In Favor of Privatization, Article Critique Example

Abstract

Privatization has its advantageous over public ownership; however, private ownership in certain sectors like water resources remains still controversial. The article “The Impact of the Privatization of Water Services on Child Mortality” by Sebastian Galiani and colleagues is aimed at refuting the statement that privatization of water resources benefits only the companies. It argues that its main purpose is to improve the welfare of people. Therefore, the aim of this paper is to outline critical evaluation of this article and how successful it was in achieving its purpose, what were the potential weaknesses and to explain the personal impression from it.

Key words: privatization, public, child mortality, water resources, contamination.

In Favor of Privatization

In the history of the capitalism, one of the most common struggles was between governmental control and privatization of companies. While in most sectors of the economy privatization has its obvious advantageous over public ownership, certain sectors like water resources remained still controversial. In this regard, the article “The Impact of the Privatization of Water Services on Child Mortality” by Sebastian Galiani and colleagues is aimed at refuting the statement that privatization of water resources benefits only the companies and not the welfare of people. In its turn, the aim of this paper is to assess critically until which extent this article was successful in achieving its purpose, what were the potential weaknesses and to explain the personal impression from it.

First of all, the authors are systematic in their research and argumentation; they also pay attention to the originality of their article and the place in the existing literature on the subject. In this regard, they suggest that the originality of the work is that the emphasis is placed on the contribution of privatization for the welfare of the local communities and people in the poor areas in contrast to the public provision of the water services. The authors argue that this is demonstrated by the decrease in child mortality due to the privatization and the consequent improvement of quality of the service and water in Argentina (Galiani et al., 2005). The authors pay attention to the explanation the connection between the quality of water supply and child mortality, outlining that children are specifically vulnerable to water-related diseases transmitted through two mechanisms: water-borne and water-shed diseases.

In order to clarify their future findings on the dependency of privatization and child mortality, the authors outlined the historical context of privatization in Argentina, outlining that the rationale for privatization was part of the national reforms caused by recession. The focus group was children under the age of five which was conditioned by their vulnerability to water-related diseases. The main statistical data was taken from the Argentinian Ministry of Health (Galiani et al., 2005). The main method applied to the analysis of statistics was the difference-in-differences model, which is “a two-way fixed-effect linear regression model” (Galiani et al., 2005, p. 96). Although this model is well-justified for the purpose of this research, it also has certain changeable variables that might result in significant changes in the result. For instance, although the time effect is presumed to be common to all municipalities at a certain period, the time-varying error might be significantly distorted by secondary factors like epidemiological situation in a municipality. Another concern is that the authors use both municipalities that had both public and non-profit cooperative’s services as controls. The difference of practices used by two different entities can undermine the standardization of their performance and mathematic accuracy for being equally evaluated as controls. Although these methodological considerations could undermine the research and its results, they were taken into consideration by authors with further steps of verifying the presence of the secondary factors or unpredictable occasions like epidemiological situations, and the difference between public and non-profit services provision were taken into account while doing the calculations. Thus, the article demonstrates a systematic and well-thought methodology of the research with critical elements of potential error variables.

The findings of the research suggest that the privatization of water services “is associated with a 0.33 reduction in the mortality rate, which amounts to 5.3. percent reduction of the baseline rate”  (Galiani et al., 2005, p. 98). In this regard, the figure remains the same irrespective of the change of government during the studies time, suggesting that the nature of the ownership is the key constant to be responsible for this result. Further in the correlation between privatization and child mortality by the cause of death it resulted in the reduction of 18.2 percent of the infection and parasite-caused diseases, and 11.5 percent in perinatal deaths (Galiani et al., 2005, p. 105). The higher death rate was found in poor municipalities rather than wealthier ones, which was used as an argument in favor of the central thesis that privatization benefits the well-being of poor people. Overall, the findings of the research and the methodological calculations demonstrate a profound and systematic analysis and argumentation in support of the central thesis.

However, the demonstrated research has certain flaws. First of all, although the connection between the privatization, improvement of quality of water and child mortality is outlined, the factor of educational programs on water use and hygiene were given a proper attention. In this regard, the quality of water might be undermined by the lack of knowledge of water hygiene or the presence of pathogens in households that can be then transmitted through the water, which would particularly the case for the poor municipalities. Another consideration is temporal. First of all, the article covers the timeframe of a decade 1990-2000. Thus, from the contemporary perspective, it is already outdated. Although it makes the case in favor of privatization of the water resources, it does not and technically cannot cover a long-term evaluation of the consequences of privatization. In this regard, the potential future rise in prices on water could easily contribute to the increase of mortality rate in poor municipalities. Another issue in this context is that the private companies were eager to install new facilities and supply infrastructure, however, in a long run, the question is whether they will be eager to renew them if the costs of water services are kept minimal. Thus, it can be argued that the article is well-structured and systematic in proving its point; it outlines strong facts and analytical data. On the other, from the contemporary perspective, this research would benefit from its further continuation and verification of the new potential factors that could change the suggested situation.

From the personal perspective, I consider that the authors did a tremendous amount of work in order to do their research and out it in this article. They demonstrate to by objective in their desire to evaluate both pros and cons of the privatization and where their research fits in. However, I think that by using just quantitative method of research their picture of the problem remain partial and theoretical. In this regard, the research would be even more systematic if it also included qualitative methods like interviewing or informal surveys among people of the poor communities. This would be particularly useful in overcoming the bias of the differences in governments, corruption, and the actual events happening outside the formal statics. I think that testing statistics or using independent data would also be helpful. Nevertheless, the article is a profound piece of academic work and is worth reading for everyone interested in the subject or related subjects of water resources management and new dimensions of privatization.

Reference

Galiani, S., Gertler, P. and Schargrodsky, E. (2005). The Impact of the Privatization of Water Services on Child Mortality. Journal of Political Economy, 113 (1), 83-120.