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Privatization: United States
built 642 days ago
During 1990, when the country shifted from a state economy into a free market economy, state property privatization vouchers were given to every citizen of Mongolia. The employees of Erdenet mining industry expected the privatization of the industry. In turn they took what they thought to be an advantage of privatization and placed their privatization vouchers in the “Erdenest” brokerage company. But during this time the Government issued a resolution to expel the Erdenet industry from the list of state enterprises that were going to be privatized. According to the TV program the industry employees still have not gotten any profits from the vouchers and even do not know whether the brokerage company is still saving them or has sold them all off. The TV journalist tried to clarify if the brokerage company sold the vouchers without the consent of the owners which would violate the rights of employees.
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Despite the fact that these corporations have lobbied hard with the U.S. Conference of Mayors, all is not going smoothly in their privatization plans. Atlanta, Georgia cancelled its 20-year contract with Suez/United Water –the biggest such contract in the U.S. — after just three years due to poor performance. Neighborhoods in Lawrence MA, primarily Spanish speaking, successfully organized to keep United Water out. And local businesspeople in Lexington KY have mobilized to buy their utility back now that RWE is the owner. Meanwhile the local union in Indianapolis is fighting to keep United Water from cutting workers’ pensions in order to show corporate profitability.
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A new trading market was devised with the privatization scheme for bulk sales of electricity from generators to distributors--the pool. A rather complicated pricing procedure existed in the pool: each generating station offered a quote for each half hour of the day, based on an elaborate set of criteria including the operating costs of that particular plant, the time of day, the expected demand for electricity, and the available capacity of the station. The NGC arranged these quotes in a merit order and made the decisions regarding when to call each plant into operation. The pool system was not relied upon exclusively... the generators frequently made contractual arrangements with distributors for a specified period of time as a means of mutual protection against fluctuations in the pool price.
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The basic economic argument given for privatization is that governments have few incentives to ensure that the enterprises they own are well run. One problem is the lack of comparison in state monopolies. It is difficult to know if an enterprise is efficient or not without competitors to compare against. Another is that the central government administration, and the voters who elect them, have difficulty evaluating the efficiency of numerous and very different enterprises. A private owner, often specializing and gaining great knowledge about a certain industrial sector, can evaluate and then reward or punish the management in much fewer enterprises much more efficiently. Also, governments can raise money by taxation or simply printing money should revenues be insufficient, unlike a private owner.
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The last form of privatization is "load-shedding," whereby the government steps aside entirely. The consumer is responsible for deciding whether or not to make use of the service, the selection of the provider, and all payments for the service. Load-shedding is most often associated with trash collection. An extreme example of load-shedding... is the privately owned section of Route 91 in California. Tolls for traveling this stretch of road range from 60 cents at night to $3.20 during peak rush hours. There are of course alternate routes maintained by state and local road commissions for drivers wishing to avoid the toll.
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This news release contains forward-looking statements relating to the proposed privatization of BCE, legal proceedings related thereto and other statements that are not historical facts. Such forward-looking statements are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events. As a result, you are cautioned not to place undue reliance on these forward-looking statements.
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