Restructuring and privatization of public enterprises in United States: Legal and financial aspects

Interestingly, the pragmatic approach to activities of public interest in the industrial countries of Western Europe and North America had all the features of the classic socialist blunder. It is unbelievable that the theorists and politicians in the developed countries failed to foresee the consequences of showering monopolistic public enterprises with taxpayer largesse. One statesman who recognized the fatal flaw in the concept of state ownership was US President Eisenhower, who in 1950s characterized it as 'creeping socialism on the American way': he called for the privatization of state-owned enterprises and argued that private owners would be better businessmen. US public enterprises cover a wide range of activities under various names including 'public authority,' 'public benefit corporation,' 'public corporation,' 'special-purpose government organization' and,,ad-hoc government organization' at various levels of authority in the world's most powerful country. Public enterprises or organizations deal in economic development policy, education, environment, health care, housing policy traffic, energy resources and, of course, military industries.26 One characteristic of the US public economy is its small volume compared to the rest of the economy and private business, as well as its continuous process of restructuring and privatization that is in fact a search for optimal public-sector efficiency and effectiveness. The reform of the public economic sector involves essential changes that deeply involve all structures from production to finance to management. Not only are ownership structures changed, but change reaches right into the underlying system on which the public economic sector rests. In fact privatization means new management philosophies, whole new financial systems, new technologies and knowledge to reflect the technological revolution in communications or all kinds and, of course, new forms of management to meet current demands. By the end of the first decade of the third millennium public enterprises are expected to exhibit some mixed but mainly private ownership to further the public interest of all citizens. The current state of affairs in the industrial world is that large numbers of citizens are investors and owners in some part of their public sectors through various forms of holdings in pension or mutual funds or company shares. This folk capitalistic illusion helps to amass the resources to develop the public sector and entrepreneurial skills among ordinary people. The post-privatization situation in the former socialist states has dashed the hopes of millions of people who believed that the process would bring not only prosperity but a groundswell of 'folk capitalism.' They now face the painful truth that they have once more been fleeced and herded to the existential limit. Large numbers of them became poor in the privatization process while the government organizations conducting the deliberately opaque process grew extremely rich. Restructuring and privatization are necessary processes in economic reform that would provide efficiency and effective public economy in developed and developing countries including transitional economies. It is now imperative to use good business practices to review the reform process for public enterprises in various economies so that the traps and bad side-effects of rash and chaotic privatization can be avoided while reproducing and adapting successful restructuring and privatization experiences in transitional and market economies. The successes in Hungary, Poland and Slovakia and so on are important, of course, but we also have to learn from more mature market economies, so that US experience is very interesting. Public economic reform is a very complex process that should be created in terms specific to each economy and single public enterprise.