Calls for the privatization of public utilities like water and electricity are common. One too many blackouts and persistent dry taps can do that to someone. Still, it’s important to know that privatization is not the solution. In fact, governments have been known to play a long game of defunding the public sector so that the services deteriorate so much that calls for privatization begin to ring out. Here are just a few reasons why public utilities should remain public.
Reduced access to essential services
When public goods are privatized, they are often managed by private companies that are driven by profits rather than the public good. This can lead to reduced access to essential services for low-income and marginalized communities, with private companies prioritizing service to high-paying customers.
Higher prices
Private companies often claim to be more efficient than government-run organizations. What they are is able to generate profits where government-run services do not focus on profit generation. This profit focus can lead to higher prices for consumers, which can be a further burden for low-income households.
Reduced quality of services
In an effort to maximize profits, private companies have been known to cut corners on the quality of services they provide. This can lead to reduced reliability, safety, and quality of services like water and electricity. When it comes to something as critical as water, low quality is a matter of life and death.
Lack of accountability
When public goods are privatized, there is often less transparency and accountability. Private companies are not always subject to the same level of oversight and regulation as government-run organizations, which can make it difficult to hold them accountable for their actions. They are not accountable to citizens the way elected officials are.
Reduced public involvement
Public goods are often seen as a shared responsibility, and the privatization can lead to a reduction in public involvement and engagement in the management and oversight of essential services. This can lead to a lack of public input and oversight, which can be detrimental to the public good. Companies are essentially authoritarian outfits where only the views of the owners and shareholders count, cutting out the views of average users. This is incompatible with a free and democratic society.
Limited competition
Privatization of public goods may lead to monopolies and limited competition in the market, which can lead to higher prices, reduced quality of services, and lack of innovation. Companies thrive on eradicating competition and cannibalizing alternative options.
Propaganda in favour of privatization argues that private firms are more efficient and innovative. On innovation, it’s demonstrably false, most significant innovation is government funded from the internet to something as recent as the Covid-19 vaccine both funded by the US government, or more accurately US tax payers. The belief that private firms are markedly more efficient is also false. What they are is able to generate profit where governments focus on spending and meeting people’s needs. Generating money is not the metric of success when it comes to public goods. More importantly, the question must be asked, of what value is efficiency if people’s needs are not met? What’s the point if only people with money get access to the goods and services we all need to survive? Our focus must always be on meeting people’s needs. Always.
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