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What are the advantages and disadvantages of the privatisation of government-owned...

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duaamasood99x | (Level 1) eNoter

Posted September 25, 2013 at 2:57 PM via web

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What are the advantages and disadvantages of the privatisation of government-owned companies such as airlines?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted September 25, 2013 at 7:10 PM (Answer #1)

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When governments sell off companies that they previously owned, there tends to be a tradeoff.  On the positive side, the companies generally tend to be run more efficiently.  On the bad side, the government is no longer able to use the companies to pursue political or social goals.

When a company is privatized, it generally comes to be run more efficiently.  The company no longer has tax dollars backing it up.  It now has to make a profit on its own.  This is good for the economy as a whole because the taxpayers’ money is no longer being used to prop up a company that is not as profitable as it should be.

However, the government is no longer able to use that company to try to improve society.  For example, a government might have used its ownership of the airline to ensure that the airline would serve places that could not support air travel on their own.  The government might also have used the airline as a source of jobs for people from underprivileged groups.  By privatizing, the government gives up the ability to use the airline in these ways.

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