We launch on May 17, 2012 with a focus on public – private partnerships for infrastructure, watching how these play out in the USA and in other countries.
State and private sector entities both can excel at managing society’s productive assets. Yet when we think of strategic planning at the national level it can look more like government selling off the family silver, and bronze, too, to business leaders who might not be ethically or technically equipped to do their best to manage those assets. In both wealthy and poor countries around the world leaders are searching for ways to improve the living standards of their citizens and make infrastructure improvements while financing the cost of government operations.
Government often turns to publicly owned assets, offered for sale or lease to the private sector in order to support public policy goals or reduce public debt. The research in this public-private partnership space is fragmented. Discussions are often fraught with accusations about plundering public assets for private gain and malfeasance in privately managed operations. Transparency is missing. A shared understanding of the importance of protecting public assests and the vocabulary for how to do this is absent.
AssetStewardship.com is created, in part, to contribute to an evidence-based privatization/nationalization conversation.
Privatization and nationalization each have bad reputations in the public mind. Yet as nations struggle to balance budgets, placate irate populations, modernize infrastructure and grow industries faster, they are reallocating assets across the public and private sector at a more rapid pace than we saw in the late 1980s. The approaches vary as much as the motives. Over the past two decades, more than 100 governments have sold stakes in state companies to private investors, raising $1 trillion and transforming the state’s economic role. In the developed world bankrupt governments, states and cities are selling off assets to make ends meet. One of the most important institutional reforms in the post-communist era has been the privatization of commercial enterprises all around the world. In resource rich countries these privatizations created the new elite.
Today, with changing economic and political circumstances, agents at all levels, from municipalities to international financial institutions, are being forced to make choices on what they can continue to support and on the optimal allocation of assets and resources across the public, private and increasingly large parastatal sectors. The current global financial crisis shines a harsh light on the imperative to improve the well being of civil society while increasing efficiency and equality.
Because there is little public discussion of the outcomes of previous privatization and nationalization efforts, there is little accountability for the successes and failures in each project. Globally we all lose as countries and stakeholders re-invent the trillion dollar wheel. As financial and fiscal crises rage, the benefits of privatization have been put into question. The processes feel opaque and the stakeholders, old and new owners and the citizen users, find the process jarring. The value of private sector management gets called into question.
A process of privatization or nationalization based on publicly discussed principles and strategies of asset stewardship can lead to increasing equality and efficiency in our fiscally beleaguered governments- every governmental level, anywhere in the world. If privatization out of necessity and nationalization for publicity is replaced with strategically planned allocation of key core assets, as well as differentiation from non-core ones, the question of best methods of execution follows. Yet the much-needed evidence-based approach depends on increased public discussion of available assets, their uses, outcomes, increased oversight and detailed examination of historic examples of both asset allocation processes. Only through this collaborative process of transparency, public consensus building and use of best practices can privatization or nationalization yield optimal, sustainable results while increasing equality and efficiency.
The very near future will bring privatization and nationalization processes to even more countries and sectors than ever before, with new potential for success and all the old pitfalls of the past. How successfully strategic assets will be reshuffled between private and public stewards will depend on the visibility of the processes and accountability of its agents. The visibility of the processes will, in turn, depend on whether public discussion can be shifted from bewilderment and dogmatic critique of these terms to evidence-based consideration of privatization and nationalization as key processes for optimal strategic asset stewardship that can yield increased efficiency, equality and growth if the agents pushing for them are held publicly accountable.
As the role of the state is reshaped and remodeled in light of economic and social developments, key asset stewardship should be rethought in a new, broader context. Questions of optimal allocation of assets, or who should own what, and sustainable allocation, namely who can afford to own what, are brought into question. Answers to these questions affect the well-being of so many around the world.
SASI, the Strategic Asset Stewardship Initiative, hopes to encourage conversation, transparency and a vocabulary that will contribute to helping society make better choices.