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Issues > Free Markets > Privatization



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Privatization means operations and services that are provided by inefficient, inept, or even corrupt government agencies are sold or provided by private companies under contract to the government. In most cases, privatization leads to lower costs, better services, and greater innovation and customer responsiveness.

Privatizing government-owned companies can also generate funds for government to pursue other priorities. In recent times in the U.S. the federal government sold Conrail, a freight railroad, for $1.7 billion, and the company producing fuel for nuclear power plants, U.S. Enrichment Corporation, was sold for more than $3 billion.

Current government operations including Amtrak and the air traffic control system could be privatized, along significant real-estate holdings that can be sold. Prisons can be owned and operated by private companies under contract to the government. According to the Office of Management and Budget, about half of all federal employees perform tasks that are not “inherently governmental” – almost all of these should be targeted for some form of privatization.

Privatization has many benefits to the public, including reduction of the budget deficit, allowing government to focus on core functions like national defense and policing, and greater economic growth through the opening of new opportunities for the private sector.


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