QS Study

Arguments against Denationalization of State Enterprises

If the state gets the ownership on continual at any business directly or indirectly incest it that business is called as the state enterprise. The business controlled or operated by the government is known as a state enterprise.

In this globalization world, most of the country’s government with a view to establishing the socialized view in the economic structure and started nationalization of various medium and large industrial and commercial organizations by an ordinance. Few Country’s government followed denationalization policy and hand over most of the state enterprises to the private ownership. The arguments against denationalization are given below:

Initiating monopoly: In many cases, private owners create a monopoly in business. They have a tendency to create monopoly business for their own benefit with a view to earning a profit. If state industrial organizations denationalized widely private owners will explicit the general consumers by using any unfair means.

Production of harmful products: General harmful but necessary products producing and marketing should not go in private management in any way and government should need on the eye of this matter such as alcohol, opium, etc.

Reduction of employment opportunity: In state enterprises, many people get employed. These organizations hand user to the private owners, there is a possibility that many people will lose their job which hampers the justice and social violence will increases.

Control of monetary systems: Maintaining economic stability is the responsibility of government is to manage and control of the proper economy and currency systems. If the management and ownership of the central bank, insurance, and others financial organizations go on private ownership that will create indiscipline situation in the economy and currency systems.

Uneven distention of national wealth: If state enterprises get denationalization then the national wealth will be accumulated to some selfish persons. As a result, the public will get tortured and suffered.

Exploitation of workers: The workers of state-owned industrial and commercial organizations always get fair wages and other facilities properly. If the ownership of these organizations handover to private owners then the workers and employees of industrial organizations will be exploited and deprived of their rights by the greedy, selfish private owners.

The problem in national defense: Maintaining internal discipline, protecting the country from external enemies, and protecting freedom of country are the responsibilities of government. So defense industries must be established in government ownership but it these industries ownership and management go to private owners then the security of country and discipline can be harmed.

Disclosure at secrecy: There are some secret industries like printing money, printing stamp, printing confidential documents, printing questions paper and distribution and preservation of weapons in the hand of government ownership. In these sectors maintaining secrecy is highly needed for national benefits. If these industries operated by the private owners instead of government ownership then these sectors secrecy and proper preservation will be harmed.

Misuse of natural resources: If the responsibility of using natural resources given private sectors then private owners will misuse these resources for their personal benefit.

Unstable price, quality, and supply of products: State enterprise prevents ups and downs in product price by producing and distributing products according to the demand of the public. So a price of products, their quality, and supply become stable but if the business goes to the private sector, then the quality of products and their preservation will be harmed and products price and supply will be unstable.

At last, we can say that social and economic welfare can be achieved by the operation of state-owned industrial and commercial organizations but there is the touch of specialization in everywhere in the present time of globalization so present all types of industrial and commercial organizations can’t be run profitably. The state ownership that’s why denationalization is needed if the state enterprises can be handover to honest efficient qualified private owners then denationalization policy can be successful.