FROM THE PUBLISHER ’ S DESK
4
The case for privatization
If GTA was still a government-run corporation , it would likely be among the agencies lining up at the legislature to ask for subsidy from the general fund , if not digging into the tax jars to cover the debt service for its revenue bonds . In either case , the burden would ’ ve been on the taxpayers , with no guarantee of efficient service . We would probably have been thrown back to the dial-up era .
Then known as Guam Telephone Authority , the agency was privatized in compliance with mandates of the federal telecommunications law , which opened up the telecommunications field to wider competition . GTA was fully transferred to TeleGuam Holdings in 2004 with a price tag of $ 150 million , making it the last government-run telephone agency in the United States . The new private management had absorbed GTA ’ s classified employees along with related personnel cost . GTA has since been a provider of private sector jobs , tax contributor and major player in the field . The company has been passed from one owner to another for whatever reason that GovGuam doesn ’ t have to deal with anymore .
Locally , GTA is an excellent argument for privatization .
For the government , reducing public cost is the draw of pursuing privatization . For the people , who are frustrated with the typically poor performance of bureaucracies , the appeal is a promise of increased efficiency , greater innovation and competitive service .
Economists endorsing privatization argue that “ the private sector is either a more efficient provider than the public sector or that the failures of the private sector are much lower than those of the public sector .” On Guam , the outcomes of federal receivership of mental health service and the solid waste system epitomize those premises . After repeatedly failing to convince the court that it is capable of managing the solid waste system , GovGuam should completely relinquish this function to the private sector .
It is tempting to support the idea of fully privatizing the Guam Memorial Hospital . However , given that its services involve public health and human life , completely giving it up to the corporate world might not guarantee health access for the indigent . Outsourcing its business operations and privatizing its management — which Lou Leon Guerrero proposed during the Guam Chamber of Commerce ’ s recent gubernatorial forum — might be a
better alternative , This would entail depolitization and end the function of the hospital as a dumping ground for political hires .
During the Chamber forum , candidates identified the lowest-hanging fruits , such as the mass transit system . Leave that service completely to the private sector , said Sen Frank Aguon . Use the transit agency ’ s funds to deploy Uber drivers all around the island , former Gov . Carl Gutierrez suggested . Sen . Dennis Rodriguez put the Guam Power Authority , Guam Waterworks Authority and Department of Public Works on the target list .
Chris Edwards , director of tax policy studies at Cato and editor of Downsizing- Government . org ., has compiled a collection of statistical studies that examined the performance of businesses before and after privatization .
Among the findings :
A 1994 study in the Journal of Finance looked at 61 privatizations in 18 countries and found strong performance improvements , achieved surprisingly without sacrificing employment security . Specifically , after being privatized , firms increase real sales , become more profitable , increase their capital investment spending , improve their operating efficiency , and increase their work forces ;
A 2003 study on privatization in the Journal of Public Economics found that ‘ the empirical literature has provided systematic evidence that privately-owned companies outperform state-owned enterprises ;
A 2004 study by the Inter-American Development Bank of Mexico ’ s reforms found that privatization leads to dramatic improvements in firm performance and that they are the result of efficiency gains , not transfers from workers or exploitation of consumers .
A 2012 study looked at more than 50 Canadian businesses privatized during the 1980s and 1990s , including an airline , a railroad , manufacturers , and energy and telecommunications firms . It found that all overall impacts have been largely positive , in many cases impressively so . Key economic indicators such as capital expenditures , dividends , tax revenues and sales per employee tended to increase .
Clearly , privatization offers a solution to bureaucratic inefficiencies , an option that the local government must seriously explore without waiting for a federal mandate .
Publisher / Editor-in-Chief Mar-Vic Cagurangan publisher @ pacificislandtimes . com
Associate Editor Bruce Lloyd editor @ pacificislandtimes . com
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