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Friday, October 28, 2005

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Stormy

An interesting paper. To balance Gary’s quotation, I would counter with the following from Working Paper 6, “Winners and Losers and the distributional impact of privatization”—same authors:

“We review the increasing (but still uneven) literature and conclude that most privatization programs appear to have worsened the distribution of assets and income, at least in the short run.”

Furthermore, I would question the assertion within the book that there is a necessary tradeoff between equity and efficiency, between social justice and privatization.

Efficiency is not always the handmaiden of privatization; nor is equity necessarily the brother of public ownership. This kind of simplistic formulation makes no allowance for the role of regulation or for the role of government to tax profits for the public good.

If privatization is efficient, it is curious to note that the authors place the U.S. high on efficiency (see Working Paper 6). Gary’s description of the U.S. as the Enron nation does not exactly denote a high measure of efficiency, a description I find particularly apt given our current state of affairs.

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