Sunday, October 13, 2013
World of Finance: Nationalization vs. Privatization-2
And if you see the history there have been number of times that the governments have intervened claiming to act in their national interests to act and saying that when things are right they will withdraw their share and return it to their rightful owners but again history is the judge that once it is nationalized it is hard to get rid of it because people have vested interests to be part of the government and spend other people’s money. Once the Euphoria around the government takeover is done, then you see the productivity going down. Although I am not saying that it happens always but there are some industries where it is not efficient for a government to run a business since the government has to take into account the votes it has to win so it sometimes makes decision which may not be the optimal one for a business. But don’t get me wrong sometimes the government gets it right and they do create reputable and respectable institutions which are the envy of the people and people want to have them as their first choice of employment. But in these cases, merit is strictly followed and whoever is at the helms fight for the institution reputation every time some new government comes up with a bright idea to change sometime for the worse or in their own image. But still nationalization is not always the answer to run a business. I really believe that business decisions should not be on a government list of priorities.