Advantages And Disadvantages Of Privatization

Privatisation is where a previously public owned firm is sold privately usually to generate a large capital sum or to reduce the burden on the public sector. Privatisation refers to the changing of ownership from a state-owned to a privately owned entity. It is usually done three ways which usually are the sale of assets, contracting out and deregulation. Therefore by privatising the MHPA, it means that the ownership of the enterprise would change to a privately owned firm from a state owned firm and therefore this would bring about a large amount of potential changes in the way that the firm is run and operates.

In Document 4 “A Call to Action,” by James B. Weaver, it explained to the public through the author's thoughts of that monopolies had too much power and that the monopolies destroy competition and trade. This book was written at the time of when big corporations were taking over and destroying competition. Also, the author goes into detail that they control the price of the raw material, so they can produce their products at a low price and sell it at a low price. By selling that the lowest price, the competitors can not compete are driven out of business or reduce the wages of the workers. This idea can be related to current times were big corporations, such as Walmart, are destroying competition because they lower their prices that the competitors cannot compete with.

It has been 20 years since the privatisation of British Rail occurred in Great Britain. This is when the government’s ownership and infrastructure of the railway where passed on to the private sector in order for them to try make it a better efficient market. The government have multiple regulations in order to keep this industry from falling back in to a monopoly. There has been many benefits and problems that have occurred to both the producer and consumer while the government have tried to intervene in order control the pricing of rail tickets.

Privatizing the United States air traffic control operations may move closer to becoming a reality in 2017 – something most airline companies and other industry leaders have been pushing for a long time. Proponents of shifting away from government control introduced a bill last year that the incoming president has expressed a willingness to carefully consider. Rep. Bill Shuster (R), who helped draft the legislation, sees the long overdue shift to satellite-based air traffic management as the solution to lower costs for operators, while making air traffic safer and more efficient for all stakeholders. Whether global air travel is privately run or government controlled, call center voice recording activities will still be necessary to ensure control tower staff are fully trained and conversations are documented for

According to Robert B. Denhardt, Public Administration an Action Orientation, privatization "is the use of non governmental agencies to provide goods or services previously provided by government." (P.95). Privatization comes in various degrees, from the outright selling or transfer of government ownership of assets (for example public utilities), to, as is more common in the United States - the contracting of goods or services to private firms.

In some cases where products produced by the government are subsidized then privatization leads to an increase in prices, when the government owns these firms then the consumers will experience a reduction in the price of goods and services produced by these firms and therefore gain.

History has shown that societies that promote vigorous competition among private companies have lower prices, better products, and greater consumer choice.

It creates equal and fair pricing. The economy would be tyrannical without competition, that is why they made a policy to destroy any monopolies from forming because if they were able to form and take over that area of the market and raise prices outrageously to whatever they feel would make them as much profit as possible while not raising too many suspicions. However if there is a monopoly they would be able to raise the prices however high they want because there is no other companies selling that same product at a cheaper price. Competition creates fair prices because take for example two gas stations right across the street from each other. They are both getting solid business until one decides to lower the price of his gas ten cents. The other gas station notices twice as many cars at the other one and decides to lower his fifteen cents. This just keeps going on until they have to stay in a certain range so they can still make a profit, but this is how competition stabilizes the economy. Competition also makes companies come out with new and innovative ideas to grab that portion of the economy. In other economy's where there is communism they don’t create products to the best of their ability or try to create new things as they are all getting paid the same so there is no incentive for employers or employees to work harder. Competition is what makes the U.S come out with the latest technology, latest cars, phones, and anything you can think of. An example of a big time monopoly was John D Rockefeller, he was able to control everything, prices, products, elections it just creates solo dominance in the market which is not good. We need different products in the economy and different versions of products for every different person and every different cause for wanting that product. The U.S economy is number second in the world now which is why we are so great and have so many varieties of products. This

Overall, the assigned literature explicitly describes privatization as a neoliberal strategy. The neoliberal perspective that the economy works better under the free-market approach and that government intervention should be limited, seem to couple well with the goals of privatization. Unquestionably, privatization is a controversial topic as it promotes non-traditional ideas of how the government should operate. I believe that privatization jeopardizes the financial existence of public programs such as Social Security and Medicare, programs that have historically aid the United State economy by reducing poverty among vulnerable populations. Also, privatization appears to mostly benefit large corporations as they continue to increase profits

In the article “Why Governments Intervene In Market”, the author agreed with governments’ interference because of inequalities of resource ownership. Some companies owned the most resources but others owned less, which could hurt the country’s economy. In order to fight against the problems, the government used regulation, taxation and subsidies. There are four reasons for the government to intervene the economy. First, the government tries to improve social welfares. Such as, (Deepen and strengthen “conditionality’’, Encourage “Diversion”, Introduce better “triage”at the start of the welfare system, Identify people with severe problems earlier, and manage them better, Widen conditionality further, Reform Housing Benefit and Social Housing).Without the government’s restriction, businesses can be combined together to build a strong monopoly. Monoplying market would cause many negative problems such as unlimited rise of price and occupying enormous resources. Second, the government

Privatization is the act of transferring ownership of a specified property or business operations from a government organization to the hands of a privately owned entity. This as well includes the transition of ownership from a public company to a private company. During the 21st century, the economy of United States have changed due to the industries that have been selected to be privatized by the government such as transportation, education and health care. Private sectors in the United States have taken control of these industries which is formally controlled by the government. It is noticeable that, the presence of privatization in the United States during the 21st century has affected the United States citizen negatively. The transportation

Natural monopolies are cases in which production costs, infrastructure, and demand structure lead to a single monopolizing firm producing the good at lower cost than any other arrangement. Under such situations, firms will tend to over-charge and under-supply, causing a reduction in social surplus and an inefficient distribution of goods. A lack of competition is a fundamental violation of the idealized market assumptions. Little or no competition leads to inefficiencies of production and operation (Weimer and Vining p. 102). Furthermore, natural monopolies give an unfair and non-competitive advantage to firms that have entered the industry first. In cases of natural monopolies, government must typically regulate private industry in an attempt to maximize surplus, or, alternatively, government may provide the good or service publicly.

There are two kinds of privatization, private provision of service with a “public” character and the process of returning to the private sector property’s or functions previously owned or performed by government. (Shafritz/Russell/Borick pg. 106-107). The private sector is guided by the motive of money and in the United States, where there is more of a free economy, the private sector is wider in comparison to countries like China. Some argue certain public goods and services should remain primarily in the hands of government. An example of this, is law enforcement, basic health care, and basic education. In comparison, some feel that government should steer rather than row.

Privatization of public services is increasingly common in today’s bureaucracy. While these private companies have an arguably important role in the function of society and stability of infrastructure, their definition under the law and protection from government overreaching is questioned. Most notably, two Supreme Court cases – Board of County Commissioners v. Umbehr and O’Hare Truck Service v. City of Northlake – look at First Amendment freedoms in relation to private action. The cases also correspond to how private sector entities are titled under government control. It is important to first analysis the cases and then view the sides of the case, noting the important of the constitutional issue of free speech and how the government attempts to limit it.

Privatization policy was introduced in Sri Lanka in 1977. The great efforts were taken by the government after privatization to reform economic policies including allowing private ownership in the plantation sector, to open the country for foreign direct investment and promoting free trade with other countries. Three major sectors of the Sri Lankan economy such as agriculture sector, industrial sector, and service sector were also subjected to economic reforms under this new trend. Several studies have been conducted to evaluate the impacts of new economic policy in various sectors of Sri Lanka. Sri Lanka’s agriculture export income mainly depends on Tea, Rubber and Coconut plantations. Further, rice is cultivated as a stable crop of Sri Lanka. 27.1 percent employment is occupied in Agriculture sector while agriculture sector contributes to 7.1 percent of Gross Domestic Product of Sri Lanka.