privatisation
- Created by: Christina Harris
- Created on: 16-04-13 17:35
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- privatisation
- when governments sell public sector businesses to new owners in the private sector.
- arguments for:
- the new owners operate the business with profit as a main aim
- this encourages them to run the business efficiently
- competition may now be encouraged if the business is sold off to several different private owners.
- this helps to increase efficiency and to keep prices low
- governments are often short of money.
- new owners may have additional capital to invest in improving the service offered by the business
- important business decisions will now be made fore reasons of business efficiency - not by government popularity.
- for instance, the government might subsidise a loss-making coal mine to protect miners' jobs.
- a private mine owner would close the mine to use resources more efficiently and profitably elsewhere.
- for instance, the government might subsidise a loss-making coal mine to protect miners' jobs.
- the sale of the business to private owners raises money for the government
- the new owners operate the business with profit as a main aim
- arguments against:
- as the new owners are interested mainly in profits, some services making losses may be closed down.
- these might be very important for some people or areas, for example, closing a rural bus route or not delivering letters to isolated districts
- workers' jobs could be lost as the new owners attempt to increase efficiency in order to raise profits.
- the business might be sold off to one owner who would still be able to run it as a monopoly.
- this could lead to higher prices for the customers
- only a few-people - the new owners - will benefit from owning the business, whereas before privatisation the whole country could benefit from any profits made as it was owned by the government
- as the new owners are interested mainly in profits, some services making losses may be closed down.
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