As governments downsize, they often contract with private companies to perform what was once considered to be the traditional work of government. What are the advantages and disadvantages of privatizing jails, public schools, military aircraft maintenance, state welfare agencies, and state employment agencies?

Advantages of Privatization

1. Increased Efficiency of Public Services

2. Creation of competition

3. Job Creation

4. Lack of Political Interference

5. Sale and Tax Revenues

Disadvantages of Privatization

1. Profit Motive as against social welfare

2. Defense Issues

3. Emergence of Monopolies or Duopolies

4. Going concern problems of companies

Explanation:

Advantages of Privatization

1. Increased Efficiency of Public Services: In the case of jails, public schools and welfare agencies; privatization will improve its efficiency because shareholders will want to ensure that management is performing through audit committees but no pressure is on the state to perform.

2. Creation of competition : With privatization of jails schools and welfare agencies, private companies who take up these functions enter into a natural competition to perform better than each other in terms of quality and eventually in some cases 'price'

3. Job Creation: Privatization creates jobs as private companies employ professionals based on merit, unlike state employment agencies who may use zoning as a yardstick for employment.

4. Lack of Political Interference: With privatization, agencies are left to run without political interference. Politicians are hardly professionals or good managers as they may not have any prior experience in these state agencies they are in charge of.

5. Sale and Tax Revenues: With privatization, sale of agencies generate huge income for government and these agencies begin to pay corporate income tax to the government.

Disadvantages of Privatization

1. Profit Motive as against social welfare: A major disadvantage is that these companies exist for profit motive and the social welfare of the citizenry becomes a secondary motive.

2. Defense Issues: In the case of military aircraft maintenance, it might be too risky to privatize because the owners of these companies might belong or be linked to enemy nations. The defense secrets of a nation should be known to the right few.

3. Emergence of Monopolies or Duopolies: In most cases these agencies become monopolies upon privatization as they are sold to one major company or at most few.

4. Going concern problems of companies: Some private firms face challenges on the long run that threatens their existence and they'll call for a bail out or go underground.