THE ETHICS OF PRIVATIZATION: PART 2

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So we got some good feed back from our last post The Ethics Of Privatization: Part 1, so I wanted to bring the second rendition while the topic is still hot. I wont be back in my home office for another couple days, because I am in the middle of doing some traveling, but I am feeling inspired and don’t want to lose momentum with this topic. I’m actually coming to you live from a limousine in Phoenix AZ, but I think I can still maintain my flow while were driving. I’ve got about an hour till I arrive at the airport so hopefully I can drop this second chapter here quickly…Hope you enjoy!

Escape from the Commons

The Public commons, the space in which people share and interact amongst one-another has historically been a place of great significance and importance. It has served as the place of our ancestor’s homes, their work, their relationships, and essentially all that encompassed their life. However, technology and development has given rise to new concepts and theories in regards to the space we share. Increasing populations and migration, has put pressure on people to delineate the land that we share, and define ownership; which has been the viable alternative to cooperative living. Though there are still indigenous cultures that adhere to the tribe mentality of ownership, and other modern Co-op initiatives, the paradigm of the commons being shared is mostly dead.

More recently, over the past century has been an emphasis on the state and its ability to govern the land and the activities that take place upon it. The state in many parts of the world has been developed almost as a parent, in charge of keeping the people safe, nurtured, and civil with one another. It has come to govern the commerce, national security, and the well being of its citizens through its many institutions and services. Obviously some parents have done a better job than others but overall the intent to further the well being of societies across the globe has been successful.

Much of the reasoning that has propelled this adoption of the state, and private ownership has been sponsored by the ideas of theorists like Thomas Hobbes, and the idea of the political community. Since man was seen to be able to perform incredible feats collectively, there was an early effort to coordinate these collective efforts. This unification of people, and cooperative efforts was thought to maximize opportunity for the collective society, as well as the individuals of society. Without this cooperation, and collective efforts (which came to be known as the State), man was believed to be subject to a constant “war of all against all.” The potential of mans resources, health, and safety would be limited, since there was no coordination and cooperation between all members of society. To realize the full potential of mans collective efforts, it became apparent that some sort of trust and cooperation would be needed. The ideas of Hobbes and earlier theorists set the stage for social contracts between individuals, and governing bodies that would oversee the collective interests of the commons.

Nationalize

Throughout history societies have been formulating these social contracts between one-another and erecting governments to oversee them. These formations have proven to be effective at coordinating the collective efforts of many societies, and establishing strategies for prosperity. Though they all serve the same overall function, the ownership and role of government varies between regions, and may be much more pronounced in one region relative to another. Some governments own most of the means of production, and GDP contributing industries in a region (North Korea), where as other states own considerably less. Much of the government ownership has ties with political and ideological afflictions of the society, and generally corresponds to the ideals of the national agenda. If a country is undergoing economic difficulties and the people desire resurgence into the global economy, than you can often expect increased government influence and control over the local economy and local industries.

By seizing the reins, an affirmative government has the ability to make considerable improvements to a country, but generally comes at the expense of less societal input by the public. This causes governments to emphasis certain industries by offering tax deductions, subsidies and other governmental investments into promising industries. Sometimes the government will go beyond supporting certain industries with incentives, but will actually acquire ownership of the industry. This process of obtaining control or ownership of these industries by the national government is formally known as nationalizing.

Government control can go beyond simply nationalizing specific industries, but has also taken the shape of full government control over the entire economy (communism), and has even led to political and social control by governments in many instances throughout history. Though there has been success with strong government control, such as the resurgence of national economies, most notably with the recent rise of China, it is however, often coupled with negative consequences such as corruption and authoritarianism. Throughout the years there has been countless failures of these strong government led economies (i.e. Soviet Union), which has contributed immensely to the modern support of liberalized capital markets. In China specifically, there has been an immense amount of recent scandals surfacing that has highlighted the risk of letting a small handful of people control the operations of such a large economy.

Bo Xilia, a former communist party leader has recently been charged with corruption, as he and his family used countless millions of the governments money to travel the world, and treating themselves to many luxuries. The scandal came to a crashing holt when Bo Xilia’s wife, Gu Kailai, was convicted of murder on British businessman Neil Heywood, a man who sought to expose the family’s corruption. Scandals such as this leave many people around the world skeptical of excessive government control, and the lack of transparency and accountability it has been known to offer. By seizing control of industries such as telecommunications and media, governments such as China have the ability to sensor societies exposure to the truth, and propagate propaganda as they wish. Similar scandalous cases in North Korea and the Middle East have added to the modern economic paradigm that is paranoid by the thought of excessive governments, and faithful in the potential of the free market.   

As I will elaborate on in future posts, this support for reduced government control in countries like the U.S. has helped to promote privatization, and the further diminishing of government control. The verdict is not yet out on whether privatization is good or bad for a country, but I will highlight some instances that will really make you question the ethics of privatization overall. Keep an eye out for the third installment. 

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