Privatization: “Privatization” is the transfer of services from the public to the private sector. Throughout the 1980s and 1990s, federal, state, and local governments sought to privatize public services, such as education, healthcare, and policing. Such privatization creates new profit opportunities for the businesses that provide these services but also reduces public accountability and oversight. Also privatized were the enforcements of public health and environmental regulations. The rationale for such privatization was that businesses were better equipped to set and enforce their own rules than government, and that private enforcement was more efficient than public. Thus, many local health departments privatized environmental health services; some states privatized regulation of the retail alcohol industry; and national regulators such as the Occupational Safety and Health Administration (OSHA) and the USDA turned over responsibility for some safety inspections to the companies being inspected. Another rationale for privatization of enforcement was that national governments often lacked the mandate or expertise to monitor increasingly global exchanges, leading them to delegate such responsibility to private international organizations, often controlled by the industry to be regulated.
How does privatization affect public health? While the specific impact depends on the details, among the consistent relevant scholarly criticisms of privatization are a loss of regulatory capacity, an increased share of costs shifted to profit, diminished oversight of privatized services, a tendency to allocate services based on cost rather than need, and the vulnerability of privatized services to market volatility. In general, privatization of regulatory or service functions reduces the power of government and increases the power of corporations. A study of privatization of tobacco companies in the former Soviet-bloc nations and other countries suggests that the process leads to increases in tobacco consumption. A review of privatization of water supplies in Latin America concluded that “privatization marked a troubling shift away from the conception of water as a ‘social good’ and toward the conception of water—and water management services—as commodities” and reduced access to clean water.
Threats from privatization continue. In 2013, the Obama Administration proposed new rules to protect the safety of food imported from other countries. Each year 130,000 Americans are hospitalized and 3,000 die from contaminated food. About 15 percent of the food comes from abroad, often from countries with limited capacity to monitor food safety. Yet the FDA inspects only one to two percent of all food imports. Acknowledging the political reality that corporations and their conservative allies were unlikely to fund regulations that required independent oversight of the food industry, the FDA instead proposed that private companies like Walmart and Cargill inspect their own imports, thus delegating a core public health function to private industry. A pernicious long-term effect of privatization is that it further diminishes the public sector, the only actor with the capacity and resources to make protecting public health a priority.