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Privatisation
Yvonne
Harvey, Contributor
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| Students
of PGA Academy share a light moment
during the school's Parents' Day
on Tuesday, January 31, 2006.
- Anthony Minott Photo |
HI
EVERYONE it's POB time again. This week's
lesson may be regarded as the other
side of the coin to nationalisation
which was looked at in a previous lesson.
Before considering privatisation you
may wish to read over the essentials
of nationalisation.
Privatisation
is the term used to describe what happens
when the burden of ownership, management
and control of state-owned enterprises
is transferred to private owners.
This
may take many forms including:
The sale of government assets to the
private sector.
The movement of certain services that
were performed by the public sector
to the private sector e.g. garbage
collection.
The sale of shares in publicly-owned
companies to the general public.
The sale of controlling rights to
the workers of a publicly-owned company.
The deregulation of certain sectors
that were monopolies, e.g. transportation.
The introduction of private companies
who render certain services to publicly-owned
companies.
The
idea of privatisation then is quite
varied and these many forms must be
considered when the term is used.
WHY
PRIVATISE?
Privatisation normally takes place
because governments can no longer
afford to maintain or subsidise all
businesses they own and control.
Often, it occurs in order to prevent
wastage of public funds in state-owned
businesses that have been inefficient
and are making large losses.
Supporters of privatisation sometimes
argue that it provides government
with a source of short-term revenue
through the sale of state-owned assets.
Another argument is that it allows
the business to be run with greater
management skills than provided by
the public sector.
It also reduces the level of public
spending (for e.g. on subsidies) and
borrowing while promoting healthy
competition and efficiency.
Finally, privatisation gives the voting
public an opportunity to own assets
with the ultimate result of increasing
support for the free enterprise system.
OPPONENTS
While
many support privatisation, there
are some opponents. The arguments
against privatisation are the same
arguments in support of nationalisation.
Included in these arguments is the
fact that:
Privatisation increases monopoly abuse
by transferring businesses to the
less accountable private monopolies.
Control of strategic resources by
private individuals is not in line
with the democracy that most Caribbean
countries claim to defend.
With privatisation certain basic utilities
become less accessible to the average
person.
Many government-owned businesses have
amassed huge debts and pension rights.
This being so, it is often difficult
to get buyers for these businesses.
Some argue that state-owned assets
usually end up being sold too cheaply.
Privatisation means an end to subsidies
and increased prices to citizens,
since the goods and services of the
private sector differ from the public
sector.
A
number of countries in the Caribbean
have implemented privatisation, including
Jamaica. You may wish to do some research
to find out the sectors that have
been privatised in your own country.
In
addition to the above research, try
this question:
(a)
Define 'privatisation' (2 mks)
(b)
List two areas (sectors) in your country
that have been privatised. (2 mks)
(c)
State three arguments for and three
arguments against privatisation.
(6 mks)
Total
10 marks
That's
it for this week. Take care.
*
Yvonne Harvey teaches at Glenmuir
High School.
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