NATIONALISATION

29 September 2017 By PDSNET

The taking over of privately owned assets, especially companies, by the government. In a mixed capitalist society such as exists in most countries around the world today, control of the economy is divided between the private sector and government. Certain services are always better provided by governments - such as the roads system. Clearly it would be inefficient to have various different companies all building roads down to Durban which would then compete with each other. The same can be said of the electricity grid. So those types of services are supplied by a government agency. However, there is no reason why an airline like SAA should be owned and managed by the government. Governments are typically less efficient at running large organisations than the private sector. This led the father of economics, Adam Smith to say, "The least government is the best government", meaning that the government should not perform those functions in the economy which can be run by the private sector. In South Africa, the government is too large and this has resulted in a series of tax increases - which make it even harder for our economy to compete on world markets. The EFF have made it one of their policies to nationalise the major banks and the mining industry if they get into power. Such a move will lead to a significant reduction in the efficiency of those sectors. Essentially, private enterprise is the only part of the economy which generates a surplus - and everyone else lives off that surplus. It therefore makes sense to increase the size of private enterprise as much as possible and to minimise the size of government.



Share this glossary term: