Note - Public Ownership vs. Privatization

Note - Public Ownership vs. Privatization - WEEKS 8 81 9...

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WEEKS 8 81 9: PUBLIC OWNERSHIP VERSUS PRIVATIZATION (443- 46 4 by Diane Jurkowski, 2001 ( INTRODUCTION d*sgbO"tQd In response to the high costs of control and dlsll sionment with its effectiveness, governments are privatizing. Governments are getting out of t h e ' b i o s i n g of what amounts to trillions of dollars of assets. Everything is going - from steel plants and phone companies and electric utilities to airlines and railroads to hotels, restaurants and nightclubs. It is happening not only in the former Soviet Union, Eastern Europe and China, but also in Western Europe, Asia, Latin America, United States and Canada. Federal, state, provincial and city governments are turning many of their traditional activities over to the marketplace. In a para le rocess that is more far-reaching and less well understood, they are also overturning the regulatory a & a tus that has affected almost every aspect of daily life of governments for the last six decades. The objective is to move away from governmental control as a substitute for the market and toward reliance on competition in the marketplace as a more efficient way to protect the public. This shift does not, by any means, signal the end of government. Governments continue to spend as large a share of national income each year as the year before. The reason, in the industrial countries, like Canada, is social spending -transfer payments and entitlements- where government remains the solution of last resort for a host of Yet, the scope of government, the range of duties it takes on in the economy is decidedly governments are planning less, to own less and to regulate less, allowing instead the marketplace to expand. l & k The d m g of the state from "commanding heights" (as presented in a book entitled The commanding Heights by Daniel Yergin and Joseph Stanislaw, New York, Simon & Schuster, 1998) marks a great divide between the twentieth and twenty-first centuries. It is opening doors of many formerly closed countries to trade and investment, vastly increasing, in the process, the effective size of the global market. Many new jobs are being created. Still, it is capital and technology that, in this new mobile economy, easily move around the world in search of new opportunities and markets and more favourable business environments. Labour, which does not travel as easily, could be left behind. The result for workers is a double anxiety - about global competition and about the loss of the social safety net. Globalization, not more than a decade ago, has become the familiar description for the process'of integrating and internationalization of economic activities and strategies. A new reality is emerging. This is not a process t a condition - a globality, a world economy in which the traditional and familiar boundaries are being s;&& nted or made irrelevant. The end of the Soviet Union and communism has redrawn the map of world politics and subdued ideology as a dominating factor in international affairs. The growth of capital markets and the continued lowering of barriers to trade and investment are further tying markets together and promoting a freer flow of ideas. National companies are
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