Privatizing public goods: Our lives up for sale

THE JAKARTA POST – Opinion & Editorial, Monday, 15 July 2002

by Yanuar Nugroho

Beware. In the coming years, we in Indonesia may have to pay more not only for our drinking water, but also for bathing and watering flowers at home. We may also have to pay for permission to dig a well in our backyards.

Worse, farmers and villagers may no longer be able to access water from rivers or springs, for corporations will already have been given the right to access all water resources.

And as marine resources management would be privatized, hiding behind the authorities to protect the area, fishermen will be in danger of being wiped out by the corporations away from the open space where they usually fish.

Are these worries real? They seem to be. And most probably there are more examples.

The bill on water resources has already reached the legislature, to be ratified by the end of this year. Other bills are lining up — forest management, mining, marine resources, etc. They involve the plans to implement one of the conditions imposed in the Letter of Intent (LoI) involving the International Monetary Fund: Privatization. And it has gone beyond what we may think: Privatizing of “public goods”.

Instead of fighting for authority in natural resources management, the government seems to have no other choice but to follow what the IMF prescribes. Take Presidential Decree No. 96/2000. It states that share-ownership for any companies working in the water sector can make up 95 percent of their total share. Such a commitment, according to research by the Indonesian Forum on Globalization this year, clearly sabotages the authorities in charge of managing water resources.

Similar to the dispute around the issue of selling the permission to utilize free-frequency 2.4 GHz for wireless data communication (in contrast to the phone lines, who owns frequencies anyway?), the case in water privatization seems quite subtle. But if it succeeds, the next in line for sale might be air, or other public goods which we would never have imagined before. What is behind all of this?

According to a recent book by Keith Bezanson, the notion of “public goods” has recently assumed center stage in the international agenda of policy makers for two reasons. First, political and social pressure is mounting for the financing of a wide range of new initiatives in the name of public goods. Second, there is much disagreement on the value and potential of an international public goods approach in addressing global concerns.

This has raised a number of key questions. The most important one is the conceptual framework that integrates the key factors affecting the definition, delivery and consumption of public goods. Although the bright side of it might be acceptable — potential payoffs, particularly in terms of better and more effective policies to address common concerns — on the other side, the lack of clarity could lead to misguided policies and involve high opportunity costs.

We have to be very aware; it is not possible to escape values, preferences, interests, asymmetrical knowledge and power relations in defining “public goods” and in arranging for their provision.

This is the point where the problem becomes very complex, when the notion of public goods is then related to resources available in the developing countries. These are the countries left behind and trapped in serious foreign debt. Most are implementing the IMF’s ambivalent prescriptions by imposing the “Structural Adjustment Programs” (SAP).

Under this prescription, financial liberalization and open market are extended and reinforced and the problem of privatization of public goods begins. What is the argument? Pushing exports to earn foreign exchange — prioritized over basic necessities, food production and other goods for domestic use — to pay the debt.

And for doing so, economies in the Third World have been being deflated; the governments are withdrawn not only from public enterprise but also from compassionate support of the basic health and welfare of the most vulnerable, according to the 1999 Economic Justice Report, 1999.

The SAP may not have put the suffering Third World countries back on a steady economic keel, but they have certainly helped undermine democracy in those nations.

In 1999 Joseph Stiglitz wrote that there are real risks associated with delegating excessive power to international agencies. Such institutions can become an interest group, concerned with maintaining its position and advancing its power.

He adds, that if we believe in a democratic process, countries must make decisions for themselves; economic advisors should only advise them of prevailing views.

Indeed, SAPs really only make sense when seen through the lens of economic globalization. This is how we might be able to understand the whole logic behind privatizing public goods.

They are an integral part of the free market orthodoxy that aims to give free rein to private corporations to trade, invest and control all resources, including the natural ones. By doing so, they move capital around the globe with a minimum amount of government interference; as the debt loan on all governments, particularly those of the Third World, has crippled their capacity to look after their citizens, let alone to protect and manage natural resources and public goods from being privatized.

The needs of capital are not always the same as the needs of society, says writer Noreena Hertz, but this is the age of silent take-over, in which government power and people’s authority have been wiped out by the potent control of corporations.

It seems that we are in an era where all of us are being indoctrinated in liberalized trade and investment, heartily endorsed by the world’s biggest banks and corporations. A deregulated, privatized, corporate-led free market is being touted as the answer to humanity’s problems. The proof, though, is not so easily found.

Further, is there any possibility of customer politics of the stick-and-carrot type to entice corporations and business community to redefine their roles in society? Can governments, while allowing corporate interests to take precedence over those of the public, also provide areas where corporation and business community may decide to put the public needs first?

If the answer is “no”, we have surely to go beyond our current concepts of politics and economics, for obviously we are lagging behind history.


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