- This article is about state ownership. For information on public corporations, see Corporation. A corporation is a separate legal entity usually used to conduct business
Public ownership (also called government ownership, state ownership or state property) refers to government ownership of any asset, industry, or corporation at any level, national, regional or local (municipal); or, it may refer to common (full-community) non-state ownership. For the government of parliamentary systems see Executive (government. Ownership is the state or fact of exclusive rights and control over Property, which may be an object, land/real estate, Intellectual property In Business and Accounting, assets are everything owned by a person or company (all tangible and intangible property that can be converted into cash. For other uses of this term see Industry (disambiguation An industry (from Latin industrius, "diligent industrious" A corporation is a separate legal entity usually used to conduct business National governments (alternatively national unity governments or national union governments) are broad Coalition governments consisting of all parties (or Examples of administrative divisions English terms In many of the following terms corresponding to British cultural influence areas of relatively low mean population Local governments are administrative offices that are smaller than a State. A township (or Municipality) is a settlement which has the status and powers of a unit of local government The process of bringing an asset into public ownership is called nationalization or municipalization. Nationalization, also spelled nationalisation, is the act of taking an industry or assets into the Public ownership of a national government Municipalization is the transfer of Corporations or other Assets to Municipal ownership
A government owned corporation (sometimes state-owned enterprise, SOE) may resemble a not-for-profit corporation as it may not be required to generate a profit. A government-owned corporation, state-owned enterprise or government business enterprise is a legal entity created by a Government to undertake commercial Governments may also use profitable entities they own to support the general budget. A government Budget is a legal document that is often passed by the Legislature, and approved by the Chief executive -or president SOE's may or may not be expected to operate in a broadly commercial manner and may or may not have monopolies in their areas of activity. In Economics, a monopoly (from Greek monos, alone or single + polein, to sell exists when a specific individual or enterprise has sufficient The creation of a government-owned corporation (corporatization) from other forms of government ownership may be a precursor to privatization. Corporatization is a more precise term for what often is called Privatization, for it almost always refers to a process by which formerly public assets or functions are sold Privatization is the incidence or process of transferring ownership of business from the Public sector (government to the Private sector (business
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Arguments for and against
See also: arguments for and against privatization and the welfare state
For
- Public services. Privatization is the incidence or process of transferring ownership of business from the Public sector (government to the Private sector (business This article refers specifically to the Welfare state of the United Kingdom. Public services is a term usually used to mean services provided by Government to its Citizens, either directly (through the Public sector) or According to the theory of public goods, some services, such as defence, cannot be provided by the private sector directly - only a government system of taxation can finance them. In Economics, a public good is a good that is non-rivaled and non-excludable. Defence Others (merit goods), such as education, can be under-provided by the private sector (according to social standards concerning access to them). A merit good in Economics is a commodity which is judged that an individual or society should have on the basis of a norm other than respecting consumer preferences Education encompasses both the Teaching and Learning of Knowledge, proper conduct, and technical competency
- Essential services. Certain political theories (namely social justice theories) consider some services as essential (i. Social justice, sometimes called civil justice, refers to the concept of a Society in which Justice is achieved in every aspect of society rather than e. providing the service outweighs other concerns, especially commercial ones). A very common example here is health care. Health care is the prevention treatment and management of illness and the preservation of mental health through the services offered by the medical, Nursing In the case of such essential services, nationalization may ensure their continuation regardless of commercial, environmental, or other external pressures. Nationalization, also spelled nationalisation, is the act of taking an industry or assets into the Public ownership of a national government According to proponents of such theories, these concerns are surpassed by the positive externalities that are deemed likely to result from ensuring the service's availability to everyone. In Economics, an externality is an impact on any party not directly involved in an economic decision
- Efficiency. In natural monopolies, competition is wasteful, and will tend to be eliminated by competitive forces (leading to a private monopoly or oligopoly). Natural monopoly is a term used in Economics to refer to two different things An oligopoly is a Market form in which a Market or Industry is dominated by a small number of sellers (oligopolists A public sector monopoly can be held to account via democratically-elected governments, in a way in which a private monopoly cannot. In Economics, a monopoly (from Greek monos, alone or single + polein, to sell exists when a specific individual or enterprise has sufficient (A private monopoly may be subject to regulation, but this may be an inefficient way of securing the public interest. This article is for the legal term For regulation of genes see Regulation of gene expression. )
- Accountability. As mentioned above, while a governmental monopoly is nonetheless still a monopoly, it is answerable to the electorate rather than a small group of shareholders. In Economics, a monopoly (from Greek monos, alone or single + polein, to sell exists when a specific individual or enterprise has sufficient (e. g. if the telephone service is nationalised, voters can bring pressure onto the government to provide better services, and parliament may have the power to sack anyone responsible for a reduction in the quality of service).
- Consumer interests. Public ownership can protect consumer interests in sectors where competition is low, where choices are important but made infrequently, and/or where consumers do not have the expertise to make good decisions (such as in health care). Health care is the prevention treatment and management of illness and the preservation of mental health through the services offered by the medical, Nursing
- Common good. A profitable nationalised industry contributes with its profits directly to the common wealth of the whole country, rather than to the wealth of a subset of its population.
- Financial security. Public sector institutions have access to finance at government interest rates, which are (almost) always lower than even the most financially secure private sector firms, because the government is unlikely to go bankrupt, which means less risk to the lender. Risk is a Concept that denotes the precise probability of specific eventualities
- Work ethic. Employees may be more inclined to view their work positively if it is directed by a management appointed by a government that they have a say in electing, rather than a management representing a shareholding minority. Also, they may gain intrinisc satisfaction knowing their work is important and essential for society as a whole. There has been discussion of a public service ethos which makes public sector workers work harder than they would for a private employer.
- Equity. Public ownership can help prevent extreme imbalances of wealth.
Against
- Waste. Government ownership may lead to waste (x-inefficiency) if it proves unable to motivate management and personnel through appropriate incentives, including appropriate pay and threat of redundancy. X-inefficiency is the difference between efficient behavior of firms assumed or implied by economic theory and their observed behavior in practice Management (covering theory practice and scope of management and Manager' (covering the people who manage might help clarify and systematise In Economics, an incentive is any factor (financial or non-financial that provides a motive for a particular course of action or counts as a reason for preferring one choice Layoff is the temporary suspension or permanent Termination of employment of an Employee or (more commonly a group of employees for Business reasons
- Consumer choice. Public ownership in an industry which could be competitive in private hands may stifle innovation if proper incentives are not provided by the government. Consumer choice may be reduced and there may be no alternative sources - and no catalysts for alternative sources - of goods or services that better meet consumer preferences. Consumers refers to individuals or households that use goods and services generated within the economy.
- Misinvestment/over-investment. Over-investing in Finance, particularly Personal finance, refers to the practice of investing more into an Asset than what that asset is worth Public ownership of profitable services may lead to "gold-plating" (over-investment in assets) if decisions are driven by engineering ideals and not efficiency concerns. Gold-plating is a term relating to European Union law, used particularly in the UK
- Unprofitable companies survive. Public ownership of a loss-making service or industry (such as flu vaccines) may inhibit the changes needed to ensure long-term profitability (or permit bankruptcy). A Vaccine is an Inoculation designed to increase immunity against a specific disease This may mean subsidising unnecessary losses indefinitely.
- Misallocations of labor and money. The government may be inefficient in running production, trading, or service operations, in the sense of causing misallocations of labor and capital, with consequent reductions in the standard of living and economic growth. In Economics, capital or capital Goods or real capital refers to items of extensive value
- Accountability. Accountability to the market may be eliminated, and accountability through government may be an insufficient replacement, particularly if an industry or service does not have a high public profile or if the government is not democratic.
- Influenced by politics. Politics Politics is the process by which groups of people make decisions Decision-making in the public sector may be prone to interference from politicians for political or populist reasons. Populism is a discourse which supports "the people" versus "the Elites " Populism may involve either a political philosophy urging social and political The industry may be over-staffed in order to reduce unemployment; it may be forced to conduct transactions or actions in certain areas in order to win local votes; it may be forced to manipulate its prices in order to control inflation. Unemployment occurs when a person is available to work and currently seeking work but the person is without work. In economics inflation or price inflation is a rise in the general level of prices of goods and services over a period of time Of course, some of these measures may be considered positive rather than negative, but if they are not taken properly, in the long run they are likely to be an inefficient way to meet the desired goals.
- Source of Income Sometimes governments are accused for overcharging for products where they hold a monopoly, thus utilising them as an additional source of income, or hidden tax.
See also
- General
- Government ownership / funding
- Private ownership
- Change of ownership
- Privatization - Nationalization - Municipalization - Newt Gingrich (see "welfare reform")
- Regulation
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