Read the text carefully, then answer the subsequent questions

Privatization involves selling state-owned assets to the private sector. It is often achieved through listing the new
private company on the stock market. Private companies have a profit incentive to cut costs and be more efficient.
It is argued that governments make poor economic managers. If you work for a government-run industry, managers
do not usually share in any profits. They are motivated by political pressures rather than sound economic and business
sense. For example, a state-enterprise may employ surplus workers, which is inefficient. The government may be
reluctant to get rid of the workers because of the negative publicity involved in job losses. Therefore, state- owned
enterprises often employ too many workers, thereby, increasing inefficiency.
A government many think only in terms of the next election. Therefore, they may be unwilling to invest in
infrastructure improvements which will benefit the firm in the long-term because they are more concerned about projects
that give a benefit before the election. However, a private firm has pressure from shareholders to perform efficiently. If
the firm is inefficient then the firm could be subject to a takeover.
Often privatization of state-owned monopolies occurs alongside deregulation – i.e. policies to allow more firms to
enter the industry and increase the competitiveness of the market. It is this increase in competition that can be the
greatest spur to improvements in efficiency.
Privatization of some sectors such as tap water, however, is unsuitable; it would just create a private monopoly which
might seek to set higher prices, which would exploit consumers and harm consumer interests. Therefore it is better to
have a public monopoly rather than a private monopoly. Likewise, there are many industries which perform an important
public service, e.g., health care, education and public transport. In these industries, the profit motive shouldn’t be the
primary objective of firms and the industry.
Many of the privatized companies are usually quite profitable. This means the government misses out on their
dividends, instead going to wealthy shareholders. Shareholders usually seek to increase short-term profits and avoid
investing in long-term projects. Privatization also leads to fragmentation of industries, which results in areas where it
would be unclear who had responsibility.
On the other side, nationalization, which means the establishment of public ownership over the principal means of
production implies that, on behalf of the nation, the government of the country owns and operates the productive system,
and sometimes also the distributive system.
Nationalization is a step towards socialism which usually signifies a system in which all major productive enterprises
are brought under government control. The demand for nationalization arose as a result of the excesses perpetrated by
laissez-faire capitalism. The onward march of the capitalistic system of production in the 18th and the 19th centuries gave
rise to a number of acute social and economic problems.
In explaining root causes of wealth and income inequality, social thinkers pointed to the defects of a system of
production which was operated primarily on considerations of private profit. A system of private enterprise could run
successfully only if private profits were large. Since opportunities of making large profits could be reaped only by a few,
the system inevitably tended to create inequality. This original shortcoming was perpetuated and multiplied a
hundredfold by the laws of property and inheritance. Thus, the system of private enterprise actuated by the profit motive
came in for sharp criticism. Social reformers began to advocate the abolition, or at least partial modification of the
present system. There was demand on all sides for State ownership of important industries, for appropriation of private
profits by the State and for reduction of the existing inequalities.
Nationalization also came to be regarded as holding the key to better relations between labor and management. Under
private capitalism the managers are agents acting for a host of owners. They have therefore to oppose the demands of
labor in every case to safeguard the owners’ interests and to keep their own position absolutely safe and clear. This would
not be so under a system of nationalized industries, because the interests of the laborers would not be opposed to those of
the managers. Both would act on behalf of the nation and get such rewards for their services as the nation is willing to pay.
The managers, freed from their tutelage to the industrial overlords, would devote themselves entirely to improving
technical efficiency and lowering the cost of production. The industrial world, under private capitalism, is torn under strife
and discord. There are frequent stoppages of production or, at least, the quantity and quality of work have to suffer as a
result of this bitterness. Nationalization would do away with industrial unrest and usher in a period of cooperation and
prosperity for all. Nationalization of some important industries would enable the State to earn large revenue easily and
without any extra cost.
In addition, during war, nationalization would help because the government could not be forced to pay exorbitant
prices for war supplies by a handful of war profiteers. Similarly, in periods of unemployment, people could be given
employment expanding the activities of the nationalized industries.
In short, nationalization would help the State to order the political and economic life of the nation more conveniently
both in peace and in war. Without mastery over certain industries, the government would be solely at the mercy of the
economic lords.
Nationalization was a slogan raised by considerations of social welfare in the management of a nation’s economic
affairs. Nevertheless, nationalization curbs individual initiative. Social philosophers have often pointed out that in a
regime of nationalized industries, men will have a tendency to work in accordance with a dull routine rather than strike
out a new path. It is only when men can think and act freely as individuals that they can produce new ideas and make new
inventions.
However, we must not forget that although modem industry is often dominated by monopolies, there is some rivalry
among them and the spirit of competition is not entirely dead. Yet, state ownership of industries may mean rigid routine
and a dead uniformity. Moreover, there is a danger in making the government the sole master of economic affairs. In
private Capitalism, the government can act as the balance-wheel; if anything goes wrong, we can look to the government
for redress. https://www.economicshelp.org/blog/501/economics/
 Section ONE: Comprehension
Task One: Select and Cross the option that best completes the following:
1. The word “incentive” means almost the same as:
A. Encouragement
B. Setback
C. Obstacle
D. Hindrance
2. The word “reluctant” means almost the same as:
A. Resistant
B. Willing
C. Hesitant
D. Compliant
3. The word “get rid of” means almost the same as:
A. Hire
B. Dismiss
C. Train
D. Promote
4. The word “urge” means almost the same as:
A. Hurdle
B. Barrier
C. Drive
D. Increase
5. The word “abolition” means almost the same as:
A. Cancellation
B. Avoidance
C. Continuation
D. Addition
6. The word “advocate” means almost the same as:
A. Criticize
B. Oppose
C. Propose
D. Defend
Task Two: Select and Cross the option that best completes the following:
1. Social reformers:
A. Argue for privatization
B. Criticize privatization
C. Recommend state-ownership
D. Attack state-ownership
2. Social activists would like:
A. The government to repossess private profits
B. The shareholders to get these private profits
C. The shareholders to abandon these private profits
D. The shareholders to reinvest these private profits
3. Social activists promote: (Two ideas are correct)
A. Social inequality
B. Social equality
C. Unequal distribution of income
D. Equal income distribution
4. Under privatization, managers (Two ideas are correct):
A. Serve business owners
B. Maintain good relations with workers
C. Oppose workers’ interests
D. Maintain good relations with workers
Task Three: Complete these tables with information from the text in Note Form:
State-owned companies’ incentives Private-owned companies’ incentives
a. …………………………………………………………………. a.………………………………………………………………….
b. …………………………………………………………………. b. ………………………………………………………………….

Privatization
Advantages Disadvantages
a……………………………………………………………… a. ………………………………………………………………
b.……………………………………………………………… b. ………………………………………………………………

Nationalization
Advantages Disadvantages
a……………………………………………………………… a. ………………………………………………………………
b.……………………………………………………………… b. ………………………………………………………………
Task Four: Briefly answer the following questions in your own words:
1. The writer states that “Privatization causes several social and economic problems”, Explain
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2. The writer states “nationalization curbs individual initiative”. What do you think?
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Task Five: Translation
A. Translate this paragraph into English:
La privatisation d'une entreprise publique consiste dans le transfert, au profit du secteur privé, du contrôle exercé par les
pouvoirs publics sur ladite entreprise. Une telle opération est de nature à toucher une grande partie de l'activité des
pouvoirs publics, dès lors que le caractère économique d'une activité – condition indispensable à l'identification d'une
entreprise publique – peut également caractériser des services publics, industriels et commerciaux ou autres. Elle
emporte par ailleurs des effets démultiplicateurs : soumission de l'entreprise privatisée aux mécanismes de marché ;
révision de la réglementation des sociétés cotées dans le sens d'une prise en considération, le cas échéant exclusive, de la
maximisation des investissements des actionnaires ; recul de la réglementation étatique au profit d'instruments privés de
régulation.
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B. Translate this paragraph into French :
In addition, during war, nationalization would help because the government could not be forced to pay exorbitant
prices for war supplies by a handful of war profiteers. Similarly, in periods of unemployment, people could be given
employment expanding the activities of the nationalized industries.
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Task Six: Write a good essay in which you discuss this statement
“Finance is not merely about making money. It is about achieving our deep goals and protecting the fruits of our labor.
It's about stewardship and, therefore, about achieving the good society.” Robert J. Shiller
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