Privatization also helps reduce the size of the government to a manageable level. The government has various responsibilities and duties to its citizens. With many public agencies, the government may not be in a position to offer good services to its citizens. Privatizing reduces the load of the government and helps it to concentrate on provision of the most essential services. Another advantage that may accrue following privatization initiative is that this would lead to increased competition which in turn would lead to improved quality of goods and services and a decrease in prices.
Most of the public administrations or programs are monopolized by the government hindering new entrants to the market. Privatizing monopolized institutions or programs would help entrepreneurs to enter the market thus creating fair competition in the market. Competition leads to improvement of quality as well as a reduction of prices for consumers (Pierce & Blackburn, 2003). Cons One of the potential disadvantages of privatizing public programs is that this may lead to a reduction in public accountability.
As mentioned earlier, private sector is not subjected to public scrutiny and leaves little room of ensuring public accountability. Private sector is less regulated by government agencies and as such, the public would have no access to financial and service records that are maintained by the owner or provider of the services. There could also be variations provided services to the public. Contracts with the private sector may become undesirable for the government and the only remedy available for the state is to terminate the contract.
In cases where the contractor is a sole provider or in cases where disruptions of services cannot be tolerated, termination of the contract is not possible. Lack of public accountability and limitation of government intervention in privatized entities makes privatization undesirable (Vanalandingham, 1999). Service quality problems are also another disadvantage that may arise following privatization of the public agencies.
The main aim of the private sector and contractors is to reduce operating costs which may make them to “cut corners”. This may include creaming citizens or clients, that is, serving individuals who have fewer needs and also through use of lower and quality materials for equipment maintenance. Though in the short run this may reduce costs, such activities are very costly in the long run for the government as frequent equipment replacement may be required (Pierce & Blackburn, 2003).