Governments put themselves out of business worldwide
London — Britain - home of Buckingham Palace, Wimbledon, and the Tower of London - has an added tourist attraction that is drawing foreign officials. The new attraction, not found on any tourist map, is privatization.
Yet Britain, which has handed over nearly 40 percent of its state sector to private enterprise in the last eight years, is not the only country to privatize. Though motives vary widely, some 100 other countries - from China to Cuba, and from Brazil to Bangladesh - have begun the process of rolling back the frontiers of the state.
Even the Soviet Union, with its rigid centrally planned economy, is beginning to flirt with capitalism. A May 1 law allows thousands of Soviet citizens to work for themselves in small family businesses.
What makes Britain the model for other countries is that it is the only country that has embarked on such a systematic program of privatization.
``We are far and away the leader,'' a Treasury source says. ``We were the first to start it, and we've built on the expertise.''
So far, 16 state-controlled companies - including such household names as Jaguar and British Airways - have been taken over by private enterprises. This has brought 600,000 workers into the private sector, of whom over 400,000 have bought shares in their companies on highly favorable terms. One million former tenants in public housing now own their homes. And dozens of city and town councils have contracted out public services, such as refuse collecting and school and hospital cleaning, to private firms.
According to Madsen Pirie, president of the Adam Smith Institute in London, a free-enterprise think tank, representatives from up to 50 countries have visited his office to see how privatization works.
Other stops on what Dr. Pirie dubs the ``Cook's tour of privatization'' include the British Treasury, banks, local privatizing councils (those that have privatized essential services), and the National Freight Consortium in Bedford, which was privatized in 1982 under a management-employee buyout. (See facing page.)
Pirie says that privatization world-wide is spreading like a brushfire.
The Scots-born economist, who sports a bow tie, speaks as fast as an express train, and is a leading member of Mensa, the high I.Q. society, sees the transfer of economic power from government to people as representing a social revolution.
``It's the biggest story of the 20th century,'' Pirie says. ``Bigger even than the collapse of Keynesianism. It marks the reversal of 100 years of collectivism.''
He says the world is heading full speed ahead in the opposite direction: Both France and Japan have had huge sales of state assets. Turkey, which intends to bring in sweeping privatization, has sold the Bosporus bridge. Italy has sold the state airline, Alitalia. Privatization is also growing apace in the third world. Even China and Cuba allow some tenants to buy their own homes.
Motivations for privatization vary. Some countries, like socialist Tanzania, feel that excessive state control has stifled incentives to produce. Others, like oil-producing Malaysia and Nigeria, are tight for cash because of the fall in oil prices.
But the rush to privatize is not without some bumps in the road. Last month, nearly 1 million workers in Bangladesh shut down banks and industries in public and private sectors in a one-day strike to force the government to repeal its policy of returning nationalized industries and banks to private ownership. These workers had liked working for the state.
In what has been seen in many quarters in Britain as the greedy and therefore unacceptable face of capitalism, a Conservative Parliament member was forced to step down when found making multiple applications for British Telecom shares.
Opponents of privatization in Britain charge that the government is giving away some 4 billion to 5 billion ($6.7 billion to $8.4 billion) in national assets every year to bankroll tax cuts in an effort to win voters. And some say the government has not effectively curbed the market dominance of newly privatized monopoly utilities.
The government defends privatization on grounds it spurs competition and eliminates sluggish, state-subsidized enterprises that drain public funds. Other defenders say that commercial decisions are now free from political influence.
The government of Prime Minister Margaret Thatcher also has ideological objectives: to turn Britain into a property-owning, share-owning democracy. Mrs. Thatcher makes no secret of her desire to ``bury socialism.'' There is some evidence to suggest that her free- enterprise ideology is catching on.
Recently launched: British Airways. About to be launched this month: Rolls-Royce aero engines. Waiting in the wings: British Aiports Authority's 13 airports, and the 10 water authorities of England and Wales. The water authorities' assets alone are 28 billion ($47 billion).
Between 1979 and 1987, the number of people owning shares in Britain has almost trebled, from 7 to 20 percent of the adult population. Many came aboard with the privatization of such giant utilities as British Telecom and British Gas, induced to buy because a minimal number of shares could be bought in installments.
In the view of the Treasury source, the reason so many countries are starting to follow Britain's example is that, by and large, people are finding the state is not the best employer. ``Running a country and industry is incompatible,'' he says.
Not surprisingly, privatization dramatizes the ideological divide in Britain between the free-market Conservatives and the socialist-leaning Labour Party and its trade union supporters. According to John Smith, Labour's trade and industry spokesman, who is often tipped as the next leader of the party, privatization has more to do with politics than economics.
``First, it satisfies the basic intention of Conservatives to dismantle the state. Secondly, it finances tax cuts. And thirdly, it's irrelevant to the economy,'' he said.
Yet Thatcherism has so radically altered the political climate that Labour no longer calls for wholesale renationalizations as in the past.
One straw in the political wind was provided during the recent flotation of British Telecom stock. The trade union movement urged British Telecom workers not to buy shares, but as many as 96 percent chose to ignore that advice.
The end of privatization here is not yet in sight. Potential areas include forestry, prisons, steel and coal industries, and the post office. Dr. Pirie even foresees the government's selling off derelict land it owns. With a potential price tag of 200 billion ($336 billion) , selling off such land could keep the privatization business going, at the current annual rate of around 5 billion, for another 40 years.