Contributing Writers: Azad Ali, Tangerine Clarke,
George Alleyne, Nelson King, Vinette K. Pryce, Bert
Wilkinson, Lloyd Kam Williams
GENERAL INFORMATION (718) 260-2500
Caribbean L 10 ife, April 5–11, 2019 BQ
By Jomo Kwame
Sundaram
KUALA LUMPUR, Malaysia,
April 2, 2019 (IPS) —
In most cases of privatization,
some outcomes benefit
some, which serves
to legitimize the change.
Nevertheless, overall net
welfare improvements are
the exception, not the
rule.
Never is everyone better
off. Rather, some are
better off, while others are
not, and typically, many
are even worse off. The
partial gains are typically
high, or even negated by
overall costs, which may
be diffuse, and less directly
felt by losers.
Privatized
monopoly powers
Since many SOEs are
public monopolies, privatization
has typically
transformed them into
private monopolies. In
turn, abuse of such market
monopoly power enables
more rents and corporate
profits.
As corporate profits are
the private sector’s yardstick
of success, privatized
monopolies are likely
to abuse their market
power to maximize rents
for themselves. Thus, privatization
tends to burden
the public, e.g., if charges
are raised.
In most cases, privatization
has not closed the
governments’ fiscal deficits,
and may even worsen
budgetary problems. Privatization
may worsen the
fiscal situation due to loss
of revenue from privatized
SOEs, or tax evasion by
the new privatized entity.
Options for cross-subsidization,
e.g., to broaden
coverage are reduced as
the government is usually
left with unprofitable
activities while the
potentially profitable is
acquired by the private
sector. Thus, governments
are often forced to cut
essential public services.
In most cases, profitable
SOEs were privatized
as prospective private
owners are driven to
maximize profits. Fiscal
deficits have often been
exacerbated as new private
owners use creative
accounting to avoid tax,
secure tax credits and
subsidies, and maximize
retained earnings.
Meanwhile, governments
lose vital revenue
sources due to privatization
if SOEs are profitable,
and are often obliged
to subsidize privatized
monopolies to ensure the
poor and underserved still
have access to the privatized
utilities or services.
Privatization
burdens many
Privatization burdens
the public when charges
or fees are not reduced, or
when the services provided
are significantly reduced.
Thus, privatization often
burdens the public in different
ways, depending on
how market power is exercised
or abused.
Often, instead of trying
to provide a public good
to all, many are excluded
because it is not considered
commercially viable
or economic to serve them.
Consequently, privatization
may worsen overall
enterprise performance.
‘Value for money’ may go
down despite ostensible
improvements used to justify
higher user charges.
SOEs are widely presumed
to be more likely
to be inefficient. The most
profitable and potentially
profitable are typically the
first and most likely to
be privatized. This leaves
the rest of the public sector
even less profitable,
and thus considered more
inefficient, in turn justifying
further privatizations.
Efficiency elusive
It is often argued that
privatization is needed as
the government is inherently
inefficient and does
not know how to run enterprises
well. Incredibly, the
government is expected to
subsidize privatized SOEs,
which are presumed to be
more efficient, in order to
fulfil its obligations to the
citizenry.
Such obligations may
not involve direct payments
or transfers, but
rather, lucrative concessions
to the privatized
SOE. Thus, they may
well make far more from
these additional concessions
than the actual cost
of fulfilling government
By State Senator Roxanne J.
Persaud
State Senator Roxanne Persaud
(D-Canarsie, East New
York, Brownsville, Mill Basin,
Sheepshead Bay, Bergen Beach,
Marine Park, Flatlands, Mill
Island, Georgetown, Ocean
Hill, Starrett City) clarified her
position against a local constituent’s
criticism over her
opposition to marijuana legalization.
Earlier this week, Floyd
Jarvis, a 27-year resident of
Canarsie criticized Persaud
alongside Assemblywoman
Jaime Williams (D-Canarsie,
Georgetown, Mill Basin, Marine
Park, Bergen Beach and Gerritsen
Beach) in a KCP op-ed for a
recent video that depicted community
opposition to cannabis
regulation and taxation for
New Yorkers with 15 residents
visible in the social media posting.
Jarvis claimed, “15 residents
that appeared alongside
the elected officials at their
presser are in no way representative
of the larger district
that totals 150,000 and their
feelings concerning cannabis
regulation.” Jarvis claims that
the majority of the constituency
in the Assembly members’
district believe legalization will
decriminalize marijuana possession
amongst black and Latino
populations, particularly
amongst males who are disproportionately
arrested for the
schedule 1 narcotic amongst
any other ethnicity across the
city.
But Persaud said Jarvis mischaracterizes
her opposition
to marijuana legalization and
totally supports Jarvis’s push
for decriminalization.
“I extend my appreciation
towards constituent Floyd
Jarvis for participating in the
far-reaching discussion on cannabis
legalization and fighting
for those wrongfully imprisoned
on possession charges.
While I indeed do not agree
with legalizing recreational use
at this time, I want to reiterate
that I am in full support
of decriminalization — which
includes reviewing past cases
of New Yorkers currently incarcerated
for possessing marijuana,
as well as statewide legalization
of usage for medical
reasons,” said Persaud.
Persaud and AM Williams’
opposition to the Marijuana
Regulation and Taxation Act
(MRTA) include health and
safety quality of life issues. The
state lawmakers recently voiced
their concerns at a meeting of
the NAACP of Freeport Long
Island on Monday, March 19
citing health risks like how
dispensaries are magnets for
violent and serious crime.
Williams also went on to note
at the meeting that the known
health risks of secondhand
exposure to cigarette smoke
OP-EDS
Privatization often
burdens the public
in different ways,
depending on how
market power
is exercised or
abused
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Continued on Page 12
Continued on Page 12
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Has privatization
benefitted the public?
Persaud responds to
local constituent’s
criticism
/schnepsmedia.com