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Experts at the Veolia Summit Call for Greater Cooperation between the Public and Private Sectors

Press Release June 20, 2012

  • Dennis Snower: The economy needs a smart government
  • Günter Verheugen: The public sector needs to address consumer interests
  • Johann Eekhoff: Monopoly profits are made at the expense of the citizens
  • Thorsten Grenz: It is essential to allow competition to provide the best solutions

 

At this year’s Veolia Summit, which is held annually together with the Kiel Institute for the World Economy, economic experts called for greater cooperation between the public and private sectors. Günter Verheugen, former EU commissioner for industry and vice president of the EU Commission, Dennis Snower, president of the Kiel Institute, Johann Eekhoff, former undersecretary and director of the Institut für Wirtschaftspolitik an der Universität zu Köln, and Thorsten Grenz, CEO of Veolia Umweltservice GmbH, discussed the summit’s topic “Partner, Competitor, or Monopolist? How Much Government Is Good for the Citizen?” Claudia Kleinert, of German television, moderated the discussion.

Verheugen: The public sector needs to address consumer interests
“Wherever the public sector engages in business activities, it needs to be subject to competition,” said Günter Verheugen. Further, he said that how the public sector pro-vides services is not a matter of ideology. “It needs to address consumer interests, that is, to provide the best services possible at the cheapest prices. This certainly does not happen when it protects monopolies and restricts or prevents competition.”

Johann Eekhoff: Monopoly profits are made at the expense of the citizens
“Once again, there is an increasing tendency for municipalities to provide public services that could also be provided by the private sector, even though experience has shown that doing so drives up the prices that citizens have to pay for such services,” said Johann Eekhoff. This is especially the case as concerns the provision of energy, according to Eekhoff. “On the one hand, the municipalities prevent competition, and thus lessen the incentive to provide energy efficiently, which drives energy prices up. On the other hand, cash-strapped municipalities are tempted to use their energy monopolies to make profits at the expense of their citizens.” When government intervenes in the wage and price systems, it causes price increases or shortages, said Eekhoff. “Current calls to raise wages substantially or to introduce minimum wages are very dangerous economically.”

Dennis Snower: The economy needs a smart government
“A market economy can only be successful when it is guided well by government,” said Dennis Snower. “The central role that government plays in a market economy is often overlooked.” The rules of the game in the market have to be established clearly and implemented consistently, he said further. “Government is the referee and protector of competition has to see to it that particular market participants are not discriminated against.” The challenge for government, according to Snower, is to find a balance between its own activities and the activities of private businesses. “A market economy thus needs a smart government,” said Snower.

Thorsten Grenz: It is essential to allow competition to provide the best solutions
“As of recently, the question is being posed as to whether public services should not be provided by private businesses,” said Thorsten Grenz. Further, he said that it is essential to allow competition to provide the best solutions. “Competition and a government that ensures that competition works should go hand in hand.” Turnover tax privileges for government businesses distort competition, government authorities often do not ensure that the provision of public services is efficient because they do not ask for competitive tenders, and the citizens pay, according to Grenz. He said that the new German recycling law is a good example of this. It allows municipal businesses to collect waste paper even when private businesses could do it cheaper. “This is done at the expense of the citizens and the environment,” said Grenz.


The Veolia Summit, which is held by the Kiel Institute and Veolia Umweltservice GmbH and which was held for the second time during the current Kiel Week, is a run-up event to the Global Economic Symposium (GES). The topic of Veolia Summit, business and government, will also be dealt with at the GES in Rio de Janeiro on October 16-17.

The Global Economic Symposium (GES) 2012 is being jointly organized by the Kiel Institute for the World Economy (IfW) and the Bertelsmann Stiftung, in cooperation with the German National Library of Economics – Leibniz Information Centre for Economics (ZBW) and in collaboration with the Fundação Getulio Vargas (FGV). Further information can be found at www.global-economic-symposium.org and at the official GES-blog at blog.global-economic-symposium.org.


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