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President-elect Donald Trump is said to be interested in the privatization of the US Postal Service, a prospect that also appeals to his DOGE project and its allies in Congress. Yet debating this issue — and privatization more generally — is almost pointless without first defining terms. “Privatization” can be good, bad or uncertain.
The best kind of privatization is when private suppliers can replace state provision outright. Consider Poland in the 1980s, when most of the economy was state-owned and state-run. After the fall of communism in 1991, many of those state-owned businesses were replaced with private corporations. Since then, Poland has gone from being a poor country to one with living standards close to those of Western Europe.
The lesson here is that talk of “privatization” per se is meaningless without elucidating which kind of privatization is under consideration. One class of privatizations, such as in Poland, is close to an unalloyed good, and economists are right to tout it. But in a large number of other cases, which are frequent in modern Western democracies, privatization works only when judiciously applied.