The question of privatisation

WHEN I wrote my columns on the six pillars for growth, people pointed out areas I had missed, including privatisation of state-owned enterprises. Since most SOEs lose money, I thought this topic was covered under the pillar of prudent fiscal and exchange policies. Upon further reflection, however, I should have added privatisation as a separate pillar required for growth. Here it is. Before discussing privatisation, we need to address why the government, especially one as inefficient as ours, should be involved in the provision of goods and services at all. Markets provide most goods and services quite well and therefore, globally, most governments don’t get involved in their provision, either from the standpoint of equity or efficiency. Running of petrol pumps, airlines or banks are examples of this. We, of course, continue to own PSO, PIA and National Bank. Of course, for equity reasons, many governments get involved in the provision of education and health. I have argued in these pages that since misgovernance in Pakistan is the rule and not the exception, we’d be better off if the government just subsidised education or health through vouchers or insurance, rather than government-operated facilities.