1. Presented by: Nancy Rich September 20, 2011

2.  Russian-American economist  Corporate finance, economics of financial markets, economics of transition  “Most Influential Economist in the World” – IDEAS/RePEc

3.  Private ownership is nearly always preferable to state ownership  Private ownership offers: Incentives to innovate Cost control

4.  Concern: Private ownership will not address social goals  Preferable in certain instances: Opportunities for cost reduction that lead to non- contractible quality Innovation is unimportant Consumer choice is ineffective Reputation mechanisms weak

5.  Examples: Air Force One Nationalization or heavy regulation during wartime

6.  Concerns about quality can be controlled with government regulation & contracts  Competition between suppliers can control many issues

7.  Areas where private ownership could succeed: Schools Prisons Healthcare Military & police

8.  Public ownership is often to the politician’s benefit  Bribes can influence either way  Most extreme case: Communism

9. “Private ownership should generally be preferred to public ownership when the incentives to innovate and to contain costs must be strong.”

10.  State versus Private Ownership Andrei Shleifer The Journal of Economic Perspectives Vol. 12, No. 4 (Autumn, 1998), pp. 133-150 http://www.jstor.org/stable/2646898