Western free market ideology says, yes; but empirical evidence and real life experience says, no. Private enterprise often destroys value rather than create it.
© Alex Krainer's Substack
it is assumed that the nature of ownership is the key factor determining an enterprise's performance, and that private ownership aligns owners' interests with those of the company's customers. As a rule, the magic of free market capitalism ensures that the customers get better service, better quality and variety of products, and
bien-sur, lower costs. To boot, the owners make profits and everyone lives happily ever after.
However, empirical evidence simply doesn't support this. At the very least, real-life experience suggests that
not all private enterprises are superior, nor are all state-run enterprises inferior. In the past, I shared the experience with the trash collection services in Croatia. During the socialist era, trash collection was run by state companies, and our towns and cities were clean and orderly. I remember that many foreign visitors would remark how our cities were remarkably clean, and they really were.
But then, in the early 2000s, the service was privatized and the magic of private, free market capitalism took effect. Today, trash collection is much more expensive than before, private owners reduced the number of collection points, forcing everybody to carry their trash farther (effectively working for trash collectors for free), and the cherry on top is that our cities are no longer clean and orderly. Here's what my home city of Rijeka often looks like:
© Alex Krainer's SubstackNot a great look, especially if your No. 1 industry is tourism.
What the images above can't convey is that this doesn't smell like roses either. Here's a recent photo from Zadar, a beautiful medieval town on the Adriatic coast, one of Croatia's top tourist destinations:
© Alex Krainer's SubstackTrash collection is a profitable business today, and the seagulls are great fans.
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