NATIONALISATION

Main premises Attack those premises ! “ The government cares about its people and will therefore take decisions most beneficial for the population.” “Companies are more efficient and profitable.” “With a lot of different companies people have more choice.”

Topics: Can we hold private companies accountable? Can we hold governments accountable? Are private companies efficient? Are public companies efficient? Why should we care about profit? Why should we not care about profit? Is nationalisation bad for private companies?

Can we hold private companies accountable? YES: Incentive to maintain consumers and therefore profit Consumers can change to other companies  the more companies the more options NO: Companies have a profit incentive  not everybody can hold them accountable equally Often other options are not available because of monopolies: Monopoly on “territory”: railway, water and gas pipes, housing  hard for other companies to enter competition Monopoly of power: One company holding most bargaining power, knowledge etc. within one area (for example medicine)

People do not always have most choice just because there are a lot of companies!

Can we hold governments accountable? YES: Governments have a voter incentive and national institutions are often an important issue in public elections  NHS NO: Public elections are only held every couple of years People vote on different issues within one election and can therefore never hold the government accountable on everything Only really works in perfect democracies

The government does not always act in the best interest of the people!

Are private companies efficient? YES: Companies can only survive if they make profit Competition leads to companies trying to perform better than others  investment into new areas and research NO: Companies care about profit not about the best outcome for ALL people Companies want to make as much profit as possible  charge as much as consumers are willing to pay (demand supply)  prices are most expensive when you need a service most (train tickets)

Are national companies efficient? 1/2 YES: Centralisation makes things cheaper (economies of scale) If the government holds various national companies they can cooperate with each other (for example healthcare & pension system) If there is contemporary loss the government can balance it out, making a company more stable & able to do long term investments (for example infrastructure)

Are public companies efficient? 1/2 NO: Sometimes the government makes decisions it cannot afford, for example to attract voters, & then has to put money into one area when it could have been spent on something more important Sometimes public companies are less profitable than private companies – Don’t just assume that! – explain that governments have to focus on various different issues whereas private companies focus on one sector and therefore have an incentive to do well in that area

Private companies are not always more profitable or effective than public ones!

Why should we care about profit? National companies are more sustainable if they are profitable If the government has to sustain companies with money it looses out on money it could have spent elsewhere

Why should we not care about profit? Profit incentives + demand and supply  goods & services are most expensive when people need them most (for example train tickets)  that makes companies less reliable and reliability is good for people and the economy Providing basic services  redistribution of access Transportation Health care Housing, gas, water  Explain why this services are so important that profit does not matter!

Is nationalisation bad for private companies? YES: Probably, for those being nationalised The risk of nationalisation can prevent FDI NO: National companies can secure basic services, such as infrastructure, mail service, etc. that other (private) companies can rely on