Private vs. Public Ownership

598 Words3 Pages
Evaluate the economic case for taking privatised indutries, such as the railways, back into public ownership 30 Marks Privatisation is the act of taking something that is state owned and changing it to private ownership or control. The benefit of keeping the industry privatised is that it promotes efficiencies, such as X, allocative and productive. This is because by making an industry private, you are creating it into a business which is profit driven and which has to be productively, X and allocatively efficient at least to some degree to survive in a contestable market. This could be seen as the main argument against nationalisation along with the cost to the taxpayer. The cost to the government and the taxpayer of keeping the business’ running and making sure they efficiently pursue their desired function can have high opportunity costs.This is especially prominent in a time of recession/economic downturn when the money could be spent in other ways to increase growth the economy,such as macroeconomic policies including fiscal and monetary policy. On the other hand public ownership does have some positives. The main benefit is that of public interest, this includes the fact that the business is not there to operate for profit, it is there to serve the consumers. This point could also be tied in with the fact that any profit made by the business’ if government owned will go back into society. This is obviously beneficial if the business’ are making profit, but it could be argued that a business should not be making profit, but instead charging lower prices to consumers initially. This is also an issue if the business’ are underperforming, then the taxpayer would essentially be paying for money to go into the business’ to get them back on track. In the example of railways, public ownership could lead to lower prices to consumers and a smaller amount of negative
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