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Ryanair boss Michael O'Leary said staff at Dublin Bus are holding the public 'to ransom' and said that the bus service and the rail service should be privatised - Leaving Cert Business - Question 2 (C) - 2017
Question 2 (C)
Ryanair boss Michael O'Leary said staff at Dublin Bus are holding the public 'to ransom' and said that the bus service and the rail service should be privatised. So... show full transcript
Worked Solution & Example Answer:Ryanair boss Michael O'Leary said staff at Dublin Bus are holding the public 'to ransom' and said that the bus service and the rail service should be privatised - Leaving Cert Business - Question 2 (C) - 2017
Step 1
Define the term privatisation.
Answer
Privatisation refers to the process of transferring ownership of a public sector enterprise or service to private individuals or organizations. This often involves selling state-owned companies to private investors, allowing them to operate for profit rather than public service. The goal is typically to enhance efficiency, reduce government spending, and foster competition in the market.
Step 2
Evaluate the benefits and challenges of privatisation for the Irish economy.
Answer
Benefits of Privatisation
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Government Revenue: Selling state enterprises like Aer Lingus can provide the government with significant financial resources that can be utilized for infrastructure development or to pay down national debt.
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Efficiency: Private companies often operate under profit incentives, which can lead them to be more efficient than state-run enterprises. Reduced bureaucracy and the drive to minimize costs can enhance service delivery.
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Access to Finance: Private companies generally have easier access to capital markets. By going public, these enterprises can raise funds through share offerings, which facilitates expansion and innovation in the economy.
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Industrial Relations: Employees in private enterprises may have better job security and benefits, since firms often prioritize maintaining a motivated workforce to minimize disruptions related to labor disputes.
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Competition: The removal of state monopolies opens up markets to competition, which can lead to better services and lower prices for consumers.
Challenges of Privatisation
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Loss of State Assets: Important government assets may be sold off, risking public control over essential services like healthcare, water, and public transport.
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Increased Unemployment: Rationalization processes in privatized companies can lead to job losses as firms seek to optimize profitability, resulting in higher unemployment rates and increased pressure on social welfare systems.
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Lack Social Commitments: Private firms may prioritize profit over social responsibilities, leading to the discontinuity of essential services that are less profitable, affecting vulnerable populations.
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Loss of Control/Costs to State: The state may lose important influence and control over certain sectors as private investors gain decision-making power. Additionally, initial costs related to preparing for privatization can be high.
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Profit Motive/ Increased Prices: Privatization can lead to higher service costs, as the underlying goal of profit maximization may result in increased prices for consumers who previously benefited from subsidized public services.