Selling State Assets

Paul Sweeney criticises the idea of selling State-owned entities in today’s Irish Times: you can read his article here.   Paul Sweeney’s contribution is incomplete. In particular, he does not fully address some key issues (I raise these points as questions, without having answers)

  • Liquidity.  If a government faces funding risk, selling valuable-but-illiquid assets may reduce the risk of a funding crisis.
  • Ownership and firm performance.  While Paul Sweeney highlights the potential inefficiencies of privatised firms, he does not have much to say about the possible inefficiencies of State-owned firms where the management or workforce may have objectives that are not fully aligned with the common good.
  • Regulation.  Where monopoly power is a severe problem,  regulation is necessary. Can the Irish regulatory system be made more effective to ensure that sectors inhabited by monopoly-type firms deliver efficient outcomes? Does the identity of owners affect the effectiveness of regulation?

Paul Sweeney also highlights the increasing importance of State-owned firms in Asia, Russia and Latin America. It would be good to know the exact lessons to be drawn for countries such as Ireland from this development.