Privatization

Definition
Privatization describes the process by which a piece of property or business goes from being owned by the government to being privately owned.

Do Libertarians support Privatization? It depends. Libertarians want to privatize everything but libertarians don't support all methods of privatization.

Privatization has become a shorthand way of describing the process of selling public or state assets to corporate interests for cheap. This subcategory of Privatization can be termed Neoliberal Privatization. Libertarians (should) oppose this. Some libertarians tolerate this method of privatization on utilitarian grounds, or because it is usually accompanied with removing legal barriers to entry.

Libertarian privatization would mean returning ownership and control of those assets to those who were forced to pay for it (taxpayers), and/or to those who currently occupy it (workers or residents) in the form of private, negotiable shares. This subcategory of privatization can be called Mutualization.

Although Mutualization sounds very similar to some forms of socialism but it is not. Here ownership is not being transferred to collectives or workers holistically (in the abstract). Instead, ownership here is quantifiable and sellable in the form of shares. Even today publicly traded corporations may be partly owned by employees in the form of shares but that is hardly considered socialism.

A note on why libertarians are often found supporting Neoliberal Privatization.

It is unfortunate that many libertarians and libertarian publications can often be found supporting sale of State assets in order to privatize. There could be multiple reasons for this:

1. The libertarian in question is actually a Neoliberal calling himself a libertarian due to similar jargon.
2. True libertarian privatization is politically expensive. Political support for this idea could have come from the left if abstract collective ownership wasn't a popular leftist idea already. Abstract collective ownership ends up with the State being owner in reality - the opposite of what libertarians want. On the other hand neoliberals are often ready to ally with libertarians.
3. A case for Neoliberal Privatization can be made on utilitarian grounds. It is often accompanied with deregulation of the industry in question. Many libertarians view this as a net positive, and without the support of taxpayers and/or workers, take to Neoliberal Privatization as a pragmatic approach.

Who really owns State assets?

Libertarians do not consider the State to be the legitimate owner of so-called State or Public assets. Libertarians do not consider property ownership (public or private) to be legitimate simply because it has been declared as such by the government. This form of property is called de-jury property.

While it is true that the State has invested capital/money into State assets but the source of that capital is taxes. Taxes are forcefully collected by the state from taxpayers without any prior agreement between the two. There is also no way to opt-out of paying your taxes. Under such conditions, each tax payer should be considered a part-owner of the State's asset.

Libertarians consider the Commons of a locality to be homesteaded by the locals of that area. The Commons include public properties like roads, grasslands, lakes, rivers, forests, etc. While the State invests in developing and maintaining the Commons the source of that capital is often municipal taxes forcefully collected from the locals themselves.

State organizations in which consumers directly invest like Employees' Provident Fund Organisation or Life Insurance Corporation should similarly be considered to be owned by the consumers themselves unless they are also subsidized through taxes (in which case the taxpayers are also considered part-owners).

If none of the above situations apply then libertarians consider the asset to be owned by the individuals currently occupying and using the asset, which is often the workers working there.

Libertarian Privatization results in a share being given (not sold) to the individuals considered to be owners as above which varies from case to case.

This also should explain why Libertarians (should) oppose the Neoliberal form of Privatization. No one can legitimately sell that which they do not own, not even the State.

The sale of State assets to corporate interests for cheap (due to it often being a distress sale) should be considered an injustice to the real owners of those assets.

Who really owns State-supported Private assets?

Libertarian principles of privatization also apply to so-called "private" corporations which rely on the State as a result of lobbying. These "private" corporations have successfully used the regulatory framework of the government to monopolize (or oligopolize) their industry. They have received cheap loans, corporate bailouts, and subsidies to help them stay in business. Some also rely on government contracts for revenue. They can only be called "private" in the most ironic sense.

These "private" corporations exhibit similar behavior as the public sector. They show inefficiencies in their operations, have disregard for the consumers (who have nowhere else to go), and engage in price-fixing. Those are the reasons libertarians oppose public sector monopolies. Consistent application of libertarian principles demands that they be privatized as well.

If a corporation has received corporate bailouts and subsidies then they are actually owned by taxpayers, at least partly. If they have captured the regulatory framework to build a monopoly/oligopoly then, as co-founders of the garrison state, they deserve confiscation and reversion of their property to the genuine private sector. Based on the principles described in the first section, these industries should be considered to be owned by workers (occupying and using the land) and taxpayers depending on the extent of tax money involved.

What is private really?

When libertarians say 'private' they specifically mean that which is not funded by taxation or granted a legal monopoly.

Consider a thought experiment. We have the Indian Railways department that has the authority to run railway services and the government sets the budget for the department. The government could very well "privatize" the railway department and put it under contract instead of a budget. The situation would only be marginally different. The so-called private railways would be funded by taxation just like today, and it would enjoy a monopoly over the service. The result could be an increase in fares and no corresponding improvement in services.

Many examples of failed privatization experiments fall into this category. This includes Public-Private partnerships for infrastructure like highways and airports. For example, libertarians support toll roads in principle but don't support many examples of actually existing toll roads because it is just an example of a "private" corporation enjoying a legal monopoly.

Privatization without removing legal barriers to entry ends up being predictably disastrous, and it is generally common in Neoliberal Privatization.