This sounds so obviously stupid I wonder why nobody stopped and said "You know, we might just make all these companies leave with stuff as ridiculous as this."
Taxes on corporate profits are generally seen as reasonable in the abstract, and they're common all over the world. I could see setting an unusually high tax rate being problematic, but that doesn't appear to be what happened.
And it doesn't appear that the state was seizing anything. They were buying up shares off the public market. This doesn't seem more objectionable than any other hostile takeover. If a business owner wants to maintain control of their company then it's trivially easy for them to do so. All they have to do is not explicitly sell it, which is what an IPO is after all.
And I'm having trouble seeing where the creeping socialism concerns come in. The end goal, according to the wikipedia page, was that the companies would be owned and operated by their own labor unions, which isn't an uncommon or inherently controversial corporate governance model. The state appears to have merely been facilitating the transfer.
With perfect hindsight we can of course see that it didn't work out, but I doubt I would have been able to predict that in advance with any confidence. Would this have been fine if the state used a different taxing model? Would it have been okay if the labor unions managed to do it of their own initiative? Is it that broadening ownership of a corporation is inherently objectionable for some reason?
What am I missing?
I'm not interested in debating the merits or lack thereof of socialism as a system of government, but the "bread and circuses" thing applied to Roman citizens.
Unless I was misinformed, the overlap between the people in the Roman empire who were citizens and the people in the Roman empire who were the labour force was very, very small.
So, executive boards of companies?
The positive aspect is that it introduces democracy into the system (through control by officeholders), if only for the moment that it takes for power to recentralize (as any autonomy that the business has is lost due to patronage appointments from the central government or larger unions.) Maybe this could be prevented by handing control to the union of the workers in a particular company, or a particular location, rather than large unions that cover entire industries.
https://www.forbes.com/sites/darrendahl/2016/07/19/are-emplo... https://hbr.org/1987/09/how-well-is-employee-ownership-worki...
I recall VW put a single member of labor on their board; it broke the company as other members courted the vote of the uninformed labor rep, giving up perks until labor costs were bankrupting the place.
Companies operating in a competitive environment have to be pretty efficient. Optimizing a company for employee benefits is pretty much at odds with that. I know, they will all be more loyal etc. But that's different from lowering product cost and controlling profit margins. You fail to make payroll even one week, the game's over.
Of course, since labor representation on boards is widespread in Germany, most medium to large German businesses are a good example. I assume the German economy is in tatters.
If we presuppose educated and trained labor members who are used in management, well then I guess we have that now? In every company everywhere.
"He finds that codetermination laws are negatively associated with productivity, but profit sharing, worker ownership, and worker participation in decision making are all positively associated with productivity." ---http://library.uniteddiversity.coop/Money_and_Economics/Coop...
"The positive effects are found most uniformly with respect to profit sharing and, to a slightly lesser extent, individual capital (share) ownership and participation in decision-making by workers." ---https://www.sciencedirect.com/science/article/pii/0147596787...
actually corporate taxes are a pretty controversial topic among economists. it's not considered to be a particularly efficient tax, and it is unclear who ultimately bears the burden of the tax.
A starter in Wikipedia: https://en.wikipedia.org/wiki/Tax_incidence
I wonder if the guarantee of a hostile takeover is the issue. When companies IPO, they don't expect immediate and systematic attempts of hostile takeover funded by your own money (tax dollars) through the most powerful organization in the area.
I wonder if the companies could have pulled a Zuck and kept full control regardless of ownership.
But you're right, still not so clear why they would run for the exits, unless the tax to do this was prohibitively high.
Once you do, and it is bought by someone else, it's not your company anymore. Why does it matter if it was bought by Berkshire-Hathaway, Vanguard, or by the government of Sweeden?
Why is a government buying a majority of a company's shares on the public markets bad? Why is one man, or an investment firm buying a majority of shares of a company any better?
An attack on this is an attack on the concept of public markets.
'Public markets' does a lot of work in this claim. There's an obvious difference between shotgun nationalization, and a hostile stock takeover. It's the difference between armed robbery of a grocery store, and buying a loaf of bread at posted prices.
This seems to be a common reaction when market proponents see their own system used against them. (See also: collective baragining on the side of employees vs collective bargaining on the side of management. For some reason, one is bad, but the other one is just the way things are. Management bargains collectively, but we have to bargain against them independently.)
If nothing else, company officers and the board have an obligation to shareholders, which would would not want to see their shares diluted in that way. So no, it is not surprising that companies decided to relocate to jurisdictions that were not about to nationalize them.
Great, you've just described taxation.
> which is nationalization -- the government taking control (even fractional control) of a company by force.
How is buying shares on the public market with government money taking control of a company by force? No current shareholder is obligated to sell their shares.
Ah of course, taxation is theft... [1]
> If nothing else, company officers and the board have an obligation to shareholders, which would would not want to see their shares diluted in that way.
Shareholders voluntarily selling their shares to the government does not 'dilute' shares of other shareholders. It doesn't matter if the government's money came from taxing the company, some other company, or individuals.
[1] I'm sorry, but if you want to take advantage of a country's labour force and markets, you are expected to pay taxes. What the government does with that tax money is up to them.
1. Government has money. This money is collected through tax revenue, resource royalties, etc.
2. Shareholders of company voluntarily put sell orders on a stock exchange.
3. Government places buy orders on a stock exchange.
4. Repeat #2 and #3 enough times, and the government becomes a majority shareholder.
No part of this involves confiscation, any more then Berkshire-Hathaway buying, and taking a public company private is 'confiscating' it.
But the social democrat government in Sweden couldn't perform it quickly enough to prevent flight of capital and people, nor quickly enough to consolidate political power to a dictatorship of the proletariat.
So they lost the election and the development was stopped.
Citation needed. From what I am gathering from this thread, wikipedia, and translated wikipedia, these shares were to be bought from stock exchanges.
If this is incorrect, then yes, I agree that it is nationalisation.
There isn't that much in English written about them, but that is actually a good thing since most of it is of good quality.
http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?ar... https://www.jacobinmag.com/2017/08/sweden-social-democracy-m...
What IS stupid is thinking that companies will stick around while their control gets transferred away (from those controlling it). If a company wants to transfer control to its employees, it will do that. If a company doesn't (almost all of them) it will leave. That seems pretty darn obvious to me.
The CEO doesn't own a publicly traded company, the shareholders do. And if they don't think a sale is a good idea they can just not sell their shares at the offered stock price.
I'm being a bit intentionally naive, but I don't understand who the "they" is that is supposed to have a valid worry about losing control.
Original plan was to create funds to would buy up more than the majority of the stock of all major companies in Sweden, all controlled by the labour unions. That would have been de facto socialism. Why? Because the labour unions was married with the political power, the Social democrats. Biggest labour union of them all, LO, controlled Social democrats with funding and forced memberships.
All political power and economic power in one entity would have been very dangerous.
After controlling the major companies in Sweden, they would have of course continued with the non-public companies, because the main goal of Löntagarfonder was to create equal salaries between high profit companies and low profit companies.
Taxing profits in moderation is not breach against democratic principles, but using the companies own money to take ownership over it is.
Right to run your own company was established already in 1864 in Sweden. Löntagarfonder was a direct opposition to that.
https://en.wikipedia.org/wiki/Decree_of_Extended_Freedom_of_...
There is nothing wrong with worker ownership if the workers create it by themselves, taking other peoples work is not okay.
No, that was the "solidarity in wages" policy which was already implemented. It was this policy that made successful companies make excess profits. Those profits were supposed to go to "Löntagarfonderna".
When, say, the Koch brothers concentrate political and economic power in themselves, it's just markets and capitalism.
The state does not have any money, it takes money in taxes we all agreed on to use it in fair way, and that is not to use the power of the state to buy up your livelihood and give that to a party member, that would be unfair.
For any other value of "we all agreed" then it sounds like you're arguing that the vast majority of government expenditures are unjustified. That seems like a much more expansive claim than what you're trying to make.
Why should it be okay for the state to use tax money to purchase a tank or a mile of road but not to purchase a share of stock?
State can of course buy stock. State owned companies can work just fine.
But there is a difference in intent. Intent here was union controlled ownership of all major companies. Creator of idea explicitly quoted Marx.
It think also we got bit sidetracked in this discussion with the word buy that I misused, it was not buying at the stock market, it was "buying" with legislation, exchanging profits for stock.
It's not the companies own money after it's been taxed. From then on it's actually the government's money.
Intent here was to take control over the ownership of the companies, that would have been same as 100% tax, they where just using a more complicated scheme but the end result would been the same.
Original idea was to take the dividend as new stock. Nothing voluntary, no buying at market rates.
The issue is the intent.
When socialists start doing stuff like this, it is clear what the long term goal is. The long term goal is to take the means of production from those who have it, though whatever politically palpable means necessary.
Sure, they start off doing a voluntary stock buyout program, but what happens when that program inevitably fails? (perhaps because it takes way to long to takeover a company, or merely that the company owners refuse to sell)
Will the socialists come to the conclusion that their socialist policy didn't work and reverse it?
No. What happens when socialism fails is that the socialists conclude that they didn't go far ENOUGH and then they double down on their mistakes.
In this situation, "doubling down" would be increasing the tax, forcing the owners to sell at a given price, and eventually straight up confiscation of the business.
When people in the government start yelling about how they want to take the means of production, even voluntarily, the proper response is to run away as fast as possible, and take your means of production with you, before they make it illegal to do so.
That looks to me like pretty compelling historical evidence against the hypothesis that socialist experiments must necessarily slide down the slippery slope to full-on communism.
The taxes that do make sense are ones that are much more difficult to avoid:
1. Land-value 2. Sale of registered securities 3. Sales tax or VAT 4. Personal income tax 5. Estate tax
That generation of social democrats was more of socialists than democrats and that was where it all went wrong, making their own party ideology to state ideology.
Taking over private property in that way is nothing more than theft and a breach of fundamental principals in Swedish society and especially against the consensus agenda (see Saltsjöbadsavtalet).
Social democrats kicked out the communist from the party in 1917 and by that becoming a democratic party and in 1921 heading their first government, but by this communism where basically back in fashion again.