Problems with Privatization

Debra Satz (Stanford University)

Privatization has its friends and foes. This mixed reception is largely because its consequences vary in different circumstances. However, I believe that the class of consequences that have been considered relevant is too narrow.  In brief, the literature and the debate have focused primarily  on two dimensions of the privatization decision: efficiency and accountability.  Proponents tend to stress the efficiency of privatization while critics flag the lack of accountability (and sometimes of efficiency).   But more than efficiency and accountability are at stake in the decision to privatize many publicly provided goods or publicly owned resources. Here, I make the case for considering two other aspects of privatization:  inequality and the erosion of important public purposes and public decision-making processes. I show that my analysis of privatization can shed light on two controversial cases: the privatization of education and of prisons.