Monthly Archives: February 2013

My View on Privatization of Public Services

Recently, I had an argument with a best friend regarding privatization of public services.

His arguments:

  1. The government should only be the controller but not the implementer.
  2. The government should put up the quality of service (QoS) for the private company to follow.
  3. The government should strictly monitor the private company and take action (fines or terminate the contract) if the QoS is not met.
  4. Privatization promotes competition and brings better services to the public.

I did not agree but could not really justify why not.  After days of thinking and reading, I come out with the following:

  1. It’s good for an organization (e.g. government) to be small so that it can be efficient.  However, there can be many ministries (can be seen as individual organizations) within the government.  If a private company (also an organization) can be efficient, why not a ministry?
  2. Privatization is capitalization.  The aim is to maximize the money earned.  It is not a sin to make money however public necessities like water and sanitation (and probably electricity and transportation infrastructure) should be accessible to the public free of charge (FOC) or at a minimal cost.  Totally opposite of maximizing profit.
  3. A market needs competition to trigger the improvement in the QoS and keep the price reasonable.  Water and sanitation (and probably electricity and transportation infrastructure) is a natural monopoly.  There is simply no competition available.

Privatization may be better in some area but not all, especially for those public necessities or services.  Also, I don’t think any government embracing privatization will ever do so to their military forces.



  1. 政府只应扮演监督的角色。列出服务标准和指南,确保私营公司严格遵守。任何的违规必须给予罚款惩戒,甚至是终止合约。
  2. 缩小政府的规模(只监督而非执行)可提升办事效率。政府要管的事情已经很多了。
  3. 商界的竞争将可提升服务素质,最终是人民得到好处。


  1. 政府里有许多部门。只要精简部门的架构,想提升办事效率绝对可能。私营公司不也和政府部门一样吗?若私营公司能办到,政府部门又怎么不行?
  2. 私营化是资本主义,目标是赚钱。我没说“赚钱”是错的,但有些公共服务如:水供、卫生,甚至是电力和交通基建,应该免费(或以最低价)提供给人民。这和“实现利润最大化”的资本主义是完全相反的。
  3. “竞争”是商业环境中提高服务素质、保持价钱合理的主要因素。水供、卫生,甚至是电力和交通基建并不存在竞争,私营公司获得绝对的垄断。