Nationalisation is the
process of taking a private industry or private assets into public ownership by
a national government or state by passing a law.
Nationalisation “taking over private
property by state or national government” is usually done for the welfare of
general public example: for building roads, dams or public buildings.
Advantages of nationalization
Economies of scale: advantages due to
increase in size of firm. When firm become nationalized it would have better
control so that this benefits can be enjoyed by all people
They benefit from economies of scale (Bigger is better) which
means that the prices to consumers is relatively lower than if we had a number
of small firms.
Consumption of resources than exploitation: Government will
conserve the resources whereas in private sector resources will be exploited to
get profit
Increase in employment opportunities: public sector may not think
of redundancy of employee if the firm doesn’t give the profit where as private
firms they make workers redundant if firm is in loss
A monopoly owned, run and controlled by the government will stop
the consumers being exploited.
The government can manage the economy by controlling the important
industries.
The government can invest money and make their service more
efficient.
Companies owned and run by the people for the people take
social costs (pollution etc.) into account and the profit goes back to
the people.
The disadvantages of nationalization
When the ownership is in public sector, the employs do not work
for profit there performance and efficiency of the employs remains poor, they
lack skill, interest and ability.
It will not increase the skills interest and ability of workers as
there is no incentive for extra work. Whereas private firms will give
promotions, higher salaries, fringe benefits for workers who show ability,
interest, and performance.
Government may not complete the work in time as it may take a long
time to take decisions hence there will be delay in work. Whereas in private
firms decisions are taken quickly making work fast
The government may not take proper actions to utilize all the
resources hence many resources will be unutilized.
Government may not be able to handle many affairs at a time which
will lead to improper management and losses creating a burden to government.
Competition is necessary for development and increasing the
production. Nationalization has decreased the spirit of competition. So the
quality products will not be available
The management of nationalized firms will provide jobs to their favored persons because the political leaders have influence upon the state authorities.
The management of nationalized firms will provide jobs to their favored persons because the political leaders have influence upon the state authorities.