THE PUBLIC SECTOR

run & owned by the state(central / local government)

Merit goodsDefinitionGoods or services (such as education and vaccination) provided free for the benefit of the entire society by a government, because they would be under-provided if left to the market forces or private enterprise.

Public good   DefinitionAn item whose consumption is not decided by the individual consumer but by the society as a whole, and which is financed by taxation.A public good (or service) may be consumed without reducing the amount available for others, and cannot be withheld from those who do not pay for it. Public goods (and services) include economic statistics and other information, law enforcement, national defense, parks, and other things for the use and benefit of all. No market exists for such goods, and they are provided to everyone by governments.

(http://www.businessdictionary.com/)

THE CENTRAL GOVERNMENTPublic services (financed from taxation): o National healtho Defence (the police, the army)o Education

Public enterprises (sold at a price, profit)o Utilities: electricity, water, gas, sewerageo BBC / HRT, Bank of England / HNBo British Rail

o Owned by the central government

(policy decisions – financial targets, prices)

o Run by the Board of Directors – day-to-day control – the Board reports to ministers in charge – ministers report to the Parliament

LOCAL AUTHORITIES(MUNICIPAL UNDERTAKINGS)

o Cemeteries, crematoriums, market hallso Street cleaning, dustbin collection, waste dumpo Car parks, street lighting, fire protectiono Recreation facilities, stadiums, golf courses, swimming poolso Theatres, galleries, museums, airports

ADVANTAGES Natural monopoly in public ownership

Essential for social welfare (uneconomic for private businesses)

National security /e.g. atomic energy/

Government has resources to fund a vast industry, even if uneconomic

Provision of essential services

Profits for benefits of the whole nation

DISADVANTAGES

- Bosses are politicians (lack of business expertise)

- Local issues may be disregarded in favour of policies of national importance

- Taxpayers pay for losses

USE THE WORDS BELOW TO COMPLETE THE PARAGRAPH:

goods, public sector enterprises, industries, public, private, financial, productive, service

 

The manufacturing sector consists of a variety of manufacturing ______________ .

Companies that are owned by shareholders or private individuals are in the __________________sector.

A nationalized industry, run by the state, is in the ______________sector, and the companies in this sector are examples of ____________________________________.

Any company that produces _______________or products is in the ___________sector.

Banks are located within the __________________sector of the economy, or in the ___________________sector of industry.

http://youtu.be/9LWNTUK8KtA

Do you agree with the: Three reasons public sector employees are killing the economy? Explain your attitude.__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

PUBLIC PRIVATE PARTNERSHIP (PPP or P3)

public sector authority + private party

a) public serviceb) public goods (infrastructure)c) the company putting in the lowest bid – the

cheapest price – gets the contractd) places in old people’s homes, catering in

hospitals, cleaning...has been put out to tender

PRIVATISATION

Transfer of

government-controlled companies into

private ownership

Advantages competition – lower prices more choice better quality innovation (new products, diversification) sensitive to demands of consumers managers make decisions freely growing number of shareholders selling the state owned industries raises revenue for the government

Disadvantageso Laying off workerso Some services cannot be provided without

state finance (e.g. railway network)o Concentrating on profito Privatised firms may hand over control to

foreignerso Trade unions not able to protect workerso State owned firms can only be sold once

RB: p.20-I

p.21-II,III,IV

Read about the history of HT and answer the questions.