a em.
wes boggles . “effrontery of
“these rich, ‘profit, laden institutions to make ©,

ple are ‘barely managing to exist from pay”
day to pay day.

Perhaps when banks can narrow the: gap
between low interest on savings and high in-
terest on loans the people will have the funds
to consider putting into the banks.

f

sunday

news

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north shore Classified Advertising 986-6222
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Associate Publisher Editor-in-chief
Robert Graham Noel Wright

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Advertising Director
Tim Francis

North Shore News, founded in 1969 as an independent community
newspaper and qualified under Schedule il, Part il, Paragraph i) of the
Excise Tax Act, ia published each Wednesday and Sunday by North
Shore Free Presa Lid. and distributed to every door on the North
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Gubacriptions, North and Weal Vancouver, $26. per year Mailing
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addreased savelope.

VERIFIED CIRCULATION 64,450 Wednesday; 84,2778 Sunday

Son’ y' c
Ah A i epanpen a me at! 2 G
beni

|. such a statement when the majority, of peo- ies

time entrepreneurs who reall
tick. »

Two. fecent, unrelated ‘i in-

cidents highlight how serious

the situation: has become.
eWith more. than |

in the. country, .Ca
farm community-reports that
hundreds of. acres .of berries

"| have been: left’ to rot. in ‘the

fields because pickers aren't
available. °

The reason? Potential
workers fear they will lose
unemployment. insurance. or
social; assistance’ support. if
they. work: “for only’ a’ few
days, which. is common in
the berry picking. game as
employees move from one
farm to. another.

So rather. than’ sign. up for
farm work, the’ unemployed
continue ‘to. draw benefits,
while the berries.rot. To add
insult to injury, farmers were
required. to-play, the govern-
ment’s red-tape- game: ‘forc-
ed to fill out ‘extensive
government. forms, even if
the in ividual Saly’ worked

Effectively. * dmitting. its

. mistake, Ottawa” belatedly
backed off,. Téelaxing some.of —

the stiff new. regulations.-But
by that time, the berries had

IN
one form’ involves the
contracting out of work
that previously had
been performed by
g2eovernment
employees. . Studies
have shown that
through this policy the
cost of government ser-
vices on average falls
by 50 per cent.

By HERBERT GRUBEL

This form of privatization
has been undertaken with
municipal garbage  collec-
tion, janitorial and laundry
services in hospitals and
grounds maintenance of
public property. When
private firms bid for the right
to perform these services,
the contracts specify
precisely what needs to be
done.

The quality of required
work is outlined in detail.
Nonperformance leads to
penalties and can lead to a
shifting of the contract to
another firm. Surveys of
customers normally show
that the quality of services
largely has remained the
same but often was improv-
ed by privatization.

It is not easy to document
why privatization leads to
lower costs of providing un-
changed quantity and quality
of services. Unionization

1S: TO
million people’ unemployed
-Canada’s  ~

and accompanying higher
wages, featherbedding prac-
tices and lack of motivation
of workers may provide a
part of the answer. But costs
drop also if the private firms
are unionized. Better quality
and motivation of private
firm managers may be
another cause of lower costs.

However, for the decision
whether or not to privatize in
the end, the causes of lower
costs are not important.

Noel
Wright

on
vacation

Decisive is the empirical fin-
ding which show the savings
from privatization almost
always to average 50 per
cent.

The limit of privatization
is not known. In some places
in the United States tradi-
tional government services
such as fire and police pro-
tection have been con-
tracted out successfully.
There is in principle no need
to have the mails shipped in
post-office trucks and
delivered by mail carriers
paid by Canada Post. We
have only begun to probe the
frontiers of the privatization

veohe

he

opportunities in Canada.

PRIVATIZING
ENTIRE FIRMS
A second form of
privatization involves the

sale of entire business en-
tities previously owned and
operated by the government.

Some of these entities
were started originally by
government because there
was a perceived public need
which the private sector did
not meet. After an initial in-
vestment or some non-
profitable pampering, many
of these enterprises have
become profitable on a con-
tinuous basis. For this
reason, the Cypress Bowl Ski
Report and the Beautiful
British Columbia magazine
concept and subscriber list
can be sold to private
operators by scaled bids, as
the B.C. government an-
nounced recently.

The same forces that lead
to savings under contracting
out are probably also present
in the privatization of entire
firms. If this is so, the private
profits will be greater than
those the government had
earned. This excess will be
reflected in the sale price
and means a net increase in
government wealth,

Some government opcrg-
tions, such as the B.C. Fer-
ries and Railroads may never
be profitable to operate for

rivate entrepreneurs. This
s so because often they are

,

| Privatization cuts the cost |

. PRIVATIZATION

The. sad fact’ is, goveri-
ments .are distorting the
competitive, free enterprise
system, creating a

remarkable advantage for
the. companies
ors

that:

Federation. of Independent
Business - ‘said in a recent
speech:

“Every: ‘Single ‘meeting’ of
small ‘business people} have
ever attended breaks. out in-

tion of-grants. Most .of:them
have suffered:from the-sub-
sidized. competition « “Of a
rival. In an environment of
150,000: annual’ -bi

Start-ups, - no. “pra

authority. can, assure itself
that it isn't funding ‘one: guy
to put another out of
business.” a

required to provide certain
services below cost in the
“public interest”. Even such
firms could be privatized
profitably. All we need is
competitive bidding for the
right to operate these enter-
prises. The winner would be
the one operating the system
at the lowest cash subsidy.
The same forces that make
contracting out so advan-
tageous would make these
subsidies smaller than the
ones needed under direct
government opcration.

Privatization in all its
forms is a government policy
whose time has come. What
are we waiting for?

PROFESSOR HERBERT
G. GRUBEL OF
ECONOMICS AT SIMON
FRASER UNIVERSITY