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A common thread among the Republican presidential hopefuls is a call for privatization. Conservatives believe there is simply too much federal government and it's failing to adequately fill the needs of the public. As an alternative, they are suggesting many services be moved to the private sector, where corporations will be incentivized to compete, thereby driving down the cost to the consumer.
In recent decades, there have been some major shifts to privatization in certain industries. In the UK, for instance, the government sold British Airways and British Petroleum to private buyers in the 1980s. In 2004, the Student Loan Marketing Association (more commonly known as Sallie Mae) shifted over to the private sector after being operated as a government-run program. In both cases, the objective was to cut costs while increasing efficiency. Private corporations are not as stringently regulated as government entities, making it easier to adjust to the demands of the market.
However, critics say privatization comes at a major cost. If programs like Social Security or Medicare were put into the hands of a private corporation, they may stray away from public benefit and more toward corporate profit. Private companies ultimately answer to their shareholders so, while they may be able to more quickly react to a shifting economy, they may also compromise their services in favor of boosting profits. This is particularly concerning when discussing programs like Social Security and Medicare, which serve particularly vulnerable communities like seniors and the poor.
As with many factors in the upcoming election, it ultimately comes down to different visions of the federal government. Should the government impose oversight to ensure compliance and fairness? Or should there be a large free market to provide certain services to the public?
Lessons Learned From The Privatization of Sallie Mae (treasury.gov)
"On December 29, 2004, in a ceremony at the U.S. Treasury Department, the Student Loan Marketing Association (SLMA), a government-sponsored enterprise or GSE, ceased to exist."
Delaying the inevitable: Political stalemate and the U.S. Postal Service (brookings.edu)
"The U.S. Postal Service (USPS) was created more than 200 years ago and may be the country's oldest continuously operating business."
Should the Postal Service be sold to save it? (washingtonpost.com)
"The U.S. Postal Service, which has been losing customers for almost a decade, is still struggling to right itself."