Privatization promotes collusion and corruption
By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia,
April 23, 2019 (IPS) — At the
risk of reiterating what should
be obvious, the question of
private or public ownership
is distinct from the issue of
competition or market forces.
Despite the misleading claim
that privatization promotes
competition, it is competition
policy, not privatization, that
promotes competition.
Privatization the
problem, not the
solution
Instead, privatization has
typically been accompanied by
collusion, which undermines
competitive pricing. Formal
and, more commonly, informal
collusion is rife. Informal collusion
is more likely among those
involved in public or transparent
bidding to provide privatized
or contracted-out services.
Transparent institutions and
arrangements, such as public
auctions and open, competitive
bidding for contracts,
have often been compromised
by secret, informal collusion.
Typically, those with political
connections and insider information
are better able to secure
lucrative contracts and such
other business opportunities.
Greater public transparency
and accountability were expected
to promote greater efficiency
in achieving the public interest
while limiting waste and borrowing.
But contrary to such
claims, privatization itself does
not ensure transparency and
accountability, or address corruption.
As it is rarely implemented
on an arm’s length
basis, it may also contribute to
other problems, including new
types of corruption.
Hence, privatization does
not enhance efficiency except
to augment profits. The public
sector can be more efficiently
run, as in some economies.
Hence, the challenge is
to ensure that the public sector
Contributing Writers: Azad Ali, Tangerine Clarke,
Nelson King, Vinette K. Pryce, Bert Wilkinson, Lloyd Kam
Williams
GENERAL INFORMATION (718) 260-2500
Guyanese diasporans prepare for nation’s independence celebrations
Caribbean L 10 ife, April 26–May 2, 2019 BQ
is better run. Greater public
accountability and a more
transparent public sector can
help ensure greater efficiency
in achieving the public and
national interest while limiting
public sector waste and borrowing.
Ascertain problems to
determine solutions
Correlation does not imply
causation. An enterprise may
be better run after privatization
due to managerial reforms,
behavioural changes or organizational
improvements. But
if such improvements could
have been achieved without
privatization, then one cannot
conclude that privatization is
needed to bring about desired
reforms.
It is important to consider
the organizational and managerial
reforms, including incentive
changes, which might
be desirable to achieve superior
outcomes. One should not
assume that privatization is the
answer regardless of the question
or the problem at hand.
After all, many SOEs were
set up precisely because the
private sector was believed to
be unable or unwilling to provide
certain services or goods.
In many instances, the problems
of an SOE are not due to
ownership per se, but rather to
the absence of explicit, feasible
or achievable objectives, or the
existence of too many, often
contradictory goals.
In other cases, poor managerial
and organizational
systems, blocking flexibility,
autonomy and needed reforms,
as well as cultures supportive of
them, may be the key problem.
Such reforms may well achieve
desired objectives and goals, or
even do better, at lower cost,
thus proving to be the superior
option.
Many SOEs have undoubtedly
proven to be problematic
and inefficient. However, privatization
has not proved to be
the universal panacea for the
myriad problems of the public
sector it has been touted as. As
such, the superior option cannot
be presumed a priori, but
should instead be the outcome
of careful consideration of the
nature and roots of an organization’s
malaise.
SOE reform or
government
procurement often
superior
SOE reform is often a superior
option for a variety of reasons
although there are no ‘one
size fits all’ solutions regardless
of circumstances. Problems
need to be analysed in
context and solutions cannot
be assumed a priori.
It would be erroneous to presume
that public ownership is
always a problem. There may
be other problems which are
not going to go away without
properly identifying and resolving
them.
Desirable changes, resulting
in improved performance
and outcomes, may take place
following the privatization of
a particular SOE. But even
this does not mean that privatization
per se is responsible
for these improvements
unless state ownership itself
has blocked needed changes, in
which case there may well be
compelling cases for privatization
in such situations.
Another alternative, of
course, is government or public
procurement. Generally, public
private partnerships (PPPs)
are much costlier than government
procurement. With a
competent government, government
procurement is generally
more efficient and much
cheaper.
Yet, international trade and
investment agreements are
eroding the rights of governments
to pursue government
procurement. With a competent
government and an incorruptible
civil service, and competent
accountable consultants
doing good work, efficient
government procurement has
generally proved far more costeffective
than PPP alternatives.
OP-ED
LETTERS TO THE EDITOR are welcome from all readers. They should be addressed care of this newspaper to the Editor,
Caribbean-Life Publications, 1 MetroTech Center North, Brooklyn, New York 11201, or sent via e-mail to caribbeanlife@
schnepsmedia.com. All letters, including those submitted via e-mail, MUST be signed and the individual’s verifiable address
and telephone number included. Note that the address and telephone number will NOT be published and the name will
be published or withheld on request. No unsigned letters can be accepted for publication. The editor reserves the right to
edit all submissions.
Founded 1990 • Published by Brooklyn Courier Life LLC
Corporate Headquarters: One Metrotech Center North, Suite 1001, Brooklyn, NY 11201
PRESIDENT & PUBLISHER: Victoria Schneps-Yunis
CEO & CO-PUBLISHER: Joshua Schneps
ASSOCIATE PUBLISHER: Ralph D’Onofrio
EDITOR EMERITUS: Kenton Kirby
ASSOCIATE EDITOR: Kevin Williams
This newspaper is not responsible for typographical errors in ads beyond the cost of the space occupied
by the error. All rights reserved. Copyright© 2019 by Brooklyn Courier Life LLC. Caribbean
Life is protected by Federal copyright law. Each issue of Caribbean Life is registered with the Library
of Congress, Washington, D.C. The Caribbean Life, its advertisements, articles and photographs, may
not be reproduced, either in whole or part, without permission in writing from the publisher except
brief portions for purposes of review or commentary consistent with the law.
Force (GPF) and Guyanese-
Americans in US law enforcement
and the US military.
The joint military and law
enforcement officers will
also conduct the Flag Raising
ceremony. Ten GDF officers
and two police officers
will travel to New York to
represent the Joint Services
of Guyana at the celebration,
GICCNY said.
It said Guyana government
officials who have been invited
include Prime Minister
Moses Nagamootoo, Minister
of Health Volda Lawrence,
Minister of Public Infrastructure,
David Patterson,
Minister in the Ministry of
Natural Resources, Simona
Broomes, Minister of Public
Affairs Dawn Hastings-
Williams, Georgetown Mayor
Ubraj Narine and Director of
Sports, Christopher Jones.
Artistes who are scheduled
to perform include Guyana’s
reigning Calypso King
“Mighty Believer,” Kenroy
Fraser; Guyanese-American
hip-hop artiste Lia Givenchy;
Stichy, the One Man Band;
Carib Soca Monarch Brandon
Hardin; Chutney Monarch
and runner-up Soca Monarch
Steven Ramphal; third
place Soca Monarch runnerup
Vintage; Trevon VibeZ;
Adrian Dutchin; Chutney
legend Terry Gadraj; former
two-time Calypso Monarch
Diana Chapman; and Guyanese
American rapper Kelsy
More.
Others are: Gospel artistes
Saiku and Jeremiah; dancer
Jonnel Shury; reggae artiste
Omaje; dancehall artiste Jory;
and artiste Blaze Anthonio.
GICCNY said all performers
will be accompanied by
Angel Caribbean Band and
DJ Mix Master Tony.
The event will be hosted
by radio personality Malcolm
Ferreira, Dr. Rose October
and comedian Trey Sancho,
GICCNY said.
It said organizations, businesses,
groups or individuals
who are interested in participating
in the celebration,
placing trucks or floats on
the parade, or in vending,
may contact the Committee
at www.celebrateguyanainnyc.
com, or call 929-263-
2556.
Continued from Page 3
/www.celebrateguyanain-nyc.com
/www.celebrateguyanain-nyc.com
/www.celebrateguyanain-nyc.com
/schnepsmedia.com