| Nationalised
industries II
Yvonne
Harvey, Contributor
 |
These
young ladies joined in the fun during the PALS Peace Concert in downtown Kingston
on Tuesday, March 6. - Colin Hamilton/Freelance Photographer |
Hi students.
This week's lesson will complete our study of nationalised industries. I will
begin by giving an overview of the organisational structure of nationalised industries.
Next, I will look at the advantages and disadvantages of such industries. Finally,
there will be the presentation of your home work assignment. Nationalised
industries are run by boards which are appointed by a Member of Parliament, who
is in turn appointed by Government. Each board has a chief executive officer (CEO)
who oversees administrative affairs. The CEO reports to a Government ministry.
Advantages
of nationalisation 1.
When nationalisation takes place, profits are transferred from private hands where
only a few benefit, to the country as a whole, where many more persons benefit.
2. Nationalisation
often leads to regional economic development, not just development of the country
where the nationalisation takes place. 3.
Through nationalisation, private monopolies are prevented if they do not yet exist,
or they are broken up if they exist. This protects consumers from restricted quantities
and high prices. 4.
The aim of nationalised industries is social welfare rather than the maximisation
of profits. A wider cross section of persons benefit when the aim is social welfare.
5. Economies
of scale (that is, benefits or advantages of large-scale production) results from
nationalisation. These advantages lead to lower average costs of production for
the industry. Lower costs can be and often are transferred to consumers in the
form of lower prices. 6.
If it were not for nationalisation, some essential goods and services would not
be provided, since it would not be profitable for the private sector to provide
them. 7.
Nationalisation may result in improved quality and greater efficiency. 8.
Increased employment and greater job security are often the results of nationalisation.
Also, it sometimes results in improved working conditions. 9.
Nationalisation standardises production and, therefore, encourages the use of
up-to-date technology which increases output. 10.
Industries that are failing are revived through nationalisation. Thus, unemployment
that would result from the closure of these industries is prevented. Disadvantages
of nationalisation 1.
The taxpayer is often burdened with paying more tax to cover losses in these industries
when the management is weak. 2.
The monopoly nature of nationalised industries may lead to a take-it-leave-it
attitude to the consumer. 3.
In some instances, the quality and variety of output may actually decline. 4.
Many consumers resent the standardised production of nationalised industries.
5. Some
ministers and MPs do not exercise effective control over very specialised and
complicated operations in some nationalised industries. 6.
Governments may have difficulty in maintaining the industry after the initial
investment. This may result in the business being returned to private hands. 7.
Workers in nationalised industries receive relatively lower wages than workers
in private sector businesses. Now,
it's assignment time. Use the TWO lessons on nationalisation (last week's and
this week's) to answer the following question: (a)
(i) Define nationalisation. (ii)
Give TWO examples from your own country of industries that are nationalised or
have been nationalised in the past. (4 marks) (b)
Explain three major objectives that governments attempt to achieve through nationalisation.
(6 marks) (c)
Outline the organisational structure of a nationalised industry. (4 marks)
(d)
Give three advantages and three disadvantages of nationalisation. (6 marks)
Total
marks: 20 Opposite
to nationalisation is privatisation. You are being encouraged to research this
area under the following headings: - Definition
of privatisation
- Reasons
for privatisation
- Advantages
of privatisation
- Disadvantages
of privatisation
As
you research this area, it would be wise to make some brief notes on your findings.
Take care until next week. Then, we will begin a new unit. Bye for now. Yvonne
Harvey teaches at Glenmuir High School. | 
