Comment on the following statement discussing Mexico's recent privatization. "Mexican state companies are owned in the name of the people, but are run and now privatized to benefit Mexico's ruling...

Comment on the following statement discussing Mexico's recent privatization. "Mexican state companies are owned in the name of the people, but are run and now privatized to benefit Mexico's ruling class."

Answer.Historically, Mexican state companies have been run to benefit politicians as well as their bureaucrats and workers rather than consumers and taxpayers (who wound up subsidizing these firms). Whether privatization benefits Mexico's ruling class depends on how prices are set and the terms of the sale. Even if privatization takes places at unrealistically low prices, it will benefit all Mexicans, provided that (a) no laws restrict the ability of domestic or foreign firms to compete with privatized firms and (b) the government ends its subsidies to them. Competition will force privatized firms to be more efficient and lower their prices to consumers, while cutting subsidies will end a major drain on the Mexican treasury.