Privatization Is a Process That Is Frequently

Privatization is a process that is frequently met in countries with developed market competition. It is used by governments in order to transfer some of the state owned assets or services to private investors. The process of privatization has its advantages and its disadvantages.

In my opinion the process of privatization should be viewed from extreme points-of-view. In other words, we should not view privatization as either good or bad. I think some business sectors should be privatized (Investopedia, 2013). This is the case of the telecommunications industry. If such industries are privatized, numerous providers and sellers will enter the market. The increased competition in such industries determines lower prices and more options for buyers. However, other sectors, like healthcare should not be privatized. This is because in such cases the government would not have any control on healthcare. Social security issues must be managed by the state.

The process of privatization seems like a good idea in most cases. In an article posted in the Financial Post, the author discusses the situation of Canada, where the state owns liquor retailing business, telecommunications, gamin and lottery units, electric utilities, insurances, and others (Financial Post, 2013). The issue in this case is not that these state owned enterprises are not profitable. The issue is that they are not profitable enough. Different analyses have revealed the fact that if privatized, these businesses can increase their profits. However, this does not seem to be a good enough reason for the Canadian government to privatize them. In my opinion, such businesses should be privatized because they could increase their profits, which means the income taxes collected by the government are likely to increase.

In addition to this, privatization can determine job losses. This is the case of UK, where the privatization of the coal and steel industries has impoverished important regions of the country. However, this does not mean that these industries should not have been privatized. This means that the government should have played a more important role in the process of privatization (Kirby, 2013). The UK government should have imposed strict conditions when privatizing such industry. The most important objective of privatization must be represented by job conservation.

Privatization advocates state that it determines freedom and choice. This is true in most cases. This can be observed in privatized industries where there numerous investors and competition is increased (Ravitch, 2013). But in the case of industries that become monopolies, there is little freedom and choice for customers. And because of privatization, governments cannot involve in regulating these industries.

In other words, privatization is a good thing mostly, but only it is kept within some limits. In the modern economy, it is important that governments privatize their state owned businesses. This increases competition on these markets, it reduces prices, it can create jobs in some industries, it increases the power of buyers, and it can help governments collect more taxes because companies' incomes in these industries increase. The limits of privatization are represented by the sectors that should not be privatized. This refers to healthcare and social security issues (Weizsacker et al., 2005). Therefore, governments should focus on privatizing the sectors that have been successfully privatized in other countries. It is important to understand how privatization can help improve productivity.