Limits to Privatization: How to Avoid Too Much of a Good Thing - A Report to the Club of Rome

429 Pages·2005·2.555 MB·English

by  Marianne Beishem (editor), Oran R Young (editor), Ernst Ulrich von Weizsacker (editor), Matthias Finger (editor)

Limits to Privatization
How to Avoid too Much of a Good Thing
A Report to the Club of Rome
Edited by
Ernst Ulrich von Weizsäcker
Oran R. Young
Matthias Finger
With
Marianne Beisheim
London • Sterling, VA
First published by Earthscan in the UK and USA in 2005
Copyright © Ernst Ulrich von Weizsäcker, Oran R. Young and Matthias Finger, 2005
All rights reserved
ISBN:1-84407-177-4 hardback
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Printed and bound in the UK by Cromwell Press Ltd
Cover design by Andrew Corbett
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Library of Congress Cataloging-in-Publication Data
Limits to privatization : how to avoid too much of a good thing : a report to the
Club of Rome / edited by Ernst Ulrich von Weizsäcker, Oran R. Young, Matthias
Finger.
p. cm.
Includes bibliographical references and index.
ISBN 1-84407-177-4 (hardback)
1. Privatization. I. Weizsäcker, Ernst U. von (Ernst Ulrich), 1939- II. Young,
Oran R. III. Finger, Matthias.
HD3850.L56 2005
338.9'25--dc22
2004025170
This book is printed on elemental chlorine free paper
Contents
List of Figures viii
List of Boxes xi
Foreword by the President of the Club of Rome
Prince El Hassan Bin Talal xii
Preface Ernst Ulrich von Weizsäcker, Oran R. Young and
Matthias Finger xiv
Editors’ Acknowledgements xvi
PART I INTRODUCTION
Limits to PrivatizationErnst Ulrich von Weizsäcker,
Oran R. Young, Matthias Finger 3
PART II PRIVATIZATION IN MANY SECTORS: CASE
STUDIES AND SNAPSHOTS
Initial remarksOran R. Young 15
NATURAL RESOURCES AND RELATED INDUSTRIES
Water
Solving water-supply problems in Bolivia: Beyond Cochabamba
Ralf Südhoff 17
A ‘Waterl’eau’ in Grenoble, France Martin Stürmer 21
Manila: A success story turned sour Dörte Bernhardt 25
Thames Water Utilities Limited, UK Matthias Finger and
Roger Levett 27
Water privatization in Tanzania: Mixed results Jürgen Scheffran 31
Budapest sewage works: Partial privatization of a Central
European utility Alexander Juras and Todd Schenk 34
Management success at Rostock, Germany
Ernst Ulrich von Weizsäcker 39
iv LIMITS TO PRIVATIZATION
Metals and Cement
Privatization of the mining sector in Zambia: The case of Zambia
Consolidated Copper Mines (ZCCM) Brenda Mofya and
Brighton Lubansa 41
Saving Sidex Galati steel mills in Romania Black Sea University
Foundation 46
Union Miniere Pirdop Copper, Bulgaria: A case of privatization
and the environment Alexander Juras and Todd Schenk 47
Other Resources
The fight against patents on the neem tree Vandana Shiva and
Ruth Brand 51
The basmati patent Ruth Brand 55
Privatizing nature: Plundering biodiversity Aziz Choudry 58
Private forests in Germany Ernst Ulrich von Weizsäcker 61
NETWORK INDUSTRIES
Energy
Enron: Unregulated master of influence Matthias Finger 65
The price to pay for deregulation of electricity supply in
California Ruth Brand and Jürgen Scheffran 66
Telecommunication and Postal Services
Telecommunications in Mexico, Uruguay and Argentina:
A tale of contrasts Jochen Boekhoff 72
Privatization of telecommunication in Japan Thomas Thümmel
and Max Thümmel 76
Privatization in outer space: Lessons from Landsat and beyond
Jürgen Scheffran 79
TPG Post: a Dutch privatization success Matthias Finger 84
Transportation
British Rail Martin Weidauer 87
Economics of transport and privatization Felix R. FitzRoy 92
Japanese National Railways Martin Weidauer 93
Regionalization as part of rail restructuring in Germany
Martin Weidauer 96
Privatization of the transport sector in Argentina Tim Gürtler 98
Air New Zealand Diwata Olalia Hunziker 102
Skyguide: A case of corporatization Matthias Finger 104
OTHER SERVICES
Waste Disposal
No time to waste: How to avoid too much of a bad thing
(Germany, Malaysia) Raimund Bleischwitz and Akira Proske 108
CONTENTS v
Insurance
Abolishing property insurance monopolies in Germany
Thomas von Ungern-Sternberg 114
Culture and Media
Privatization of Italian cultural heritage Roland Benedikter 118
The Salzburg Festival: An example of public responsibility and
private money Raffaela Kluge 122
The global media monsters: Private media dominate the world’s
public sphere Du˘san Relji´c 124
Health
Partial privatization of healthcare in Chile Olaf Rotthaus 130
Healthcare in the US Kai Senf 134
Healthcare reform in Zambia Brighton Lubansa and Brenda Mofya 137
Pharmaceutical research and development for neglected diseases:
Market failures and the case of sleeping sickness Tobias Luppe 140
Education
Education in Chile Ernst Hillebrand 145
Community-managed basic education in Guatemala: A solution
for the poor? Sabine Speiser 147
The increasing privatization of universities in Tanzania
Verdiana G. Masanja and Michael von Hauff 151
Pensions
A weak spot in the US private pension system Beate Klein 156
The Swiss three-pillar pension system Geneviève Reday-Mulvey 159
Police and Security
‘Rent a soldier’: The privatization of security and war and the
case of mercenary companies in Africa Thomas Thümmel,
Fabian Fechner and Jürgen Scheffran 162
Privatization of police services in Frankfurt, Germany
Tonia Sophie Müller and Simon Stähler 165
Private prisons in the US John Züchner 169
PART III PRIVATIZATION IN CONTEXT
Initial remarks Oran R. Young 173
The General Context
Post-war history: The ups and downs of the public sector
Ernst Ulrich von Weizsäcker 175
The global context: Privatization in a globalizing world
Oran R. Young 190
vi LIMITS TO PRIVATIZATION
The Regional Context
Privatization in G7 countries Matthias Finger 201
Privatization in Latin America Jorge A. Schiavon 207
Liberalization of services: Experiences of African consumers
Nessie R. Golakai 212
No limits? Privatization in Central and Eastern Europe Zsolt Boda 215
Privatization in South Asia Joachim Betz 222
Special Issues
Essential services: Shifting the burden of proof Tim Kessler and
Nancy Alexander 228
Privatization of the infrastructures Matthias Finger 235
The top public service transnational corporations Matthias Finger 239
How GATS (General Agreement on Trade in Services)
jeopardizes essential services Nancy Alexander and Timothy Kessler 246
Privatization and development Andreas Obser 252
Privatization and corruption Frédéric Boehm, Juanita Olaya and
Jaime Polanco 263
Employment impacts of privatization Rolph van der Hoeven and
Hella Hoppe 267
Women’s rights under privatization: The example of Bulgaria,
Poland, Russia and the Ukraine Anne Zollner 271
Environmental impacts of privatization Ernst Ulrich von Weizsäcker 278
Does privatization provide the right choice of choice?
Observations from the UK Roger Levett 282
PART IV GOVERNANCE OF PRIVATIZATION
Initial remarks Oran R. Young 289
Regulation Matthias Finger 291
Example: Water privatization working for the poor – first dos
and don’ts of regulation Ralf Südhoff 298
Example: Accountability instead of privatization – The Parana
(Brazil) school performance report cards Alcyone Vasconcelos
and Simon Schwartzman 304
Privatization and Municipal Democracy Nele Schneidereit and
Ernst Ulrich von Weizsäcker 307
Financing Global Public Goods: Challenges Inge Kaul 311
Example: Private funding of infrastructure in developing
countries Peter Wolff 318
CONTENTS vii
Escaping Pernicious Dualism: Civil Society between the
State and the Firm Teodor Shanin and Ernst Ulrich von Weizsäcker 325
Private Governance: Private Rules for Privatization?
Marianne Beisheim 328
Example: The ‘CSR navigator’ Björn Stigson and Margaret Flaherty 334
‘Co-evolution’ between State Regulation and the Private
Sector Raimund Bleischwitz 341
PART V CONCLUSION
Lessons Learned from Privatization Ernst Ulrich von Weizsäcker,
Oran R. Young, Matthias Finger and Marianne Beisheim 351
About the Editors and Authors 363
Notes 369
List of Acronyms and Abbreviations 378
References 383
Index 407
List of Figures
1 The public–private continuum 7
2 Schematic overview illustrating different mixes of public and
private activities 8
3 Four possible combinations of ownership and regulation 10
4 Techniques for overcharging used by Suez 22
5 Prices and investments from fully private to fully public operation
in Grenoble 23
6 How operating results diverged from assumptions made during
the bidding process 28
7 Length of Budapest sewage network and proportion of sewage
treated 38
8 Cumulative redundancies following privatization of Zambia
Consolidated Copper Mines 44
9 Neem tree fruits 52
10 Protest against neem tree fungicides extract patents in front of
the European Patent Office (EPO), Munich 53
11 International patent applications on genetically modified plants
per year 59
12 Net revenues or losses for West German public and (large)
private forests 63
13 Prices on the wholesale electricity market for California 68
14 Number of main telephone lines in Mexico 74
15 Uruguay’s lead over Argentina in telephone lines per
100 inhabitants 75
16 Private phones costlier 76
17 Revenue from telecom services per invested US$ 76
18 Entering new ground: Dennis Tito, the first space tourist 82
19 Different forms of railway structure in Japan, the UK and
Germany 89
20 Rail fatality rates in the EU and the UK 91
21 The Japanese Shinkansen train 94
22 Increase of premium levels for property insurance in selected
German regions, 1992–1998 116
23 Palazzo Correr, Venice (16th century) 120
24 Breakdown of budget sources for the Salzburg Festival (2003) 123
LIST OF FIGURES ix
25 The seven leaders of the global media industry, 2003 127
26 Health insurance coverage in Chile, by household income, 1998 132
27 The US spends a higher proportion of GDP on health than any
other country 134
28 Research and development spending on health care in the US 141
29 Lack of research and development for tropical diseases 142
30 Incidence of sleeping sickness over time 143
31 A community school in Guatemala 147
32 Numbers of tertiary education institutions in Tanzania 153
33 The development of added security in Germany 166
34 Imprisoned people in the US 169
35 World stock markets – here the Dow Jones index – soared
during the 1990s 176
36 Inflation is worldwide at its lowest level since the 1960s 176
37 The rise of the internet; measured by the number of internet
hosts worldwide 177
38 Occurrences of the term ‘Globalisierung’ (globalization) in a
German newspaper 178
39 The expansion of communism after World War II 180
40 The post-war situation until the 1970s: The state is dominant,
but business is happy 182
41 Average corporate tax rates in OECD countries 185
42 Globalization has caused the (international) private sector to
dominate over the state and public sector 186
43 World trade and foreign direct investment (FDI) 191
44 Growing inequalities 193
45 Atmospheric CO concentrations 194
2
46 Species extinctions since 1800 194
47 Decreasing production of chlorofluorocarbons 196
48 Value of assets privatized in G7 countries, 1990–2000 202
49 Percentage of population disapproving of privatization 209
50 Cumulative revenues from privatization during the 1990s as a
percentage of GDP 210
51 Costs and benefits of privatization in Latin America 211
52 Electricity costs as a percentage of monthly income in Zambia 214
53 Distribution of enterprise assets between privatization methods
in selected Central and Eastern European countries, up to 1998 219
54 Proceeds from privatization in India, Sri Lanka and Pakistan 223
55 Potential for unbundling and competition in different
infrastructure sectors 237
56 Top public service TNCs 243
57 Sales revenues from privatization worldwide 253
58 Public enterprises’ activity as a percentage of GDP 254
59 The historical reality about global growth rates 268
60 Liberalization of the network industries and the need for
re-regulation 292