ToryCorruption

Quora Answer : Why do governments privatize companies in the hope it will save money, when a properly-managed, government-owned entity is surely just as capable as yielding a healthy profit?

Oct 13, 2014

It's partly ideology : these governments genuinely believe in their souls that the private sector must perform better than government.

It's partly another kind of ideology : these governments don't really think that the government should be involved in this business for OTHER reasons (not based on performance but based on the idea that the government should be small).

It's partly political expedience : if you can get these nationalized industries off the books then you can show you've removed any costs associated with them and any liabilities (eg. pension payments to previous employees)

It's partly low-down political street-fighting : if you can sell shares in these assets to a wide proportion of the public, and they then make money when the shares go up, they're more likely to support you in the future.

It's partly genuine corruption : you have rich friends who want to have these assets and make money from them, and you're helping make that happen.

The irony is that the kind of governments who do this often talk about the incompetency of government, and the way it wastes public money. And then demonstrate the ultimate incompetence by throwing away huge amounts of public money through selling these publicly owned assets cheap.