Power & Market

Get Radical on Privatization

The benefits of privatization are well documented by empirical studies, so they will not be rehashed in this piece. Yet many still assume that some commodities are beyond privatization. Too often proponents of privatization fail to appreciate that humans are sentimental characters, and as a result, they are unwilling to commodify resources deemed to be sacred. A leading advocate of radical privatization, Walter Block in an interview with this writer expressed the view that even natural resources like forests and rivers should be privatized to induce greater levels of efficiency. Walter Block may appear unsentimental, but I doubt that even those in agreement would recommend the privatization of citizenship.

Citizenship is the next major frontier in the privatization revolution. Currently, only the American government is allowed to grant citizenship to foreigners, but why should this be the case, when the lives of ordinary Americans are impacted by immigration? And contrary to what you think, privatization will improve the quality of immigrants. There is no guarantee that the loved ones of naturalized Americans who legally migrate to the US will become productive citizens. When choosing to sponsor family members, people rarely consider their productive potential; such decisions are inspired by love and loyalty.

In contrast, if professional associations were authorized to approve citizenship, then they would have an incentive to select the best candidates and engage in thorough research to eliminate unsavory characters. For example, accountants, chefs, and educators would relocate to America after being granted citizenship. Furthermore, indirectly, privatization might stimulate entrepreneurship by creating demand for companies specializing in providing these professional associations with intelligence on prospective citizens.

By now readers are obviously wondering how standards would be maintained in the absence of government regulations. This concern is understandable, but lacking directives from the government, private associations will orchestrate their own regulations. Reprobate member agencies who grant citizenship to dubious personalities will have their privileges rescinded. Because professional bodies want to preserve the integrity of the system, they will automatically institute mandatory requirements for all parties. A case in point is that one professional body could subject its members to annual audits. If we are being objective, then clearly privatizing citizenship has merits. When the government is the sole provider of citizenship there is no onus to ensure that prospective citizens will offer a positive contribution to society.

Since privatization is divorced from sentiment, it can attenuate some of the disadvantages associated with government provision of citizenship. On the other hand, neither will privatization marginalize people interested in sponsoring loved ones based on sentiment. Such individuals can always join a professional body to assist in securing employment for family members. Under the new dispensation, except for the elderly and children, all prospective citizens would have to apply for citizenship through a professional body. So even those sponsoring sentimental applications would have to demonstrate that their relatives will work upon arrival in America.

Immigrants can either enrich or degrade the quality of society; therefore, American citizens should be positioned to determine the quality of the people who acquire citizenship. And unfortunately, the current system of allotting citizenship does not cultivate accountability. Anti-immigration activists may contend that these proposals would flood the country with new immigrants; however, they are mistaken. On the contrary, the discriminatory nature of privatization actually limits immigration by selecting competitive candidates. Moreover, privatization is not an affirmation of open immigration; mechanisms can be designed to monitor the borders in order to stem the flow of illegal immigration. Privatization may not alleviate all problems, but at least it elevates the quality of immigrants.

Similarly, a new approach to drugs is also required. Instead of lobbying for the legalization of drugs, we should suggest a framework to manage the consequences of legalization. Liberals are quick to remind us that the war on drugs has been a failure, yet few ponder how drug dealers will manage their affairs in this environment. However, the problem is not complicated, because trading drugs is just another business. Like other professionals, druggists can institute regulations to determine the rules of the games, and agents who disregard these stipulations will be excommunicated.

In general, the success of an entrepreneur is based on his reputation. Hence, agents who engage in fraudulent activities or sell inferior drugs will be driven out of the market. Further, legalization will remove the stigma of drug dealing and consequently could discourage druggists from financing illicit activities, since the costs of penetrating legitimate financial systems will have been minimized. Presently, the proceeds of drugs are perceived as dark money, and as such, drug dealers are isolated in the financial community. But the normalization of drugs will unleash numerous opportunities for dealers to engage in legitimate commerce. By minimizing the cost of participating in the economy for dealers, legalization makes illicit transactions expensive. Clearly, if the proceeds of drugs are not seen as tainted, then a druggist will be motivated to engage the financial system, instead of aiming to increase his wealth through illegal means.

Although these suggestions will elicit criticism, the truth is that we cannot comment on the efficacy of policies without testing their utility. We have been relying on stale approaches to effect positive change to no avail. So, at this stage, policymakers must shed old biases and invest in innovative alternatives to yield new insights.

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Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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