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Privatization and the World Trade Organization

Competence, efficiency and user-friendliness are in no way "natural" domains of private service providers. When the social consequences of privatization are considered, the private comes off as anything but good. Why should private investors maintain the long-term infrastructure?

By Latin American Information Service

[This editorial from: ila 281, December/January 2004/05 is translated from the German on the World Wide Web,  http://www.ila-bonn.de/archiv/28Inhalt.htm,]

Who has not experienced situations at the hospital, railway or post office where one thought one was a king/queen or customer? The bureaucratism, unfriendliness or incompetence of the personnel who often don't seem to know they offer services is annoying. You may think a powerful shot of privatization and "they" would not be working any more.

A recent report of a consumer union revealed that private insurance agents are miserably trained and usually don't even know what their customers really want to insure. According to the system logic, this isn't even necessary since sellers are focused on amounts. The legal health insurance in Germany has administrative costs of two percent. In many places in Latin America, private insurers pocket up to 40% of the contributions as "administrative costs".

It would be absurd to exonerate publi9c providers from all shortcomings or to deny the necessity of changes. Competence, efficiency and user-friendliness are in no way "natural" domains of private service providers. When the social consequences of privatization are considered, the private comes off as anything but good. Why should private investors be interested in maintaining the long-term infrastructure like the railroad network or pipeline systems? Higher profits arise when the costs for renovation are spared. If the canals or water mains rot, the investor always has the choice to let the "written-off" system go up in smoke and plant the saved investment capital in airline stocks, government bonds or in the completely privatized German pension insurance.

Whoever invests money wants to realize profit. Contrary to the -simplistic - neoliberal assertion that everyone wins when everyone can make the most of the system, only a few actually win. Where the weaker are protected, the stronger must be burdened. Thus whoever wants to have health care, reliable public transportation, secure energy supply or clean water for everyone must organize this in public responsibility.

In Latin America, public property has been sold off cheaply to private investors for more than two decades. The established political science always claims that neoliberal restructurings were tackled because the national development state and the concept of import-substituting industrialization failed. It sees its highest task in legitimating prevailing conditions. That these development concepts fell into a crisis is a reason for the radical opening of Latin American markets and national economies. To that end, bloody military dictatorships and the shattering of unions and leftist organizations representing very different social concepts for mastering the crisis of Latin American economies were needed in most countries. The Pinochets, Videlas, Banzers and Co. first made possible in Latin America what are described today as "necessary reforms".

How things run, partly violently and partly coordinated through gigantic propaganda campaigns was and is part of ila reporting. The privatization of state or communal property is described. People everywhere in Latin America do not simply accept this policy. Unions and social movements organize resistance against this, with contradictions and defeats and also considerable successes, particularly where they successfully make clear who will profit and who will lose from the so-called reforms.

What privatization in public necessities will inflict among us (in Germany) if we do not successfully resist can be seen very well in Latin America.


By Latin American Information Service

[This editorial published in: ila 265/May 2003 is translated from the German on the World Wide Web,  http://www.ila-bonn.de/archiv/265inhalt.htm.]

Ideology, a wise man from Trier said nearly one and a half centuries ago, is a "socially necessary phenomenon." Ideologies are often complicated and inscrutable so that being in error about the situation is almost inevitable.

Seen this way, the idea that the worldwide free trade regime is useful for organizing acceptable living conditions is a stubborn ideology. Its nonsense is very open. Nevertheless its followers cling to it like junkies to their substance. If it doesn't take effect any more, the dose must be increased.

When GATT, the General Agreement on Tariffs and Trade, was established in 1948, the tariffs worldwide amounted to an average 40 percent. After the founding of the World Trade organization (WTO), these tariffs fell to an average 4.6 percent. The world economy had a rapid upswing in the first two postwar decades. Many refer this back to the protective effect of the tariffs. Even if other reasons had priority, the tariffs were not damaging.

For more than two centuries, the living conditions of the majority of people have continuously deteriorated. The reduced protection through state economic policy has a high measure of responsibility.

We do not think state regulation serves capital and not people from the start. That would be an ideological view of things. Outwardly screened national economies also practice3 exploitation and strengthen the strong at the expense of the weak. However when weak national economies are exposed to the worldwide competition, they usually lose their whole foundation. Economic competition is not sports training where the strong sparring partner helps the weaker develop strength and experience. In the economy, competition is everything. The victor remains in the market; the inferior disappears.

If goods trade was central in the past, everything has become part of this murderous game. Everything is treated worldwide only under the aspect of the greatest possible profit: from senior benefits to tuition, from genetic design to drinking water, from medical assistance to energy for heating or cooking. Corporations and states are interested in a system of rules and contracts managed by the World Trade organization. Its statutes urge continuous redevelopment until all goods and services are subject to the WTO.

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