Advocates of privatisation have often paid insufficient attention to one of the most important reasons why scholars like Friedman and Hayek argued in favour of privatisation: that people are the best judges of how to spend their own money and, moreover, that they have a right to spend their own money as they wish. Privatisation must not be separated from the broader libertarian project of making government smaller and giving people control of their own lives – which includes their own money.
If privatisation is justified primarily on efficiency grounds then there is no reason why it should not be used by the enemies of freedom as a means of expanding the role and scope of the state: let the private sector do the dirty and expensive work of providing essential services and what’s left of people’s income after paying for those services is then taken by the state to make transfer payments and fund all manner of dubious activities, bodies and agencies.
Successive governments have not used the proceeds of privatisation to give people back more of their own money to spend. Rather, they have used the savings made to expand the role of the state, for example by providing ever more generous transfer payments, higher pay for public sector employees and the funding of new regulatory bodies and agencies. Money that would have previously supported the nationalised industries is now allocated to a host of other government activities rather than being returned to taxpayers.
Those who believe in freedom should therefore not uncritically praise privatisation. It should be supported solely as a means to the end of increasing individual freedom by giving people back more of their own money to spend. Where privatisation becomes a backdoor way of expanding the role of the state and thereby reducing people’s freedom this should be exposed and criticised.