PRIVATIZATIION by Murray N. Rothbard
4 min readSep 16, 2019
Privatization
Murray N. Rothbard
Privatization” is a new in-term, on local, state, and federal
levels of government. Even functions that our civic text-
books tell us can only be performed by government, such as
prisons, are being accomplished successfully, and far more
efficiently, by private enterprise. For once, a fashionable con-
cept contains a great deal of sense.
Privatization is a great and important good in itself.
Another name for it is “desocialization.” Privatization is the
reversal of the deadly socialist process that had been pro-
ceeding unchecked for almost a century. It has the great vir-
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tue of taking resources from the coercive sector, the sector of
politicians and bureaucrats— in short, the non-producers—
and turning them over to the voluntary sector of creators and
producers. The more resources remain in the private, prod-
uctive sector, the less a deadweight of parasitism will burden
the producers and cripple the standard of living of consumers.
In a narrower sense, the private sector will always be more
efficient than the governmental because income in the private
sector is only a function of efficient service to the consumers.
The more efficient that service, the higher the income and
profits. In the government sector, in contrast, income is
unrelated to efficiency or service to the consumer. Income is
extracted coercively from the taxpayers (or, by inflation, from
the pockets of consumers). In the government sector, the
consumer is not someone to be served and courted; he or she
is an unwelcome “waster” of scarce resources owned or con-
trolled by the bureaucracy.
Anything and everything is fair game for privatization.
Socialists used to argue that all they wish to do is to convert
the entire economy to function like one huge Post Office. No
socialist would dare argue that today, so much of a disgrace is
the monopolized governmental Postal Service. One standard
argument is that the government “should only do what pri-
vate firms or citizens cannot do.” But what can’t they do?
Every good or service now supplied by government has, at
one time or another, been successfully supplied by private en-
terprise. Another argument is that some activities are “too
large” to be performed well by private enterprise. But the
capital market is enormous, and has successfully financed far
more expensive undertakings than most governmental activi-
ties. Besides the government has no capital of its own; every-
thing it has, it has taxed away from private producers.
Privatization is becoming politically popular now as a
means of financing the huge federal deficit. It is certainly true
that a deficit may be reduced not only by cutting expen-
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THE FREE MARKET READER
ditures and raising taxes, but also by selling assets to the pri-
vate sector. Those economists who have tried to justify defi-
cits by pointing to the growth of government assets backing
those deficits can now be requested to put up or shut up: in
other words, to start selling those assets as a way of bringing
the deficits down.
Fine. There is a huge amount of assets that have been
hoarded, for decades, by the federal government. Most of the
land of the Western states has been locked up by the federal
government and held permanently out of use. In effect, the
federal government has acted like a giant monopolist: perma-
nently keeping out of use an enormous amount of valuable
and productive assets: land, water, minerals, and forests. By
locking up assets, the federal government has been reducing
the productivity and the standard of living of every one of us.
It has also been acting as a giant land and natural resource
cartelist— artificially keeping up the prices of those resources
by withholding their supply. Productivity would rise, and
prices would fall, and the real income of all of us would
greatly increase, if government assets were privatized and
thereby allowed to enter the productive system.
Reduce the deficit by selling assets? Sure, let’s go full
steam. But let’s not insist on too high a price for these assets.
Sell, sell, at whatever the assets will bring. If the revenue is
not enough to end the deficit, sell yet again.
A few years ago, at an international gathering of free-
market economists, Sir Keith Joseph, Minister of Industry
and alleged free-market advocate in the Thatcher govern-
ment, was asked why the government, despite lip-service to
privatization, had taken no steps to privatize the steel indus-
try, which had been nationalized by the Labor government.
Sir Keith explained that the steel industry was losing money
in government hands, and “therefore” could not command a
price if put up for sale. At which point, one prominent free-
market American economist leaped to his feet, and shouted,
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263
waving a dollar bill in the air, “I hereby bid one dollar for the
British steel industry!”
Indeed. There is no such thing as no price. Even a bank-
rupt industry would sell, readily, for its plant and equipment
to be used by productive private firms.
And so even a low price should not stop the federal gov-
ernment in its quest to balance the budget by privatization.
Those dollars will mount up. Just give freedom and private
enterprise a chance.