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October 22, 2020 

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OPPORTUNITY COST: The highest valued alternative foregone in the pursuit of an activity. This is a hallmark of anything dealing with economics--and life for that matter--because any action that you take prevents you from doing something else. The ultimate source of opportunity cost is the pervasive problem of scarcity (unlimited wants and needs, but limited resources). Whenever limited resources are used to satisfy one want or need, there are an unlimited number of other wants and needs that remain unsatisfied. Herein lies the essence of opportunity cost. Doing one thing prevents doing another.

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PRIVATIZATION:

The process of converting or "selling off" government-owned assets, properties, or production activities to private ownership. Privatization is usually undertaken either to generate revenue for the government or as part of an overall laissez faire approach to the economy.
After several decades of increasing government control of productive activities, privatization came into vogue in the 1980s, along with business deregulation and an overall movement toward greater use of markets.

The logic behind privatization is two-fold:

As such, it seems natural to give the private sector a shot at running activities that the public sector does not run very well. The downside of privatization is that many government functions just cannot be performed efficiently by the private sector, which is why, after thousands of years of civilization, government functions continue to exist and persist.

Privatization actually reflects one end of a continuum of political views that are in a constant tug of war. At the other end is nationalization. As much as anything else, these two alternatives reflect the ongoing tug and pull of competing political views.

  • Liberals tend to favor paternalistic government allocation and ownership of resources. Nationalization is a better fitting pursuit for their philosophy.

  • Conservatives, in contrast, tend to favor market allocation and private ownership of resources. Privatization is their end of choice.
However, given the efficiency of competitive markets, the necessary functions of government, and the ever present fifth rule of imperfection, neither end is likely to perpetually dominate the other.

<= PRIVATE SECTORPROCESS INNOVATION =>


Recommended Citation:

PRIVATIZATION, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2020. [Accessed: October 22, 2020].


Check Out These Related Terms...

     | nationalization | paternalism | laissez faire | invisible hand |


Or For A Little Background...

     | capitalism | free enterprise | private property | conservative | liberal | ownership and control | fifth rule of imperfection | private sector | public sector |


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     | political views | government functions | economic goals | four estates | economic systems |


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