Limits to Privatization: How to Avoid Too Much of a Good Thing - A Report to the Club of Rome PDF
Preview Limits to Privatization: How to Avoid Too Much of a Good Thing - A Report to the Club of Rome
Limits to Privatization How to Avoid too Much of a Good Thing A Report to the Club of Rome Edited by Ernst Ulrich von Weizsäcker Oran R. Young Matthias Finger With Marianne Beisheim London • Sterling, VA First published by Earthscan in the UK and USA in 2005 Copyright © Ernst Ulrich von Weizsäcker, Oran R. Young and Matthias Finger, 2005 All rights reserved ISBN:1-84407-177-4 hardback Typesetting by MapSet Ltd, Gateshead, UK Printed and bound in the UK by Cromwell Press Ltd Cover design by Andrew Corbett For a full list of publications please contact: Earthscan 8–12 Camden High Street London, NW1 0JH, UK Tel: +44 (0)20 7387 8558 (main) Fax: +44 (0)20 7387 8998 Email: [email protected] Web: www.earthscan.co.uk 22883 Quicksilver Drive, Sterling, VA 20166-2012, USA Earthscan publishes in association with the International Institute for Environment and Development A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Limits to privatization : how to avoid too much of a good thing : a report to the Club of Rome / edited by Ernst Ulrich von Weizsäcker, Oran R. Young, Matthias Finger. p. cm. Includes bibliographical references and index. ISBN 1-84407-177-4 (hardback) 1. Privatization. I. Weizsäcker, Ernst U. von (Ernst Ulrich), 1939- II. Young, Oran R. III. Finger, Matthias. HD3850.L56 2005 338.9'25--dc22 2004025170 This book is printed on elemental chlorine free paper Contents List of Figures viii List of Boxes xi Foreword by the President of the Club of Rome Prince El Hassan Bin Talal xii Preface Ernst Ulrich von Weizsäcker, Oran R. Young and Matthias Finger xiv Editors’ Acknowledgements xvi PART I INTRODUCTION Limits to PrivatizationErnst Ulrich von Weizsäcker, Oran R. Young, Matthias Finger 3 PART II PRIVATIZATION IN MANY SECTORS: CASE STUDIES AND SNAPSHOTS Initial remarksOran R. Young 15 NATURAL RESOURCES AND RELATED INDUSTRIES Water Solving water-supply problems in Bolivia: Beyond Cochabamba Ralf Südhoff 17 A ‘Waterl’eau’ in Grenoble, France Martin Stürmer 21 Manila: A success story turned sour Dörte Bernhardt 25 Thames Water Utilities Limited, UK Matthias Finger and Roger Levett 27 Water privatization in Tanzania: Mixed results Jürgen Scheffran 31 Budapest sewage works: Partial privatization of a Central European utility Alexander Juras and Todd Schenk 34 Management success at Rostock, Germany Ernst Ulrich von Weizsäcker 39 iv LIMITS TO PRIVATIZATION Metals and Cement Privatization of the mining sector in Zambia: The case of Zambia Consolidated Copper Mines (ZCCM) Brenda Mofya and Brighton Lubansa 41 Saving Sidex Galati steel mills in Romania Black Sea University Foundation 46 Union Miniere Pirdop Copper, Bulgaria: A case of privatization and the environment Alexander Juras and Todd Schenk 47 Other Resources The fight against patents on the neem tree Vandana Shiva and Ruth Brand 51 The basmati patent Ruth Brand 55 Privatizing nature: Plundering biodiversity Aziz Choudry 58 Private forests in Germany Ernst Ulrich von Weizsäcker 61 NETWORK INDUSTRIES Energy Enron: Unregulated master of influence Matthias Finger 65 The price to pay for deregulation of electricity supply in California Ruth Brand and Jürgen Scheffran 66 Telecommunication and Postal Services Telecommunications in Mexico, Uruguay and Argentina: A tale of contrasts Jochen Boekhoff 72 Privatization of telecommunication in Japan Thomas Thümmel and Max Thümmel 76 Privatization in outer space: Lessons from Landsat and beyond Jürgen Scheffran 79 TPG Post: a Dutch privatization success Matthias Finger 84 Transportation British Rail Martin Weidauer 87 Economics of transport and privatization Felix R. FitzRoy 92 Japanese National Railways Martin Weidauer 93 Regionalization as part of rail restructuring in Germany Martin Weidauer 96 Privatization of the transport sector in Argentina Tim Gürtler 98 Air New Zealand Diwata Olalia Hunziker 102 Skyguide: A case of corporatization Matthias Finger 104 OTHER SERVICES Waste Disposal No time to waste: How to avoid too much of a bad thing (Germany, Malaysia) Raimund Bleischwitz and Akira Proske 108 CONTENTS v Insurance Abolishing property insurance monopolies in Germany Thomas von Ungern-Sternberg 114 Culture and Media Privatization of Italian cultural heritage Roland Benedikter 118 The Salzburg Festival: An example of public responsibility and private money Raffaela Kluge 122 The global media monsters: Private media dominate the world’s public sphere Du˘san Relji´c 124 Health Partial privatization of healthcare in Chile Olaf Rotthaus 130 Healthcare in the US Kai Senf 134 Healthcare reform in Zambia Brighton Lubansa and Brenda Mofya 137 Pharmaceutical research and development for neglected diseases: Market failures and the case of sleeping sickness Tobias Luppe 140 Education Education in Chile Ernst Hillebrand 145 Community-managed basic education in Guatemala: A solution for the poor? Sabine Speiser 147 The increasing privatization of universities in Tanzania Verdiana G. Masanja and Michael von Hauff 151 Pensions A weak spot in the US private pension system Beate Klein 156 The Swiss three-pillar pension system Geneviève Reday-Mulvey 159 Police and Security ‘Rent a soldier’: The privatization of security and war and the case of mercenary companies in Africa Thomas Thümmel, Fabian Fechner and Jürgen Scheffran 162 Privatization of police services in Frankfurt, Germany Tonia Sophie Müller and Simon Stähler 165 Private prisons in the US John Züchner 169 PART III PRIVATIZATION IN CONTEXT Initial remarks Oran R. Young 173 The General Context Post-war history: The ups and downs of the public sector Ernst Ulrich von Weizsäcker 175 The global context: Privatization in a globalizing world Oran R. Young 190 vi LIMITS TO PRIVATIZATION The Regional Context Privatization in G7 countries Matthias Finger 201 Privatization in Latin America Jorge A. Schiavon 207 Liberalization of services: Experiences of African consumers Nessie R. Golakai 212 No limits? Privatization in Central and Eastern Europe Zsolt Boda 215 Privatization in South Asia Joachim Betz 222 Special Issues Essential services: Shifting the burden of proof Tim Kessler and Nancy Alexander 228 Privatization of the infrastructures Matthias Finger 235 The top public service transnational corporations Matthias Finger 239 How GATS (General Agreement on Trade in Services) jeopardizes essential services Nancy Alexander and Timothy Kessler 246 Privatization and development Andreas Obser 252 Privatization and corruption Frédéric Boehm, Juanita Olaya and Jaime Polanco 263 Employment impacts of privatization Rolph van der Hoeven and Hella Hoppe 267 Women’s rights under privatization: The example of Bulgaria, Poland, Russia and the Ukraine Anne Zollner 271 Environmental impacts of privatization Ernst Ulrich von Weizsäcker 278 Does privatization provide the right choice of choice? Observations from the UK Roger Levett 282 PART IV GOVERNANCE OF PRIVATIZATION Initial remarks Oran R. Young 289 Regulation Matthias Finger 291 Example: Water privatization working for the poor – first dos and don’ts of regulation Ralf Südhoff 298 Example: Accountability instead of privatization – The Parana (Brazil) school performance report cards Alcyone Vasconcelos and Simon Schwartzman 304 Privatization and Municipal Democracy Nele Schneidereit and Ernst Ulrich von Weizsäcker 307 Financing Global Public Goods: Challenges Inge Kaul 311 Example: Private funding of infrastructure in developing countries Peter Wolff 318 CONTENTS vii Escaping Pernicious Dualism: Civil Society between the State and the Firm Teodor Shanin and Ernst Ulrich von Weizsäcker 325 Private Governance: Private Rules for Privatization? Marianne Beisheim 328 Example: The ‘CSR navigator’ Björn Stigson and Margaret Flaherty 334 ‘Co-evolution’ between State Regulation and the Private Sector Raimund Bleischwitz 341 PART V CONCLUSION Lessons Learned from Privatization Ernst Ulrich von Weizsäcker, Oran R. Young, Matthias Finger and Marianne Beisheim 351 About the Editors and Authors 363 Notes 369 List of Acronyms and Abbreviations 378 References 383 Index 407 List of Figures 1 The public–private continuum 7 2 Schematic overview illustrating different mixes of public and private activities 8 3 Four possible combinations of ownership and regulation 10 4 Techniques for overcharging used by Suez 22 5 Prices and investments from fully private to fully public operation in Grenoble 23 6 How operating results diverged from assumptions made during the bidding process 28 7 Length of Budapest sewage network and proportion of sewage treated 38 8 Cumulative redundancies following privatization of Zambia Consolidated Copper Mines 44 9 Neem tree fruits 52 10 Protest against neem tree fungicides extract patents in front of the European Patent Office (EPO), Munich 53 11 International patent applications on genetically modified plants per year 59 12 Net revenues or losses for West German public and (large) private forests 63 13 Prices on the wholesale electricity market for California 68 14 Number of main telephone lines in Mexico 74 15 Uruguay’s lead over Argentina in telephone lines per 100 inhabitants 75 16 Private phones costlier 76 17 Revenue from telecom services per invested US$ 76 18 Entering new ground: Dennis Tito, the first space tourist 82 19 Different forms of railway structure in Japan, the UK and Germany 89 20 Rail fatality rates in the EU and the UK 91 21 The Japanese Shinkansen train 94 22 Increase of premium levels for property insurance in selected German regions, 1992–1998 116 23 Palazzo Correr, Venice (16th century) 120 24 Breakdown of budget sources for the Salzburg Festival (2003) 123 LIST OF FIGURES ix 25 The seven leaders of the global media industry, 2003 127 26 Health insurance coverage in Chile, by household income, 1998 132 27 The US spends a higher proportion of GDP on health than any other country 134 28 Research and development spending on health care in the US 141 29 Lack of research and development for tropical diseases 142 30 Incidence of sleeping sickness over time 143 31 A community school in Guatemala 147 32 Numbers of tertiary education institutions in Tanzania 153 33 The development of added security in Germany 166 34 Imprisoned people in the US 169 35 World stock markets – here the Dow Jones index – soared during the 1990s 176 36 Inflation is worldwide at its lowest level since the 1960s 176 37 The rise of the internet; measured by the number of internet hosts worldwide 177 38 Occurrences of the term ‘Globalisierung’ (globalization) in a German newspaper 178 39 The expansion of communism after World War II 180 40 The post-war situation until the 1970s: The state is dominant, but business is happy 182 41 Average corporate tax rates in OECD countries 185 42 Globalization has caused the (international) private sector to dominate over the state and public sector 186 43 World trade and foreign direct investment (FDI) 191 44 Growing inequalities 193 45 Atmospheric CO concentrations 194 2 46 Species extinctions since 1800 194 47 Decreasing production of chlorofluorocarbons 196 48 Value of assets privatized in G7 countries, 1990–2000 202 49 Percentage of population disapproving of privatization 209 50 Cumulative revenues from privatization during the 1990s as a percentage of GDP 210 51 Costs and benefits of privatization in Latin America 211 52 Electricity costs as a percentage of monthly income in Zambia 214 53 Distribution of enterprise assets between privatization methods in selected Central and Eastern European countries, up to 1998 219 54 Proceeds from privatization in India, Sri Lanka and Pakistan 223 55 Potential for unbundling and competition in different infrastructure sectors 237 56 Top public service TNCs 243 57 Sales revenues from privatization worldwide 253 58 Public enterprises’ activity as a percentage of GDP 254 59 The historical reality about global growth rates 268 60 Liberalization of the network industries and the need for re-regulation 292
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