As I write this, the war in Ukraine is on its 60th day. While Russian commercial broadcast media remained independent in the war's early days, it didn't take too long for that country's president to shutter most of those outlets. A little over six months before Russia's incursion into Ukraine, Poland launched a controversial legal action ostensibly designed to negate the possibility of foreign - read non-EU investors - from holding more than a minority stake in any Polish television or radio station. The new law closed loopholes that had previously permitted entities from outside the European economic area to buy shares in Polish media. That sounds like a positive step until you realise that it only affected the channel most critical of the current ruling party. The Polish majority denies that being the purpose of the amendment in question but, either way, it's all moot. President Duda vetoed the bill in December 2021 and there's been no further movement on that initiative since then. Both of these instances go against the common tidal wave of privatisations going on around the world. Broadcast media is just the latest in a long line of public utilities and services undergoing privatisation.

Countries that have privatised public works and utilities:
France: France Telecom (now Orange), Elf, a petroleum company (absorbed by Total), Renault, Air France, French Highway Concession and others.
Portugal: the Portuguese Post, ANA - Portuguese airports, EDP (an electrical energy company), and REN a powerbroker in the energy sector.
Romania: the National Commercial Bank, Romtelecom, Rom Petrol, Ursus Breweries.
Greece: most transportation options: airlines, rail and public transport, including the port in Thessaloniki.
Australia: the Commonwealth Bank as well as most other state-owned banks, Sidney airport, public transport, including both passenger and freight rail transport, various telecommunications companies.
India: various national and international airports, telecommunications companies, petrochemical concerns and food manufacturers.
That's just an abbreviated list of selected countries that have, over the last 40 or so years, privatised formerly publicly-held businesses and utilities. Many, many more countries have sold off long lists of assets to private entities, including, most alarmingly, their water infrastructure. And now, focusing specifically on how media is financed: the British government is set to sell Channel 4. Why? To whom? For how much? Who will that sale's proceeds benefit? The answers to those questions are the same as with every other privatisation initiative that's taken place over the last 40 or so years. We can add them to the most pertinent question of all: why are so many governments on board with privatising?

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A Brief History of Privatisation

The concept isn't new. The Ancient Greeks were known to contract out public services; so did the Romans. Some of those initiatives are mirrored in today's economies; for instance, defence contractors fulfil the same functions as those supplying the Roman legions, so long ago. Leaping forward a few hundred years, we find that the Han Dynasty elevated privatisation to an art form. The state divested itself of practically everything, either contracting or selling outright every single state enterprise and civic concern. Their move to privatise was ideological rather than economic, a factor that makes their divestment unusual.

The Chinese government divested itself of its assets around the time the Terracotta Army was assembled
Around the time the Terracotta Army was assembled, the Chinese state divested itself of virtually all its assets. Photo by Alexander Schimmeck on Unsplash

Leaping ahead in time to just before the First Industrial Revolution in Britain, 'enclosure' became the byword for land privatisation. In Scotland, the practice was called 'clearances', wherein vast tracts of public land were turned over to private parties. Even Nazi Germany embraced privatisation. Almost as soon as the regime came to power, they divested themselves of most state-owned enterprises, albeit only to men sympathetic to the Nazi cause. Note that Russia did the same after the fall of the Soviet Union. Thus, all of the oligarchs whose assets countries across the world are freezing were made. Privatisation didn't really take off, though, until the late 1980s, when Ronald Reagan was the US president and Margaret Thatcher was UK's Prime Minister. Once those two governments got the process going, the rest of the world, with one or two notable exceptions, followed suit. The theory behind privatising state assets is better, more efficient management. Prize-winning economist Milton Friedman had long advocated for abandoning Keynesian economic thought; he believed that free markets should be allowed all the leeway possible and government intervention in economic and social spheres should be avoided at all costs. Naturally, the model entailed the government selling its assets. He was both Ms Thatcher's and Mr Reagan's economic advisor. Thanks to those leaders' influence, the World Bank and the International Monetary Fund (IMF) adopted the 'Chicago School' economic theory, as it was called, and spurred its worldwide implementation. Economically strapped South American countries were particularly vulnerable to those institutions' influence but, in the end, every country receiving funds from the IMF adopted Chicago School economics. Doing so made them vulnerable to market instability. China resisted the IMF's mandate to privatise assets as a condition of funding to rebuild their country when it emerged from communist isolation. As a result, their economy tends to weather economic storms better.

The Pros and Cons of Privatisation

One reason that Ancient Rome started privatising is that they had so many state-owned works to keep up with that their empire creaked under its load of them. Some historians credit the bureaucratic costs of maintaining all that enterprise as one of the main reasons for the fall of the Empire. Beyond that point, it's much harder to find pros for privatisation than cons, especially when even the World Bank emphasises that industry must be competitive and consumers well-informed and rationale for it to achieve the desired outcomes. As we surely know, these days, the industry is anything but competitive.

Industry today is plagued with homogeneity rather than competitiveness
Industry today is homogeneous rather than competitive. Photo by Victor on Unsplash

Amazon is a prime example of such. Any threat to its market dominance results in that e-c0mmerce giant simply buying the competitor out. Facebook did the same with its perceived rivals, Instagram and the messaging platform WhatsApp. Where does social media get all its money from, that it can afford to plunk down billions in buyouts? More recent studies have concluded that privatisation has not yielded the expected results. Lower production standards and output, poor service outcomes and, most confoundingly, the perpetual need for government assistance in the form of bailouts, subsidies and even investments all speak against privatisation being efficient and beneficial. And overall, public sentiment toward privatisation tends to be negative.

The Privatisation of Media

A government hack will do its job simply because it is its job. They have no incentive to be creative or innovative; they won't earn any awards or rewards for doing so. Aren't creativity and innovation trademarks of broadcast media? In fact, aren't they absolutely vital to the production of engaging, entertaining content? Wouldn't it then make sense to privatise media? Yes and no. On one hand, we are treated to a glut of broadcast entertainment. Between network television, cable offerings, premium packages and niche channels such as sports home improvement, there's literally more on the telly than anyone could watch. And all those streaming services - Netflix, Hulu, Sky Q and others... It's hard to justify another channel of more of the same but denying another channel simply because there are already so many is contrary to the competitiveness that economic markets crave. So if we're to follow the Chicago School economic model and give the market what it wants, then privatisation is essential. On the other hand, broadcast media has long been considered a vital public service, one that keeps citizens informed as well as entertained. Thus, it makes good sense - and makes for sound policy to have government money in the media. Public broadcast channels work in concert with government entities such as Ofsted (in the UK), the FCC (in the US) and other media 'watchdogs' around the world to make sure that content is equitable and appropriate. They also strive to present balanced content; a blend of perspectives - liberal and conservative and afford the viewer the chance to draw their own conclusions about pertinent issues based on the given information. Privately-owned media channels are not held to standards of impartiality. They may take any stance they choose, present information from any perspective they choose and vilify opposition views as they choose. This model serves to introduce bias into public discourse because, invariably, some consumers will hew to one perspective and others will embrace the opposite. As we see in the world today, such polarisation can have devastating consequences.

Unrest and discontent are the products of polarisation
Fractures in society lead to unrest and discontent. Photo by Kalea Morgan on Unsplash

In Conclusion: the Privatisation Debate

After 40 years of governments privatising assets, we're now experiencing the fallout: less competition, poorer outcomes and greater market instability. Privatising - anything, including the media, means allowing wealthy entities the chance to accumulate more wealth - even as economic inequality grows ever more profound. The coin's flipside is no more attractive. Bloated bureaucracies, already struggling for funding, may not have the capacity to manage all of their assets and keep them functioning to any degree of efficiency. From that perspective, it makes sense to outsource some of its obligations while providing oversight and (occasional) funding. Would that be enough to offset the burden of the government fully operating states' mechanisms? And how will countries assess their wealth once their assets are all in private hands? Perhaps the solution is to find a happy medium. Maybe if the government managed those assets essential to civic life and participation, including the media, while incentivising private entities, including commercial media to operate in tandem, the public would be better served, the government would be less burdened and economies would regain stability. Perhaps you'd like to host a podcast discussing such weighty issues? Find out how you could make money on social media by doing so.

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