Nationalization vs. Privatization?

Question

Do you think a national company can do a better job than a private one. Is a national company more prone to corruption/ineffeciency than a private one. For instance some countries have a nationalized media (i.e. BBC, CBC). Are these automatically pro-govt? Others have privatized media. Are these subservient to sponsors? How about utilites? Natural resources? Defense industry? Security? Military? Or maybe it depends on the situation?

Answer 1

Generally nationalised companies have monopolies, since government ownership is a way of preventing them abusing their market piower and ripping their customers off. Traditionally this applies to things like utilities, communications companies, airlines etc.

The problem with government ownership is that the lack of profit motive means that they can become inefficient. Privatisation of Australia's nationalised utilities during the 80s and early 90s meant that the Australian economy achieved very high productivity growth in the 90s and 2000s. (There are some good papers on this at www.pc.gov.au)

Also, lack of competition means nationalised companies have less incentive to adopt the very latest technologies while they are still expensive. This means that consumers have to wait longer than in countries where there is competition between private providers (Australia's limited access to high speed broadband is a good example of this). Therefore, you get a loss of what economists call static efficiency and dynamic efficiency.

Another problem is that a nationalised firm must raise funds from government rather than being able to raise funds on the stockmarket. This prevents them from investing when the opportunity arises, but instead when the government is willing and able to do so, thus also contributing to inefficiency.

If the government owns a nationalised entity and it is competing with private sector firms, then it will either behave like a private firm, in which case why would the government want to tie up money that it could probably better spend retiring debt or spend on benefitting its citizens directly. If it is using it as a backdoor way of subsidising goods or services, then it can usually get a better deal by subsidising private firms who tender for the subsidy, thus giving the lowest prices for each dollar of subsidy offered.

That said, while nationalisation has problems, there are some things like defence where there is little point having more than one defence force - if your country is invaded, do you really want two armies fighting each other for the right to fight the invaders?

Answer 2

Nationalization And Privatization

Answer 3

Socialism is always bad. BBC is one example of a good national company but that's rather an exception than the rule. NASA is another example of a successful national company but NASA strives to work with private companies and privatise suitable functions. My main worry is that US economy becomes more and more government dependent. It looks like America won the Cold War only to fall victim to communism from within. And by communism I don't mean liberals. I mean greedy oligarchs using the Government or any other means available to unlawfully exploit the people. Sound familiar?

Answer 4

Things run by the government:
>>>Education = atrocious. Fed Dept of Education established in 1980. The result is 26 years of failure and an education system that was better without it.
>>>Social Security = going bankrupt
>>>Medicare = worse off than social security

Let me present to you the biggest financial lie in the history of America:
-----
In 1936, the federal government published an informational pamphlet on Social Security. It stated:

"…and finally, beginning in 1949, 12 years from now, you and your employer will each pay 3 cents on each dollar you earn, up to $3,000 a year. That is the most you will ever pay."

http://www.ssa.gov/history/ssn/ssb36.html
-----
At least Enron & WorldCom no longer exist to screw any of us over. Nor did they tell multi-trillion dollar lies. When corruption, fraud and lies come from the government, we all just live with it, pay for it, and suffer forever under it.
With the exception of physically protecting my safety, I don't want the government anywhere near me or running anything.

And if health care is ever run by the government, may God help us all. Did you know that there are 132,000 pages of Medicare regulations? I could not make that up if I tried.

.

Answer 5

Generally, private industries are preferrable to nationalized ones. The profit motive forces efficiencies into the production process that otherwise would not exist. Also, governments tend to stifle the entreprenurial spirit, not encourage it.

There are exceptions.

No private corporation or industry can afford to build infrastructure such as highways, dams, and bridges and so forth. Only the government can muster the necessary resources for that.

Also, the military and public safety are rightfully the government's concern. I also think that healthcare should be taken out of the private sector altogether. All citizens deserve high quality healthcare. I think doctors should be employed by the government and their salaries should be capped out at around $500,000 per year. Or, we could require that all doctors perform 5 years of public service before going into private practice. In exchange, they could have their student loans paid off.

Anyway, I digress.

Sorry.

.

Answer 6

Basically Govt may privatise any utilities under them to promote productivities and competition. On the other hand Govt may take over some privatised company to control it's function where the private could no longer set the price, where they aim to make high profit, ignoring all other side external factors.

Answer 7

Privatization will artwork nicely as they have freedom to enforce new and inventive issues effeciently and public has option to % between huge type which creates competetion which in turn leads to extra helpful service at compitational fee.