Privatization can be divided into two main types:
Direct privatization
When the state reduces the public sector directly, by selling public companies directly to private investors (the more common act of privatization. In recent years, you could hear in the media about the privatization of Bezeq, the banks, ICL, etc.) or transferring a function that was the responsibility of the public sector To be operated by entrepreneurs from the private sector (one of the examples of this is the attempt to privatize the prisons, which will be discussed later in the work).
Indirect privatization
When the state reduces the public sector indirectly by opening up to competition the sectors of the economy that until now have been dominated by a public monopoly, (for example, the landline telephone sector in Israel where additional players have been approved in addition to Bezeq and in the event that the government gives permission to a private operator to establish an electricity company that will compete with the government electricity company) . This type of privatization can also include the reduction of the public sector (indirectly) in a relative share in a certain industry thanks to the entry of private entrepreneurs into that industry (in Israel we can cite as an example the defense industry industry, where there are companies such as "Elbit Systems Ltd" that were founded privately ).
This work will mainly focus on the first type of privatization (reducing the public sector directly) since it is more common and depends more on the activities of the government.
The goals of privatization
Below is a summary of the main goals that the privatization was intended to achieve:
* Promotion of economic efficiency - a government company sees not only economic goals but also political goals and is influenced by political pressures. When the company becomes private, its agenda is focused only on economic goals and from this comes economic efficiency.
* Strengthening the function of the private sector in the economy and reducing the state's involvement in the economy (*These goals derive from a liberal economic outlook that sees the free market and private entrepreneurship as the necessary foundations for a healthy and strong economy.)
* Improving the financial strength of the public sector - as will be expanded later. A large public sector is cumbersome and inefficient and needs financial support from the government, which increases the public expenditure section with all that implies. When a public sector frees itself from losing companies that it is unable to manage effectively, it becomes stronger financially, less dependent on government support, which leads to a reduction in the public expenditure section of the budget.
* Creation of a developed capital market - the wave of privatization was done in many cases with the help of a wave of issuances on the local stock exchange, which expands the base of capital traded on that stock exchange and attracts new investors to it. processes but factors
* In the end, to increase trading cycles in the stock market and the development of the local capital market.
* Using the privatization funds for other purposes - funds received in exchange for a privatized company can be used by the government to achieve other goals, in the field of infrastructure (for example: building a new road) or social (for example: increasing allowances for Holocaust survivors).
The public's attitude to privatization:
Support or opposition to privatization is driven, among other things, by the individual's political views on economic and social issues. The position of those in favor of privatization can be deduced from the list of privatization goals presented in the chapter. Usually these are people from the right-social side of the political spectrum advocating a free market and individual entrepreneurship.
Most of the opponents of privatization are on the other side of the political spectrum (left-socialist, socialist) and their main claims against privatization are:
• Privatization harms workers' rights
• Privatization contributes to the expansion of inequality between individuals in the economy
• Privatized government companies are concentrated in a small number of private hands and continue to operate in a non-competitive manner.
• The government usually divests profitable companies and loses revenue in the long run.
In the following chapters, among other things, we will also focus on examining claims for and against privatization and drawing conclusions as a result.
Sources
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