Privatisation and Nationalisation

Topics: Democracy, Privatization, Making Democracy Work Pages: 7 (2395 words) Published: September 18, 2008
Privatisation And Nationalisation; contrasting theories in the pursuit of democracy, a UK Australia study.

Privatisation and Nationalisation are two of the governance practices used by democratic governments to uphold and help realize democratic ideals. However they are in direct correlation in principle, to one another. Using Australia and the UK, this essay shall consider this issue as it explores how these two governance practices have helped and hindered the realisation of democratic ideals.

Democracy is a belief that has shown itself to be as strong as religion. Nations and alliances have gone to war for democracy and the ideals it sustains. It has been called the human races greatest invention or “the crowning achievement of the twentieth century” ((Stoker 2006)page 19). It is perhaps the answer to the question that has plagued mankind as to ‘who shall rule’. With so much belief and passion, democracy becomes quite hard to define as Heywood writes, “ when a term means anything to anyone it is in danger of becoming entirely meaningless” (Heywood 2004) (page 220). In other word so much has been done under the banner of democracy that its true vales and ideals can be left warped and disfigured to the point that the term may represents nothing. This idea also stems from the fact that around the world there are so many different forms of democracy in practice. However the origin or democracy shows the path to its ideals. Democracy comes from the ancient Greek words demos meaning ‘stand for the many’ and kratos meaning ‘power or rule’, so put together democracy means ruled by many or mob rule. It is “about the capacity of citizens to engage an and influence policy debates and outcomes” (Stoker 2006)(page 22). Democracy is the process that allows social majorities to dictate the public environment, and make collective decisions about society. Mob Rule.

Democratic governments all around the world have employed the governance practice of privatization (sometimes called de-nationalisation). This is the process of selling or giving a public asset or service to the private market. This may be done by simply selling the asset, out right or parts, of it to a private investor (asset sale privatization); By selling shares on the open market (share issue privatization); Or by giving away shares (voucher privatization). Privatisation has become a great tool in the toolboxes of governments. The main appeal is found in the search for efficiency, which thought free market forces, could be provided through privatisation. The basic economic premise is that the provider, which is most the most efficient, will be the most successful and therefore efficiency is not only encouraged but it becomes a necessity in a free market. The problem with state/Public actors is that they have no reason or incentive to become efficient. Often they have a monopoly on the market and in some cases reduced spending (which may result from increased efficiency) will result in a budget cut in the preceding budget. The same ideas can be applied to things like accountability and management, which in a public entity can become very bureaucratic and information flow may be hindered. A public entity aims to provide a service and return to shareholders. They must move forward in innovation and efficiency if they are to achieve these goals. There are however a few characteristics that are undesirable when it come to privatisation. The biggest problem is once an entity is sold of it is often hard to regulate or maintain control of that service or produce provider. Also once sold it is lost to the government. That is to say all the infrastructure and revenue potential is lost, and the government no longer has any control over the entity. This can be an issue because the free market may dictate that a product or service is unprofitable when provided to a certain demographic or territory. Also a private actor is not working for the people, but is working for...

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