Are You Part of It?

Private Sector — By Shopping Blogs on April 8, 2009 9:24 am

Economically speaking, the private sector refers to the part of the economy that functions solely for private profit. Contrastingly, those parts of the economy that are considered part of the public sector are run by the state. One of the main differences between the two is that those companies that are part of the non-public sector tend to focus most of their attention upon shareholders instead of the general population. In most countries, non-public companies make up the largest part of the workforce.

If you happen to run a company that is not owned and operated by the government, then your company probably falls within the private sector category. Legally speaking, these types of companies tend to have numerous structures set in place for them. For example, private businesses have more options than public companies when it comes to bankruptcy, foreclosure, and other types of restructuring. There are public sectors in North America including state services (motor vehicle, transportation), some hospitals, and all government buildings. Within North America, there are far more private companies than there are public ones, though this is not the case across the world.

The People’s Republic of China is one country that is mostly publicly run. The Chinese government owns and operates almost all of the businesses (small and large) within the country. Thus, most of the Chinese workforce is employed by the government as well. This economic model is both good and bad depending upon how you look at the situation. Placing control of most businesses within the hands of the government can mean a lack of freedom. Then again, publicly run companies help to promote equality within the population in a way that the private sector does not. There are economists on both sides of the argument that promote one model over another. However, many economists argue that the public model does not promote economic growth.

In fact, many economists agree that an economy must include both a private sector and a public one in order to maintain a working society. Then again, this is all a matter of perspective. North Americans tend to pride themselves upon the fact that many private companies thrive and exist freely. In many ways, it would be hard to imagine a North American society that functioned without private enterprise. The world is full of different countries functioning in many different ways, which is why the study of economics is so interesting. Whether public or private, no economy could exist without daily business.

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