Disadvantages of Nationalization

1. Low productivity and inefficiency: Due to the fact that government businesses are usually poorly managed, most nationalized businesses by the government end up being mismanagement and that reduces efficiency of the business.

2. Prevention of private initiatives: When government takes over private business, there is every likelihood that private initiatives will also decrease. This can also be due to lack of competition.

3. Consumers can be exploited: Even though nationalization is supposed to be with the aim of not making profit, that does not mean that the government can not exploit the citizens. In many cases, even after nationalization, citizens are still exploited by the government.

4. Corruption and mismanagement: As usual, there is always a high rate of corruption in businesses owned and managed by the government. Thus, nationalization may not be a good idea for a nation where majority of politicians are corrupt by nature.

5. Political interference: When a business becomes owned and managed by the government, there is usually political interference and that may lead to misallocation of resources.

6. Increased government expenditure on subsidies and compensation.

7. Loss of government popularity.