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Privatization: United States
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Hungary has maintained the longest privatization program of any of the East European countries. Hungary began its tendency toward reform in the New Economic Mechanism of 1968. Janusz Jankowlak describes the privatization process prior to 1989 as "wildcat privatization," with limited state control. According to Jankowlak, the privatization under the communist regime did not result in more effective capital investment or the creation of a market infrastructure. However, he stresses that the program produced extensive corruption. The communists allowed for "spontaneous privatization," whereby the company directors negotiated the sale of the company to domestic or foreign buyers.
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Those who oppose prison privatization make the case that the industry has the incentive and the wherewithal to extend the amount of time convicts will remain in prison, and that this presents a threat to justice. The industry, they say, can extend sentences in two ways. First, it has thrown its influence, through lobbying and campaign contributions, behind “tougher” laws such as "three strikes", mandatory minimum sentencing, and "truth in sentencing" that increase the duration of sentences. The conservative American Legislative Exchange Council (ALEC) has been extremely active in advocating truth-in-sentencing and three strikes policies throughout the United States. This organization is heavily funded by the corrections industry, and indeed ALEC's Criminal Justice Task Force is co-chaired by Brad Wiggins, a former director of business development for the Corrections Corporation of America (Bender, 2000). The strength of these kinds of political influence, opponents fear, will only increase as the industry grows.
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Hardly any African country does not now have some kind of privatization programme. Even such countries as Liberia and Sierra Leone, which have been devastated by war, have either begun to privatize some enterprises or plan to when security conditions improve. Rwanda, still trying to recover from the genocide of 1994, has a very active privatization programme. It finalized 11 sales in a three-month period in 1998 alone. Namibia is one of the very few with no plans to privatize, largely because its state enterprises are generally operating at a profit.
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National Power's position in the industry is a legacy of the comparative status it inherited with privatization. The undisputed leader of the industry, National Power provided nearly half the electricity supplied in England and Wales via its 40 power stations, boasting an aggregate Declared Net Capacity or Capability (DNC) of 29,486MW (a megawatt here is defined as the generating capacity of a power station in any given half hour). Its smaller rival PowerGen, in second place, had 18,764MW DNC. Nuclear Electric's figure was 8,357MW, the National Grid Company controlled 2,088MW, and British Nuclear Fuels PLC, the United Kingdom Atomic Energy Authority, and small independent generators together accounted for about 2,900MW. Another, though limited, source was provided by linkages with the Scottish and French electricity systems, with which import or export deals were sometimes agreed. National Power and PowerGen between them ... controlled 78 percent of the electricity market in England and Wales, of which about 46 percent was held by National Power, with the majority of the rest controlled by Nuclear Electric.
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After more than a decade of privatization, the government decided to reverse course under the new Labour government of Tony Blair, in an attempt to address the pensioner poverty which persisted under privatization. The guaranteed minimum benefit (now the Pension Guarantee Credit) as well as the government earnings-related pension (formerly SERPS, now "S2P") were increased. A new Savings Credit was ... instituted to ensure that the minimum income guarantee wouldn't act as a disincentive to private saving. In addition, many of the workers who contracted out during privatization's heyday are being encouraged to return to the state system.
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In the short-term, privatization can cause tremendous social upheaval, as privatizations are nearly always accompanied by large layoffs. If a small firm is privatized in a large economy, the effect may be negligible. If a single large firm or many small firms are privatized at once, a whole nation's economy may plunge into despair. For example, in the Soviet Union, many state industries were often not even value adding, with cost of inputs exceeding the cost of outputs. After privatization, sixteen percent of the workforce became unemployed in both East Germany and Poland. The social consequences of this process have been horrendous, impoverishing millions, but to little social benefit in many post-Communist countries.
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