Privatization

“ Needed improvements to personnel and administrative policy to create an environment conducive to privatization;
(4) Organizational and resource requirements necessary to implement successfully the privatization program; and
(5) Actions necessary to create broadbased support for privatization efforts.
(d) The Commission shall submit its findings and recommendations to the President and the Director of the Office of Management and Budget by March 1, 1988. Interim recommendations shall be transmitted to the Director for consideration in the formulation of the President's FY 1989 budget. ”

“ The government has pursued a moderate program of economic reform and privatization, resulting in a gradual lifting of state controls over economic activity and a shifting of assets into the private sector. Nevertheless, government control over key sectors of the economy remains strong. ”

“ Over time it has come to be used as shorthand for a neoliberal view of economic policy that puts its faith in deregulation, privatization, and the creation and defense of secure property rights as the cure for all ills. ”

“ Nothing in this order is in any way intended to limit any existing authority of the heads of executive departments and agencies to approve privatization proposals that are otherwise consistent with law. ”

“ The strategy includes improving the infrastructure, strengthening tax collection to bolster government revenues, furthering deregulation and privatization of the economy, enhancing the viability of the financial system, and increasing trade integration with the region. ”

“ Every extension of government activity into new fields restricts private enterprise in two ways: first by limiting the field for investment of private capital, and second, by possibly, if not probably, appropriating through taxation a part of the returns from private enterprise in all other fields. The question whether a government should manage an industry reduces itself to this: Are the deficiencies or evils connected with private management such that it is wise to give government officials the taxing power which constitutes the distinctive feature of public industrial management? ”

“ We decide, then, that it is for the public advantage at present that both the ownership and operation of manufacturing industries and of trade must remain in private hands. The next question is, will the greatest advantage to the public be secured by starting a crusade to re-establish competition and break up all existing monopolies in manufacturing and trade; or by taking the opposite course, legalizing monopolies and so regulating them by law that they shall be prevented from making undue profits by laying an exorbitant tax upon the public? ”

“ No just system, he avers, can properly exist so long as the rate of wages is fixed by free contract between the employer and laborer; therefore the only remedy is the nationalization of all the elements of production, land, tools, materials, and all existing appliances, which involves, of course, the destruction of the institution of private property. An obvious weakness in this scheme is the provision that the Government should determine what goods are to be produced, and that every one is bound to perform that work which is assigned by the state. ”

“ It is not wholesome doctrine for private corporations to imbibe, that they are independent of the power that creates them; and that they shall be protected in setting it at defiance. Not only are their franchises and other property subject to the taxing power of states; but, so far as the public interests are affected by the action of a corporation, so far those operations must be under the control of government, whose province and paramount duty it is to provide for the public welfare. ”

“ It is no part of the essential governmental functions of a state to provide means of transportation, supply artificial light, water, and the like. These objects are often accomplished through the medium of private corporations, and though the public may derive a benefit from such operations, the companies carrying on such enterprises are nevertheless private companies, whose business is prosecuted for private emolument and advantage. For the purpose of taxation they stand upon the same footing as other private corporations upon which special franchises have been conferred. ”

“ We hear much about quasi-public corporations, and public opinion has gone a long way in taking away from the owner of public-service corporations the right to manage his own property, to name his own rates or prices, to decide about his methods, and has imposed on him the responsibility of providing safe and adequate public service from his private means, but so far has exerted little influence upon the men who have to make the quasi-public corporation of use to the public. ”

“ The slight gain to the consumer, which he would obtain from a reduction in the rates charged by Public Service Corporations, is as nothing compared with his share in the ruin which would be brought about by denying to private property its just reward, thus unsettling values and destroying confidence. On the other hand, the companies to be regulated will find it to their lasting interest to furnish freely the information upon which a just regulation can be based. ”

“ For it links the omnipotence of the State to the limitations of private ownership; it thrusts the interests of private business into every legislature that grants charters or passes regulating acts; it diminishes, on the other hand, that stimulus to honesty and correct dealing which a private individual discerns to be his greatest asset in trade, for it replaces individual responsibility with group responsibility and scatters ownership among so large a number of persons that sinister manipulation is possible. ”

“ We wish to abolish the present unjust and wasteful system of ownership of railroads and telegraphs by private corporations—a system which, while failing to supply adequately public needs, impoverishes the farmer, oppresses the manufacturer, hampers the merchant, impedes travel and communication, and builds up enormous fortunes and corrupting monopolies that are becoming more powerful than the Government itself. For this system we would substitute Government ownership and control for the benefit of the whole people instead of private profit. ”

“ When it is remembered that their decisions were made in favor of corporations, and that their effect was to compel the people to contribute a part of their substance to help build up and strengthen monopolies, which have proved to be oppressive task-masters, we are justified in saying that the fundamental law of the land has been misinterpreted and the rights of the people sacrificed. We assert that no provision of the constitution can be shown that even indirectly authorizes taxation to aid in the construction of railroads owned by private corporations. ”

“ It is only a legitimate application of the principle that government should leave to private enterprise all matters connected with commerce and industry.
Little need be said to prove that a similar application of the principle of societism to our industrial system would result even more disastrously. As a general thing, the necessary formality and expense of administration when business is carried on by the government, causes the final cost of production to be much greater than under private management, even when conducted with all honesty. ”

“ If the national, state, or municipal government can in either of the above methods compel him to aid in building up and supporting private corporations, then private corporations are clothed with attributes of sovereignty, and all private citizens own and possess their property subject to the will of these corporations. ”

“ They are owned by private companies—are built and controlled by them; they are of public benefit, but not owned or controlled by the public or by the state, or local authority, as in the case of public highways. Their private owners can sell them, with all their franchises, rights, and privileges. The rules for their operation, rates of charges, and all other matters affecting their government, are exclusively under the control of the parties owning them. ”

“ It should not be forgotten that the agent of a private company is also a representative of that larger and more powerful corporation which we call the state. The private company can do no more than outline his duty and discharge him for dereliction; the public corporation not only prescribes his duty but imprisons or hangs him for neglect; the private company is itself but a creation of the state which exercises over it autocratic power while shirking responsibility. ”

“ Public industry does not have to meet the costs of lobbying and blackmail which are often forced upon private companies. But the greatest source of saving in public ownership is the value of monopoly privileges that, under private management, go into private pockets. ”

“ In that case the contract is the means employed for carrying into execution the powers of the government, and the contract alone, and not the contractor, is exempt from taxation or other interference by the State government.
But where the General government creates a corporation as a means of carrying out a national object, that corporation and its powers, property, and faculties, employed in accomplishing the service, are the instrumentalities by which the government effects its objects. ”

“ But organization by private hands,—the combination of industrial units into great trusts economizing management, production and distribution,—cannot safely be tolerated. It means the wielding of the chief power in the State by monopolists who will use their power for private ends. The era of private competition is closing. On every hand capital is combining with capital in restraint of competition. ”

“ Wherever the tendency in any particular industry continued to run in the direction of combination, and wherever the increasingly centralized control of that industry was associated with a practical monopoly of some mineral, land, or water rights, the government might be confronted by another instance of a natural monopoly, which it would be impolitic and dangerous to leave in private hands. In all such cases some system of public ownership and private operation should, if possible, be introduced. ”

“ It held that counties, towns, cities, and villages are political or municipal corporations which, from their nature, are subject to the unlimited control of the legislature; that corporations such as banking, insurance, manufacturing, and trading companies were private corporations, the private advantage of the corporators being the ultimate as well as the immediate object of their creation, and the resulting benefits to the public being merely incidental ”

“ The public has an interest in toll-bridges, plank roads, ferries, manufacturing companies, and many other enterprises prosecuted and controlled by private corporations and individuals—are these all so connected with the administration of the government as to be proper objects of compulsory contributions for their support? ”

“ Wo to whatever is inactive and unproductive, if it can be accused, on however slight a foundation, of resting upon monopoly and privilege! The rights of industry here have the precedence of all others, efface all others, and it is on this account, that, except in in the affair of public credit, in which the towns and States pique themselves on the most scrupulous exactness in fulfilling their engagements, in every dispute between the capitalists and the producer, the latter has almost always the better. ”

“ They should be done not in order to establish a single form of bureaucratic management, but in order to release the industry from the domination of proprietary interests, which, whatever the form of management, are not merely troublesome in detail but vicious in principle, because they divert it from the performance of function to the acquisition of gain. If at the same time private ownership is shaken, as recently it has been, by action on the part of particular groups of workers, so much the better. ”

“ But it is said, that if the doctrine contended for be not true, then every grant to a corporation becomes, ipso facto, a monopoly or exclusive privilege. The grant of a bank, or of an insurance company, or of a manufacturing company, becomes a monopoly, and excludes all injurious competition. ”

“ They rapidly name, in chronological order, the events that have been instrumental in bringing about the degradation of labor. There is the primal generator of universal distress—the private corporation—which operates with all the functions of an individual, yet is free from even the most ordinary obligations that are enforced upon the individual; from the private corporation has sprung the Trust, a consolidation of corporate bodies which intensifies the evils that exist under the former institution, and as an inevitable consequence of Trusts comes private Monopolies. ”

“ The rejection of a system of divided personal responsibility between public and private officials does not consequently bring with it necessarily the rejection of a system of public ownership, if not public operation; and if it can be demonstrated in the case of any particular class of corporations that its interest has become in any essential respect hostile to the public interest, a constructive industrial policy demands, not a partial, but a much more complete, shifting of the responsibility. ”

“ Where the industry is of such a kind, and in such a stage of development, that keen competition without undue waste survives, this public interest can commonly be secured by the enactment of restrictive legislation. Where such partial control is insufficient to secure the social interest against monopoly or waste, State management, upon a national, municipal, or such other scale as is economically advisable, must take the place of a private enterprise which is dangerous to society. ”