Privatization is not the answer – 09 Jan 2023

Financial pundits have been sharing half-truths to make a case for the neoliberal agenda, especially the privatization of state-owned entities. They distort facts and conceal information that can explain the poor performance of public-sector entities to justify the privatization of these organizations.

When these experts talk about the era of development and economic prosperity, they ignore geo-political factors, focusing solely on economic growth without paying any attention to the political situation of that time. This way, they draw false conclusions to plead their case before the people.

But before discussing this, it is equally important to highlight the following news. According to the UN, homicide seems a bigger threat to humans than terrorism. Almost half a million were killed in 2017 across the world, far surpassing the 89,000 killed in active armed conflicts and the 19,000 decimated in terrorist attacks.

The UN fears that if the homicide rate keeps climbing at the current rate of four per cent, Sustainable Development Goals 16 (SDG 16), which calls for significantly reducing all forms of violence and related death rates across the world, will not be met by 2030.

The UN says that organized crime and gang violence vary widely across regions. Countries in the Americas have the worst homicide rate by a wide margin, accounting for 37 per cent of the global total. This is in a region that accounts for only 13 per cent of the world’s population. Latin America and the Caribbean have the highest percentage of victims of homicide. It was 21.20 per cent in 2020. More than four countries from this region are among the top ten states with the highest crime rate in the world.

But, what’s the point of including these statistics here, which apparently have nothing to do with privatization and neoliberalism? The answer is clear: the region was one of the most liberal economic zones where the rapacious rules of free market economy were practised in the most naked and brutal form. This is the region where almost everything was left at the mercy of the market, plunging countries into chaos and economic turmoil. The region was historically a battleground for all capitalist countries that thrived on plantations and slavery which enriched Europe and North America.

Those who are justifying privatization must study the devastation caused by the neoliberal economic reforms that were introduced in Latin America, the Caribbean and Brazil. The Social Panorama 2022 report says that 201 million people (32.1 per cent of Latin America’s total population) live in poverty, with 82 million (13.1 per cent) of them in extreme poverty.

According to a book published in 2012, one in three families in Latin America and the Caribbean, or 59 million people, live in houses that are either unsuitable for habitation or built with poor materials and lack basic infrastructure services. As many as two million out of the three million households that spring up annually in Latin American cities are forced to settle in informal settlements, such as slums, because of insufficient supply of adequate and affordable housing.

According to Unicef, 90 million children – almost half of all minors – live in poverty in Latin America. The World Bank calculates that eight to 12 per cent of all children below the age of 18 are working or living in the streets – or both – in Honduras and Nicaragua. In Latin America and the Caribbean as a whole, 500,000 children under five die annually of preventable diseases, and almost four million children younger than five are malnourished.

It is safe to assume that to many economic pundits, these numbers might sound irrelevant. It seems as if they want to forget about the suffering across the world and assume that Pakistan is located in an isolated place where it does not have any neighbours or get affected by global politics and economy.

The question is: will those who want to introduce the neoliberal agenda to 220 million people share what miracles such economic plans demonstrated in the countries where they were practiced in their most naked form?

The ruling elite offers various excuses to get rid of state-owned entities. For instance, once I asked the late Benazir Bhutto why she insisted on implementing the neoliberal policy, which was against the ideology of her father, she said it was to repay external debts. One interesting fact is that when the structural adjustment programme was introduced – in 1982 and then in 1986 – Pakistan’s external debt was insignificant; today, it is over $100 billion. More than 167 state-run entities have already been privatized, but even then, the pile of loans is still getting taller and taller.

Another argument against such public entities is that they incur heavy losses annually. Now the question is: why did such entities not suffer any losses during the decade of the 1970s and 1980s? Isn’t it amusing that they started incurring losses after the ruling elite decided to follow the path of privatization and liberalization? All state-owned entities had their housing colonies, hospitals, and schools and colleges. They were earning surplus profits which enabled them to engage in such social welfare projects. So, it would not be illogical to say that they were deliberately pushed towards destruction and losses to justify their privatization. Naturally it is difficult to do so for a profit-making entity.

Also, the cause for such losses is also selectively stated. In most cases, overstaffing is said to be a leading factor leading of losses. In reality, it is conflict of interest that pushes these entities towards destruction. For example, the reason for Pakistan Steel Mills’ losses is not its workers. It was a dictator, Gen Zia, who refused to boost the productive capacity of the largest mill of the country despite repeated requests by the Soviet Union. Had the capacity been raised to two million ton a day, the mill would have been churning out profit, contributing to the prosperity of the country.

Supporters of private capital want to see the privatization of state organizations because every public entity owns thousands of acres of land or, in some cases, even tens of thousands. Since the 1980s, only real estate has flourished in the country, leading to deindustrialization. The current fever of privatization is to facilitate real estate.

The writer is a freelance journalist who can be reached at:

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