How the public sector strengthens the economy

You probably know that privatization of public services worsens those services, but did you know that it worsens the economy, too?

You probably realize that the privatization of public services is bad for those public services. Service worsens through cheaper materials or staff shortages, for example.

But did you know that the privatization of public services is also bad for the economy?

As private companies take over those public services, they try to replace unionized workers with non-unionized workers. They also try to reduce the number of total workers providing those services, by overburdening the workloads of the remaining workers or through such things as automation and digitization.

Support independent journalism

In both cases, there ends up being less money flowing in the economy.

For example, as workers become less unionized, they are less likely to have higher wages, and if workers have lower wages, they spend less.

As well, as the private companies lay off workers, it means there are fewer workers from that company spending their paycheques.

Workers buy things like gas, and clothes, and food. They pay rent and mortgages. They pay utilities and buy cell phones. And so on.

And if there are fewer workers, and those workers are making less, then that means they are spending less. As they spend less, it lowers consumer demand. As demand drops, so does production, and that in turn leads to less overall employment.

Less income from companies in the general economy means fewer jobs in the general economy and more downward pressure on private sector wages for those who remain employed.

A strong economy depends on a strong public sector.

Support independent journalism

By Kim Siever

Kim Siever is an independent queer journalist based in Lethbridge, Alberta. He writes daily news articles, focusing on politics and labour.

Comment on this story

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: