Most neoclassical economists would argue that state-owned firms will inevitably be less efficient than private ones because the state lacks the proper incentives to run enterprises efficiently. The state does not have to fear bankruptcy, since it can keep businesses going out of tax dollars or, at worst, by printing money. It also has strong incentives to use the firm for political ends like job creation and patronage. These deficiencies of public ownership have been the underlying justification for the global move toward privatization over the past decade. But state-owned enterprises can be run more or less efficiently, and any final judgment as to the efficiency price paid for nationalization has to be measured against the entrepreneurial capabilities of that society's private sector. In France, nationalized companies have often been allowed considerable managerial discretion and operate not much differently from their private sector counterparts.36
( Francis Fukuyama )
[ Trust: Human Nature and the ]
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