July 29th 1998. The day telephony in Brazil changed forever. The change? Privatization. The state didn't have enough money to invest in the sector — and the money that had to be put in this market, in order for it to grow, only the private companies had. Without them, the amplification of this service wouldn't have been possible. During this process, the company that dominated the business at the country, Telebras, was divided into regional enterprises (Tele south-east/North-east etc). This change generated competition between the parties and facilitated the process of universalizing access to phones. The privatization of the telecoms in Brazil granted a huge advancement in terms of infrastructure and technology. Today, in 2024, there's a similar case in motion: The Basic Sanitation Framework. The goal is the universalization of water and sewage services by 2033, ensuring that 99% of the Brazilian population has access to potable water and 90% to sewage treatment and collection.
At first glance, it's hard to see the downsides of such a process. In short, the legislation, published in 2020, attracts more private investors into the sanitation market. By establishing norms to be followed by the companies in the business, the inefficient enterprises are essentially ruled out of the sector, once new concessions are only dealt to those who prove to have financial capability to ensure the simultaneous delivery of water & sewage treatment. Similar to the telephony case, the state budget for sanitation alone was insufficient to meet demand. With private companies entering the game, this would change fast. In 2021, 72 billion R$ had already been raised from investments and almost 20 million people benefited from the services. The project is clear: guaranteeing quality and structure to universalize access to basic sanitation.
However, as in with any public decision, there were opposing parties on the subject. For them, the measure would make the prices in poorer regions raise with the end of cross subsidization — when the profit made in more populated areas covers the loss in smaller counties. Some workers from companies in the business were also against the legislation. They alleged that the process would bring risks like exclusion of more vulnerable families and unemployment. Nevertheless, the Framework aims for the long haul. Yes, prices would be higher, but with the change from public to private, the new main goal is performance. Higher prices would mean higher income, facilitating expansion and quality assurance. If before there was no stimuli to achieve higher productivity and to go after expanding the market, there is now.
The problem with politics and conflicting views on the same matter is that both sides are willing to not be 100% clear with the people. By diffusing imperfect information, both parties carefully select what they share — sharing only what supports their own point of view. This rhetorical strategy is meant to persuade the listener, making a point more appealing than what it would originally be. This device is effective in the public arena because of the nation's rational ignorance. While knowledge and ignorance are often thought as opposite forces, in this concept they act together. Rational Ignorance is refraining from acquiring information when the cost of educating yourself is higher than the benefits of said education. In a nutshell, politicians omit parts of the truth and the public, not having much to gain from informing themselves correctly, believe everything their preferred party shares.
“Homo Politicus, Homo Economicus”. This phrase by Foucault brings the reflection that the “economical man”, seen as the one who takes rational decisions prioritizing self interest, is no different from the “political man”. The mindset of maximizing your own payoffs is natural to the human being, no matter the circumstance. Therein Lies the importance of privatization — rewarding effort, ensuring accountability and incentivising greater performances through competition.
Milton Friedman's “No such thing as free lunch” means that nothing that's desired or valuable can be acquired without a price. For sanitation, the “price” is giving up the universalization and improvement of the services. To cut a long story short, without higher costs for sanitation, there's no better service — if you don’t pay, you don’t gain.
Fontes sobre o novo marco do saneamento, discussões políticas e definição
Impactos sociais e econômicos do novo marco
• https://sintaemasp.org.br/noticias/ato-bolsa-de-valores-privatizacao
Linha do tempo e impactos da privatização da Telebrás
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