While there is no blueprint for transforming a largely

government-controlled economy into a free one, the

experience of the United Kingdom since 1979 clearly

shows one approach that works: privatization, in which

(5) state-owned industries are sold to private companies. By

1979, the total borrowings and losses of state-owned

industries were running at about t3 billion a year. By

selling many of these industries, the government has

decreased these borrowings and losses, gained over t34

(10) billion from the sales, and now receives tax revenues from

the newly privatized companies. Along with a dramatically

improved overall economy, the government has been able

to repay 12.5 percent of the net national debt over a

two-year period.

(15) In fact, privatization has not only rescued individual

industries and a whole economy headed for disaster, but

has also raised the level of performance in every area. At

British Airways and British Gas, for example, productivity

per employee has risen by 20 percent. At associated

(20) British Ports, labor disruptions common in the 1970’s and

early 1980’s have now virtually disappeared. At British

Telecom, there is no longer a waiting list—as there always

was before privatization—to have a telephone installed.

Part of this improved productivity has come about

(25) because the employees of privatized industries were given

the opportunity to buy shares in their own companies. They

responded enthusiastically to the offer of shares; at British

Aerospace, 89 percent of the eligible work force bought

shares; at Associated British Ports, 90 percent; and at

(30) British Telecom, 92 percent. When people have a personal

stake in something, they think about it, care about it, work

to make it prosper. At the National Freight Consortium,

the new employee-owners grew so concerned about their

company’s profits that during wage negotiations they

(35) actually pressed their union to lower its wage demands.

Some economists have suggested that giving away free

shares would provide a needed acceleration of the privati-

zation process. Yet they miss Thomas Paine’s point that

“what we obtain too cheap we esteem too lightly.” In

(40) order for the far-ranging benefits of individual ownership

to be achieved by owners, companies, and countries,

employees and other individuals must make their own

decisions to buy, and they must commit some of their own

resources to the choice.