therefore nothing good is to be achieved by government being influenced by business.

Another area of conflict is profit in the medical world. Studies have shown that the over-the-top price of medication has more to do with profit than with research. Ergo, government hospitals are forced to pay sky high prices in order to provide a health service. It is also no accident that the majority of bankruptcies in the United States are the result of expensive medical care. People would pay ever last penny to maintain their health.

Health should not be about profits

Government pays increased prices to private sector for services

Currently the prison system has been privatized in the United States. Because ‘the business of business is business’ and because the United States permits a system of ‘lobbying,’ private sector interests can do what it takes to convert politicians to legislate in their business. As a result more and more legislation in both the UK and the US is in favour of (big) business.

The privatisation of the prison ‘business’ has led to an increased number of laws to incarcerate people with the United States now having the highest per capita rate of prisoners in the world. One can be jailed for very little. In addition, it is costing the USA an arm and a leg. In other words tax payers are footing this bill.

There are many other examples where business overcharges government for private services.

The loss of essential services

In the 80s, Reagan and Thatcher didn’t want to pay for certain services anymore. So they closed them down. As a result, a lot of people with mental illness became homeless and many pensioners with dementia had nowhere to go. The idea that ordinary working people have sufficient funds to look after these people is unrealistic. It is also inhumane. A humane society puts the welfare of all people in community above profits for a few.

If you're mentally ill, you will probably be homeless at some point.

The Bilderberg Influence

Prince Bernhard of the Netherlands started the Bilderberg Group in 1954 in order to bring business together with politicians. The goal was to convince government to work with business. What has been said in the meeting has always been secret which, of course, means that if we knew what they were planning, then we-the-people wouldn't be happy. However, it's enough to know that the end goal is for business to influence government to legislate in favour of wealth.


Noam Chomsky believes in a progressive tax with the rich paying more
Noam Chomsky believes in a progressive tax with the rich paying more | Source

The idea of lower taxes for the super rich

When the top 62 people of the world own half the world’s wealth, it is unlikely that they arrived at that level of wealth in an ethical way. There is no way that anyone can earn that much money without overcharging for product, underpaying labour, or inherited it. People who own that much money are still people. As people, they are part of the human race and they have just as much of a social obligation (social contract) to pay their share.

The idea that the rich will invest in more business, employ more people, pay them higher wages, and that everybody will benefit has been shown to be fictional. The very rich spend their immense wealth on pleasure or put it in foundations for their kids.

I believe that in order for humanity to function well, this wealth needs to be spread more evenly amongst all the people of the earth. One way of doing this is to legislate that business pays up to 90% of its profits in tax. These high tax rates should continue until wealth has been more equitably distributed amongst all people, and until laws are passed which ensure that goods are charged according to what they cost to produce and salaries and wages are paid according to a standardized ratio.

By this I mean that CEOs are not permitted to be paid more than ten or twenty times the salary of the least senior position in the corporation. It is a fact of life that Basque, a province in Spain, is the most prosperous area in Europe. This has come about as a result of Mondragon which pays its CEOs five times what the person at the bottom of the company earns.

In addition, there should be a tax on all luxury goods sold, with the exception of food and homes under a certain price. The more expensive/luxurious the product, the more tax is paid. This means that people with more money will pay most of the tax, and that is the way it should be.

Capitalism is a system of unequal exchange in which workers are paid less than they are worth and owners are paid more than they are worth."

Thomas Piketty - Tax the super rich 80%

Smaller governments vs bigger governments

The idea that a smaller government will mean that government spending will spend less is naïve. It really doesn’t matter whether a government is small or large. What matters is that it is a local government, not a centralized government, and that the government is effective in carrying out its duties and that corruption is easy to expose. Power should be at the local level. Also all citizens should be given access to the ‘books.’ What the ‘government’ spends should be transparent to the last penny.

Central government vs local government

Do you want to live in a society were some are massively rich while others are a lot more poor?

See results

Duties and obligations of any government

People elect governments into power to look after the things that are collectively required for the community to function well. In a modern world, these include infrastructure (roads and bridges), public transport (planes, trains, buses), energy preferably green energy at this stage), communications (phones, internet, radio), medical facilities (health), education and free availability of all knowledge/skills, the rule of law (police and legislation), emergency services (provision for disasters), and safety from invaders (military).

Wherever government oversteps those parameters, they are no longer serving the people. Where they omit to provide those functions, they are also no longer serving the people.

Government and the private sector cannot mix. When they do, government becomes the tool of business. This has happened in both the UK and the USA. They are both now run by corporations (oligarchies). This is fascism.

Running a government like a business does not work, and it never can.

Kerry-Anne Mendoza, a well known blogger about this topic, has written an article in the Guardian. In it, she gives similar reasons to my own as to why it is a bad idea. However, she mentions other ideas as well, and it's worth a read. To quote from her... "One of the greatest myths of our time is that public services can be made more efficient if we run them as businesses. The commercialisation of our public services has been a manifest failure, and the response offered by the mainstream parties is that we simply haven’t commercialised them enough."

She has also written a book entitled "The Demolition of the Welfare State and the Rise of the Zombie Economy, published by New Internationalist" and it is well worth the read for those who are still of the opinion that businessmen have what it takes to make a government function well.

Wealth in the hands of the few

Awhile ago, there was a report from a recognized organisation (Oxfam and Credit Suisse) that half of the worlds wealth was held by only 80 people. Remember Forbes top 400 richest? Well, every single one of them is a billionaire. And remember, that is not taking into consideration the richest man in the world - Carlos Slim Helú from Mexico! So, let's say that if the top 80 people own half the world's wealth, it's fair to say that the top 400 own about 806 of the world's wealth.

It's difficult to grasp just how much money that is. Imagine the value of all your possessions and add it to the possessions of everybody in your street. How much is that? Then add everybody's wealth in your suburb. How much money is that? Then add everybody's wealth in your city. How much money is that. Visualise that. Then realize that even if your city has a million people, the top eighty people have the same amount of wealth as 3.2 billion people.

Most of these people are modern 'robber barons.' They obtained their wealth by underpaying labour/workers and overcharging for goods. That way the wealth just gravitated upwards. It was only the Unions that gave a brief bit of prosperity to most people. When Reagan and Thatcher killed the Unions, there was nothing to prevent a small number of people obtaining most of the world's wealth.

Now let me ask you a question. Just who should be paying tax? The people who own 80% of the world's wealth (under a 1000 people, I should hazard) or the other 7.billion who, collectively own 20% of the world's wealth?

© 2015 Tessa Schlesinger


Submit a Comment
  • TessSchlesinger profile imageAUTHOR

    Tessa Schlesinger 

    3 years ago from South Africa

    Sue Adams, and that is why business should never be allowed to influence government. It never used to be like that. This is explained in the article, i.e. Bilderberg Organization was created in order ensure that business could influence government.

  • Sue Adams profile image

    Juliette Kando FI Chor 

    3 years ago from Andalusia

    Re "The goals of government is to keep people and situations peaceful, ergo governments and the private sector are in conflict at this area. Therefore nothing good is to be achieved by government being influenced by business."

    But governments do not seem at all to be in conflict with business. Governments are the biggest arms dealers, like Britain selling arms to Saudi Arabia.

  • Buildreps profile image


    4 years ago from Europe

    Great Hub about this irreversible tendency to privatize. I fully agree with your point of views. Governments started to privatize in order to cut costs. The people are now increasingly at the mercy of businesses. That businesses are doing things more efficient is correct to a limited extend. Businesses also have the tendency to grow and become more complex, and therefore more expensive. Nothing actually got cheaper. Most utility contracts became only trickier.

  • profile image


    4 years ago

    This has been one of the greatest crimes of the century. The amount of National wealth built at the hands of the tax payers and sold to the wealthy is a huge crime. During this sell off, how is it that we are in debt worst then ever. We should have made huge profits and erased are debt but we our more in debt then before. Every time I upgrade my electronics to reduce energy consumption, why does it never reduce my bill? You will never save money if a for profits company is managing the national commodities that all people are dependent on. The desire to make more is always greater then public interest and the commodity they use is no longer a publicly owned commodity.

  • pagesvoice profile image

    Dennis L. Page 

    4 years ago from New York/Pennsylvania border

    The definition of insanity is doing the same thing over and over and expecting different results. We have tried 'trickle down economics' and it simply does't work for the bottom 99%. However, 1% are growing their wealth at lightning speed, under the guise of being the 'job creators' when in reality they have only contributed to wage stagnation.

  • profile image

    Howard Schneider 

    4 years ago from Parsippany, New Jersey

    You are absolutely correct, Tess. Some Conservatives kneel at the altar of private enterprise and believe government is always evil. But private companies only look for profits not the public good. That is why public functions need to be publicly run. Excellent Hub.


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