From what ive read, consumers are definitely not the beneficiaries in such arrangements. Why do governments do this then? Why give up ownership and control of vital stuff (e.g. water, utilities, highways, etc.) to private – and often – foreign entities?
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If a government decides that a public service is costing too much Or is inefficient, they will sell it to a private company to run. The government may regulate how the service is run, but it’s up to the private company to make a profit to run the service.
Because governments typically employ union members, their labor costs can be higher. It’s also more difficult to fire poor performing employees. Government services typically end up management heavy with middle managers needed to manage another layer of middle management.
By privatizing, taxes can go down because government no longer has the payroll, benefit, and pension liability.
All this is the argument for privatizing public services. Once that happens, profit motivates the private company and prices typically get higher, while services get worse, and employees get exploited to extract more profit.
There are many examples in here of why privatization is a bad thing, but that doesn’t change the arguments governments use to justify it.
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