In theory presuming more than one actor in industry, privatization invites competition for corporations primarily pursuing maximizing profits. Despite the widely-discussed concept of Corporate Social Responsibility (CSR), the foremost objective of corporations still dictates that profits rule all.
CSR only comes after as a complementary objective, never as a first under any circumstance. Therefore, privatizing publicly-owned industries into several independents intrinsically stimulates competition among them. Motive for more money remains central to the system.
Side-effects, however, deserve more attention when discussing privatizing the public sector. If privatized, the central public utilities industries will unlikely invest for "greater common goods," for instance, paving new but less-lucrative railway routes, fearing capital deficit or loss.
Aside from the classic side-effect, it is more important to review that Korea has and still suffers from oligopoly risking price-fixing in certain key sectors, the telecommunications industry to name just one.
Provided that privatization does not invite common goods problem, the price-fixing concern still remains. More alarming is that only ex post, not ex ante, measures can effectively prevent price-fixing.
Imagining the unthinkable political, economic, and social cost associated with such ex post measures, exhaustion of alternatives to privatization is a prerequisite. For a nation still wrestling with price-fixing, privatizing public corporations is as of yet still an ideal.
Choi Si-young
Editing adviser on Yonsei European Studies at Yonsei University, Seoul
CSR only comes after as a complementary objective, never as a first under any circumstance. Therefore, privatizing publicly-owned industries into several independents intrinsically stimulates competition among them. Motive for more money remains central to the system.
Side-effects, however, deserve more attention when discussing privatizing the public sector. If privatized, the central public utilities industries will unlikely invest for "greater common goods," for instance, paving new but less-lucrative railway routes, fearing capital deficit or loss.
Aside from the classic side-effect, it is more important to review that Korea has and still suffers from oligopoly risking price-fixing in certain key sectors, the telecommunications industry to name just one.
Provided that privatization does not invite common goods problem, the price-fixing concern still remains. More alarming is that only ex post, not ex ante, measures can effectively prevent price-fixing.
Imagining the unthinkable political, economic, and social cost associated with such ex post measures, exhaustion of alternatives to privatization is a prerequisite. For a nation still wrestling with price-fixing, privatizing public corporations is as of yet still an ideal.
Choi Si-young
Editing adviser on Yonsei European Studies at Yonsei University, Seoul
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