Sociology of Institutions week 5
Judt – Ill Fares of the Land: A Treatise on our Present Discontents
Prejudice privatizing 1: everyone benefits: the service improves, the state rids itself of an
inappropriate responsibility, investors profit, and the public sector makes a one-time gain from the
sale. On the face of it, then, privatization represents a retreat from dogmatic state-centered
preferences and a turn towards straightforwardly economic calculations.
Prejudice privatizing 2: in addition to the short-term cash benefits of privatization there was added
the hypothetical gain in initiative and efficiency.
What we have been watching is the steady shift of public responsibility onto the private sector to no
discernible (waarneembaar) collective advantage. Privatization is inefficient. For just this reason, such
public goods were inherently unattractive to private buyers unless offered at a steep discount. The
only reason that private investors are willing to purchase apparently inefficient public goods is
because the state eliminates or reduces their exposure to risk. The outcome has been the worst sort
of mixed economy: individual enterprise indefinitely underwritten by public funds.
The result is moral hazard. The popular cliché that the bloated banks which brought international
finance to its knees in 2008 were ‘too big to fail’ is of course infinitely extendable.
Curiously, this point escaped the eye of Friedrich Hayek. In his insistence that monopolistic industries
be left in private hands, he neglected to foresee the implications: since such vital national services
would never be allowed to collapse, they could take risks, misspend or misappropriate resources at
will, and always know that the government would pick up the tab.
Moral hazard even applies in the case of institutions and businesses whose operations are in
principle beneficial to the collectivity.
Bad results from privatizing:
- America
- New Zealand
- Contracting out the activity that someone has to regulate, that is why they ended up in
public hands in the first place. Now it is semiprivate and semipublic
Governments now increasingly farm out their responsibilities to private firms that offer to administer
them better than the state and at a savings. After the fall of the monarchy in France, it was widely
conceded that tax farming is absurdly inefficient. In the first place, it discredits the state, represented
in the popular mind by a grasping private profiteer. Secondly, it generates considerably less revenue
than a well-administered system of government collection, if only because of the profit margin
accruing to the private collector. And thirdly, you get disgruntled (ontevreden) taxpayers. The
problem we have created for ourselves is essentially comparable to that which faced the ancient
régime. In effect, privatization reverses a centuries-long process whereby the state took on things
that individuals could not or would not do.
What does it mean to those on the receiving end when everything from the local bus service to the
regional parole officer are now part of some private company which measures their performance
with exclusive reference to short-term profitability? In the first place, there is a negative welfare
impact. The result is an eviscerated (verwijdering van organen) society. As a consequence, the thick
mesh of social interaction and public goods has been reduced to a minimum, with nothing except
, authority and obedience binding the citizen to the state. This reduction of society to a thin
membrane of interaction between private individuals is presented today as the ambition of
libertarians and free marketeers. If there is nothing that binds us together as a community or society,
then we are utterly dependent upon the state. Governments that are too weak or discredited to act
through their citizens are more likely to seek their ends by other means.
By eviscerating public services and reducing them to a network of farmed-out private providers, we
have begun to dismantle the fabric of the state.
One striking consequence of the disintegration of the public sector has been an increased difficulty in
comprehending what we have in common with others. What is it that binds us together?
This problem highlights a misleading aspect of globalization. Young people are indeed in touch with
likeminded persons many thousands of miles away. But even if the students of Berkeley, Berlin and
Bangalore share a common set of interests, these do not translate into community. Space matters.
And politics is a function of space.
Until the late 19th century, government was simply the apparatus by which an inherited ruling class
exercised power. But little by little, the state took upon itself a multitude of tasks and responsibilities
hitherto in the hands of individuals or private agencies.
The Football League was always a single entity: ‘meritocracy’ in the sense that teams could rise or fall
through its various division according to their performance.
Indeed, visual representations of collective identity used to matter a lot. Rigid dress codes can indeed
enforce authority and suppress individuality – an army uniform is intended to do just that. But in
their time, uniforms – whether worn by schoolchildren, mailmen, train conductors or street-crossing
wardens – bespoke a certain egalitarianism.
The idea of national space has been replaced by international competition nderwritten by
ephermeral foreign funders, their coffers recouped from commercial exploitation of players recruited
from afar and unlikely to remain in place very long. London’s taxis, once famous for their efficient
design and the astonishing local knowledge of their drivers, now come in myriad colors.
What exactly is a ‘gated community’ and why does it matter?ther term denotes people who have
gathered together into affluent subdivision of suburbs and cities and fondly suppose themselves
functionally independent of the rest of society. Today, they are everywhere: a token of ‘standing’, a
shameless acknowledgment of the desire to separate oneself from other members of society, and a
formal recognition of the state’s inability or unwillingness to impose its authority across a uniform
public space. A moment’s reflection reveals the contradiction of such parasitic communities-within-
the-community.
If public good are devalued, diminished in the eyes of citizens and replaced by private services
available against cash, then we lose the sense that common interests and common needs ought to
trump private preferences and individual advantage.
But how long will it be before we import such criteria into our domestic arrangements? In an age
when young people are encouraged to maximize self-interest and self-advancement, the grounds for
altruism or even good behavior become obscured. What can furnish a younger generation with a
sense of purpose beyond its own short-term advantage?
