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Privatization: A Dirty Word or Not?


Terry O'Flynn.

Where do you stand on privatization? Did that question bother you?

The mere mention of privatization puts people’s hackles up. Typically, you have adamant supporters of privatization, or you have adamant defenders of public services. But the entire linguistic structure of that statement suggests that privatization works like the public service’s opponent. It isn’t a lingual error, though, and that’s the core problem inherent in the social system from which both private and public services have emerged.

In the 1980s, Margaret Thatcher began introducing privatization into the U.K. That’s also when it made its way into the Canadian economy. Then-Prime Minister Brian Mulroney’s PC government advocated for the privatization of Canada’s Crown corporations and for privatization within the health care sector. However, privatization actually has an earlier (and slightly darker) beginning. Its roots reach back to the 1930s, when the Nazi regime began efforts to de-nationalize sectors of the German economy.

While privatization seems to be an ominous, powerful, and threatening force looming over public services, it was also created as a means to relieve the burden on a public sphere that was struggling to keep up to the demand of its service requirements. It was specifically introduced to Canada as a method of cutting federal spending while stimulating economic growth and allowing industrial competition to better regulate service costs and prices. Many believe that there isn’t enough transparency within the management of public services, and that privatization can lead to better economic management.

In business it is easy to identify the supplier and the consumer. In the public sector, however, it’s not as clear. For example, taxpayers that demand a balanced budget and less government spending also do not want money taken from services such as schools and medical care. Can we cut government spending without directly affecting the public services that have a big impact on our everyday life? Not if we don’t try.

The value of a service is based on the expectations of the end consumer, but costs must be monitored and controlled so there is a profit or service result. Whether you are for privatization or not, the fact remains: competition affects profit margins and improves products and services – and privatization drives competition.

The opposition remains concerned that the structure of privatization is too profit-driven, and that its focus on profits prevents it from managing the tensions that arise over conflicting objectives—like when the pursuit of financial rewards undermines public policy goals. Further, many find it concerning that privatization of vital services could ultimately mean that an individual’s ability to access those services could become based on an individual’s means to pay.

But, personally, I find that this debate is more problematic than whether or not privatization or public services are in themselves effectual. The biggest issue is that it’s difficult to have these conversations when both sides are unwilling to consider at any other options, including a blended option that sees a co-existence of both structures.

Right now, the biggest roadblock is the refusal to consider an opinion outside of ones’ own. The only way to find resolution is to be open to ideas on both sides of the debate, whether that discussion results in solutions that are private, public, or that belong to something new entirely.