Privatization - Essay Example

What is Privatization and what are the advantages for Governments in privatizing Nationalized Industries? Introduction Privatization is also known asdenationalization or disinvestment. What privatization does in the real sense is to put forward the feelings of a private enterprise within a governmental concern, one that belongs only from the public hold. (Kosar, 2006) Thus the transfer of ownership is from the public sector down towards the private sector. The public sector belongs solely to the government and it is the private sector which takes care of the business enterprises and organizations that we are most interested in discussing here. (Clarke, 1994) Privatization refers to complete transfer or at times partial transfer of property as well as responsibility which used to be held by the governmental authorities in the past, much before privatization actually took place. A transfer of property and responsibility from a private sector organization or firm to one of a public sector institution would be remarked as nationalization or municipalization of the related property or the responsibility. Role of Privatization in the Public Sector With the changing times, we can see a number of public sector organizations and institutions changing into the private entities which could be remarked as a step in the right direction. Privatization is here to stay and it will keep on being successful in the years to come. (Bel, 2006) Privatization brings the operations of a public sector firm under the boundaries of a private enterprise which basically understands its customers and stake holders in a better manner. The role and responsibility of the government is to make sure that the duties and tasks are managed in an easy way. Now if the government interferes with the day to day operations of the different firms and businesses, then it is an additional task that it is taking up and thus the responsibility for doing something for the betterment of the people and the stakeholders on a regular basis is increased on the other hand. Only if the government understands its job in a more effective and efficient manner then it would not come in the way of smooth operations and information transfer for which the private sector is quite famous. The government should thus make sure that the different publics coming under the public sector operate in a manner that they feel are easy going and smooth and there are no problems coming from anywhere which could be the pressure groups or bodies which have some unknown motives so that they could destroy the good work which has been done by the privatization body. The problems could be so many but since it is the job of the government to make sure that there are no problems down at the private level enterprise, so for that reason efforts and attempts must be made to explain everyone and so a determined effort must be employed sooner rather than later. Next we move on towards the benefits that the process of privatization brings with itself. (Stiglitz) Role of Stocks in Privatization Process The stocks of the public sector enterprise are bought out so that there appears a majority owner and this really signals the success of the privatization process. Thus the publicly traded stock is privatized in a free and fair manner which leaves no worries at all. (Savas, 2000) It also makes sure that the main methods behind the method of privatization are discussed earlier with the presence of all parties. These methods could either be in the form of the share issue privatization (SIP) which understands the basis of selling shares that are present on the register of the stock market. Then there is the asset sale privatization (ASP) which discusses the fact that the entire selling process of the organization is undergone and at times some parts of this to an investor who is present for the long term basis. At times, this involves auction as well. Voucher privatization involves the shares that are related with the ownership and which are made distributable to all the citizens of the state for some fee and at times, without a cost as well. However discussing all three we can easily understand that the SIP is the most common among all. Advantages of Privatization for the Governments Privatization could be advantageous for the nationalized industries as it has a better check and balance method working under it for which provides trouble free service and quality levels to everyone and not only that but also there is provision for understanding the problems that could arise at the different levels related with the distribution of the organization which is having privatization within it. (Cowan, 1990) Governments can breathe easily if the large industries are sold to the private parties since there is a better understanding at the different levels. Competition starts to increase as a result of the privatization process and because of that each player within the industry tries to give his very best at all times possible. Competition only increases the chances of firms which are doing their best to reach to the right target audiences which closely match their requirements and needs. Privatization only improves the chances of the publics to better understand the deliverables of the respective industries and what they can and cannot do in times of trouble at the national and regional level. Thus the notion of free market and competition comes into the discussion in a quick way. The privatization process makes sure that the issue of monopoly is settled once and for all and there are no problems in the line of one major player taking all the steps. Conclusion In the end, it is the responsibility of the state to understand what its different publics want and if it is in the interest of them to go about with the privatization, then it is best to have this policy as it has been seen with success stories supporting it. (Smith, 1994) Privatization will continue to remain here and it will keep on making its opinion strong in the future since the governments are having troubles with a lot of policy making steps. BIBLIOGRAPHY BEL, Germa. (2006). "The coining of privatization and Germanys National Socialist Party." Journal of Economic Perspectives 20(3), 187-194 CLARKE, Thomas (ed.) (1994). "International Privatization: Strategies and Practices." Berlin and New York: Walter de Gruyter, 1 COWAN, L Gray. (1990). “Privatization in the Developing World.” Greenwood Press, No page number KOSAR, Kevin R. (2006). "Privatization and the Federal Government: An Introduction." Report from the Congressional Research Service, No page number SAVAS, E S. (2000). “Privatization and Public-Private Partnerships.” Chatham House, No page number SMITH, Adam. (1994). The Wealth of Nations. STIGLITZ, Joseph. Globalization and its Discontents. Word Count: 1,024 Read More