Who Said ‘Privatization’ Was a Bad Word?
January 31, 2014 - 12:30 pm
“Privatization” is a buzzword in politics that conjures up both hope and despair. Instead of being repelled by potential market failure, opponents of privatization should examine the widespread government failure seen in the status quo. Market failure is a possibility; current government failure is the reality. It’s critical to weigh potential market failure with potential government failure, not potential market failure with their intended desire for government success.
Privatization leads to lower state-owned debt, increases efficiency and effectiveness of services, and allows private investors to support innovative entrepreneurs. Anyone who’s been to the DMV will knows that private businesses serve customers more efficiently and kindly than government bureaus. The simply fact is that politically-motivated agencies are antiquated and unable to produce desirable results that citizens demand.
In an era when stimulating economic growth is needed and political shutdown occurs often, privatization accomplishes two major points. First, it opens up new markets for entrepreneurs. Second, it decreases state and federal budget deficits and debts. Privatization reduces the responsibilities for government; allowing policymakers to better focus on core responsibilities, such as national security.
One of the most egregious examples of politicization of a service which is wasteful and unable to adapt is mail delivery. The United States Postal Service employs an astounding 685,000 people and enjoys a legal monopoly over first class mail. Ted DeHaven from the Cato Institute writes, “The USPS is in deep financial trouble as a result of declining mail volume, bloated operating expenses, a costly and inflexible unionized workforce, and constant congressional meddling.” Due to these issues, the USPS has proposed ending Saturday delivery and closing locations. As technology continues to lower the total volume of mail the agency will only continue to post losses adding onto their $41 billion loss since 2006.
The solution is not ending Saturday delivery or closing locations, it’s allowing government to compete with entrepreneurs. New Zealand, Germany, Belgium, Britain, Finland, the Netherlands, Sweden, Malta, and Japan have all utilized full or partial privatization efforts for their mail delivery. Congress has vetoed potential changes to the structure of the agency and fight against privatization. It is time to bring America’s postal services with privatization, competition, and innovation.
Another unwarranted example of politicization is the ownership of more than 600 million acres of land in the western US. The Federal government, through the Department of the Interior, oversees about 28% of all US land valued at $919 billion. At a minimum, the Federal government could sell this land to the individual states which will lead to better, more localized management and use. At a maximum, the land could be sold to private organizations, non-profit conservation trusts, and other environmental organizations that are funded handsomely and supported by thousands of volunteers. Property should be managed locally, not by bureaucrats. The US should de-politicize these lands to help pay down the national debt and to give control to local states, conservation trusts, and environmental organizations.
Finally, the American air-traffic control system must be depoliticized for it to enter into the 21st century in regards to technology and efficiency. The Government Accountability Office considers the Federal Aviation Administration a “high-risk” agency for wasteful spending. Air-traffic is an example of unacceptable government failure that shouldn’t be subject to political infighting. The chaotic federal budget, overseen by irresponsible politicians, has no rule in business management. Congress has shown that budget shutdowns lead to furloughed air-traffic control officials and worsened airport congestion.
A recent report by the Hudson Institute found that the agency is mired in old technology and struggling to advance. Since the Federal Aviation Administration handles more than fifty million takeoffs and landings per year, it is time for the US to privatize its outdated air traffic control system. Entrepreneurs would manage the system better than bureaucrats directed by political officials. Canada privatized their air-traffic control in 1996 and their system, Nav Canada, is not subsidized but instead supported through user revenues. There is no reason why we should not follow in their footsteps and do the same.
The US is accepting mediocrity when state-run monopolies are sheltered from market competition. Politicizing an agency opens it up to the whims of political pressures and backroom deals, the selfishness of politicians aiming to get re-elected, the bureaucratization of huge federal government programs, and the thin-skin of politicians that can be captured easily by special interest groups. Those who resist privatization must present a case for why politicizing these agencies bodes well for the American public. These three agencies showcase reasons why government control wastes and mismanages finances while serving a mediocre product. It is time to privatize and de-politicize.
Matthew La Corte is a Young Voices Advocate studying political science and economics at Hofstra University in New York. Originally from Woodland Park, New Jersey, Matt has been published in the Passaic Valley Today and The Record.