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Privatisation in Spain and its consequences: an analytical perspective

María del Carmen Sánchez Carreira. Profesora del Departamento de Economía Aplicada. Universidad de Santiago de Compostela

María del Carmen Sánchez Carreira. Professor, Department of Applied Economics, University of Santiago de Compostela

A Reflection on the privatisation process carried out in the Spanish case since the eighties and with more intensity in the second decade of the nineties is very necessary. And this, not only in the current context of questioning of public sector activity and its confusion with the private sector (as an example we see, the usual revolving doors), but also because it has been more than a decade since the main privatisation processes.

A Reflection on the privatisation process carried out in the Spanish case since the eighties and with more intensity in the second decade of the nineties is very necessary. And this, not only in the current context of questioning of public sector activity and its confusion with the private sector (as an example we see, the usual revolving doors), but also because it has been more than a decade since the main privatisation processes.

The rating of an exemplary process, as it tended to be in the short term, changes to a more critical view if we adopt a long-term perspective and, as a result, consider what really happened since privatisation. Privatisation became a major economic policy in the last decades of the twentieth century, as a fundamental element in the neoliberal capitalist model promoted by institutions such as the IMF, OECD and the European Union itself.

The term privatisation is imprecise, comprising a wide range of decisions. Strictly speaking, privatisation can be defined as the transfer of ownership from the public to the private sector, implying a loss of control of assets in question by the public sector. In a broader sense, privatisation is considered any loss of economic leadership in the public sector, such as deregulation, the introduction of private management forms in the public domain, or outsourcing of that which before was provided directly by the public sector (such as services cleaning or catering to public health or educational centres, or the many services provided at the municipal level).

Ideological, financial, economic and socio-economic reasons

The objectives that justify privatisation are diverse and can be classified into four types:

? Ideological: thus, we find from political organisations the most favourable to the existence a large interventionist public sector, to the most reluctant, that defend a small public sector with limited economic intervention. Among the ideological arguments, we note the promotion of so-called popular capitalism, an expression used by Margaret Thatcher in the UK, which intended to turn citizens into capitalists through the acquisition of shares in companies which before were public. Although the privatisation of public companies are one of the more controversial instruments of economic policy, for its ideological connotation, the reality in European shows that governments different political orientation nationalized (not just in the current crisis but also after the war and the crisis of the seventies) and privatised (mainly in the nineties for more pragmatic than ideological reasons). We observe nuances in the forms, rhythms and sectors concerned;

? Financial: In most processes, the main and immediate objective is to obtain income from the transfer of public assets to the private sector. We also consider the expansion of the capital market, when companies are privatised through the sale of blocks of shares traded on the Stock Market;

? Economic: They consist of improving efficiency and increasing competition. The literature that addresses the issue of public enterprises and privatisation focuses primarily on the efficiency debate. The reality is much more complex than the tendency to simplify, stating that public companies are inefficient and private enterprises efficient. Despite the methodological problems related to the definition of efficiency (to measurement it the criterion of benefits is used when public and private companies are heterogeneous entities in their objectives), the results of numerous empirical studies does not allow us to conclude that public companies are less efficient. Different variables (such as size or sector) influence efficiency, and the degree of competition in the sector in question is particularly relevant. The arguments that theoretically justify the lower efficiency of the public company (agency problems arising from the separation of ownership and management or different control systems), are more related to other aspects such as size, than with the property per se;

? Socioeconomic: These reasons are less alluded to in the literature, but they are important. Beyond the reduction of union power or the politicisation of decisions, we should highlight the difficulties of capital to find profitable investment fields after the crisis of the seventies. Thus, it is easier to invest their resources in existing activities that already have demonstrated their profitability than take risks on the market or on new activities.

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