Petrobras, Why Privatization Alone Can Never Kill Corruption
Hélio Schartsman

-OpEd-

SÃO PAULO — The ongoing corruption and money laundering scandals at Brazil's state-owned oil company Petrobras have badly tarnished the image of the company. Once considered as a sort of national treasure, the public firm faces almost daily revelations about kickbacks paid to politicians from oil sales as part of a scheme to buy votes, which has led to a growing chorus calling for Petrobras to be privatized.

But that reasoning is flawed. If being in private hands was any guarantee against corruption, then there wouldn't be so many directors and managers who have wound up behind bars. That doesn't mean, though, that privatization doesn"t offer a cure to many of the ills that are causing devastating damage to state-owned companies.

Australian philosopher Peter Singer identified the issue well in a 1999 book in which he defended the left's adoption of Social Darwinism instead of fighting against it. On paper — that is, in abstract terms and without taking human nature into consideration — the best way to provide goods and services to the population would be via state monopoly. It offers many advantages without requiring that benefits be redistributed among shareholders.

But reality doesn't exist on paper, and "state monopoly" is often mocked as synonymous with "inefficiency." That's because it is human nature to work better and harder when we do so for selfish reasons — in other words, to earn money and prestige.

If those responsible for the day-to-day business of a company don't benefit one way or another from its success, the end result is a clear break between the interests of the organization and that of its workers. In the best-case scenario, that leads to inefficiencies, and in the worst case, to systematic corruption.

The bottom line is not necessarily that Petrobras must be privatized. But there's no doubt that the oil giant needs to adopt some habits that are commonplace in private companies. For instance, its directors should be chosen for their competence and experience, not for political motivations.

According to Singer, one of the left's big mistakes has been to believe that there's no fixed human nature. But our nature is a hybrid one. We can work hand in hand, but it's inevitable that we take advantage of a situation when the conditions allow and the opportunity presents itself.

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