system
Given the following post, respond as if you're commenting on Reddit:
human
When critical infrastructure (Water, electricity, etc) is privatized, the complaint is often that the profits have been privatized and the losses have been socialized. Is this a fair criticism?

For instance. 

A private company takes over the management of an electrical grid. To increase profits, they reduce maintenance, which makes privatization look like a good choice/efficient. But after a decade, the lack of maintenance catches up with them and service disruptions occur. They then say they need to increase fees. But if they'd not extracted that profit there would have been money for maintenance in the first place. 

Now, that's not to say that publicly managed utilities aren't mismanaged, etc. But is the criticism fair? After all, the public utility is using all the pie, while the private one is using only what isn't taken for profit.
gpt
Privatisations almost always come with heavy performance commitments. In practice, this means rather than decreasing maintenance, they often have to commit to increasing maintenance or otherwise investing in infrastructure. 

In general, long dated assets like infrastructure are funded by cash flows very far in the future. Private companies often have the ability to withstand upfront losses for the promise of future cash flow; but governments are actually really bad at that. This is primarily because government budgets for infrastructure tend to be political decisions for the Budget, which means they are decided by the exigencies of that particular year.

Mechanisms also exist to prevent infrastructure companies from profiting too much during privatisations. These are generally called Regulated Asset Base models. In general, they sort of guarantee x% return to the company, but also fixes the pricing they're allowed to charge as a percentage of the investments they put in.

Edit since it's a hot topic in the comments:

Yes - in practice enforcement is not always easy, and in many cases the multiple mechanisms are not applied at the same time or in sufficient size. In countries with endemic corruption, the entire infrastructure platform is effectively given away for free to politically connected people, the post-Soviet world being a very prime example. While in countries like the US where lobbying is fervent and restricting profits is politically taboo, the terms are either not well enforced or just weak.

In some cases, the enforcement is overzealous or otherwise prohibitive. UK energy pricing rules required strict price limits and limited profitability, this forced energy providers to cut costs aggressively particularly by reducing their electricity price hedges. When energy prices spiked, those companies were unprotected and also unable to raise prices, eventually bankrupting half of them and requiring various government interventions. In Germany, so much emphasis is placed on ensuring that small rural communities have internet access even at ridiculous costs that everywhere else is underinvested and Germany of all countries has the worst telecom infrastructure in Europe.

Executing any economic policy, especially one as comprehensive and complex as a nationalisation / privatisation is never going to be simple or perfect. Economics provides us with tools, theories, and mechanisms, but humans and institutions ultimately have to execute.