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Political and Economic Change in the United Kingdom

Political and Economic Change in the United Kingdom. Why Privatization and why it worked. Post World War II. 1945-1979. Nationalized Industries. 1945-1977: Socialist leaders in Labour party nationalized industries Public state bought out private corporations

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Political and Economic Change in the United Kingdom

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  1. Political and Economic Change in the United Kingdom Why Privatization and why it worked

  2. Post World War II 1945-1979

  3. Nationalized Industries 1945-1977: Socialist leaders in Labour party nationalized industries • Public state bought out private corporations • Coal, Steel, Aerospace, Banks, Communication • Protected worker rights and employment

  4. Management It is hard to attract good management into nationalized industries • Public sector does not pay well • Does not provide incentive schemes • Bonuses and shareholding • Culture of public sector is service, not profit

  5. Government Interference Government intervention led to inefficient performance and diluted market interests • Nationalized industries had to gain approval of government • Good decisions may not be made because other industries took precedence on national priorities

  6. The International Market Political issues prevent a nationalized industry to make international alliances • Many industries cannot survive without international allies • British Telecom • British Airways

  7. General Problems Regarding A Socialist Economy • Industries did not have to run at a profit • Financial maintenance soared due to increased government subsidies • Strong labor unions covered manual workers under a collective bargaining agreement

  8. Privatization: Moving Toward a Mixed Economy 1979-Present

  9. UK Primary Objective: To introduce competition and market forces whenever possible • Fragmented the electricity industry • Fragmented Aero-space industry • Broke up National Freight Company • Attempting to break up British Telecom and gas industries

  10. UK Secondary Objective: To create a sense of ownership among UK population • Encouraged people to buy real estate • Increased stock market transactions • Ultimately increased shareholders

  11. Cameron et al. 1999

  12. Financial Management Initiative • Contract independent agencies to carry out services once held by the government • Automobile licensing • Patents • Social security benefits • Buy services from the private sector • Building toll bridges ***Government Multiplier in GDP

  13. Money Flow Suppliers Government Private Sector Labor Luxuries

  14. References National Statistics Online. 2007 Time Series Data. Direct Gov. 23 September 2007 <http://www.statistics.gov.uk/statbase/tsdintro.asp> Cameron, Gavin. “Why did UK manufacturing productivity slow down in the 1970s and speed up in the 1980s?” (1999) Nufield College, Oxford Pomeroy, Brian. “An assessment of privatization in the UK.” (1991) Carnegie Council Almond et al. “Comparative Politics Today.” Seventh Edition (2003) Longman Theen et al. “Comparative Politics” Fourth Edition (2001) Prentice Hall J. H. Clapham; An Economic History of Modern Britain: The Early Railway Age, 1820-1850 Cambridge University Press, 1926 G. C. Peden, British Economic and Social Policy: Lloyd George to Margaret Thatcher (1985)

  15. Interactive Activity

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