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Comment by youareostriches | Hacker News Reader

This is a far, far better response to bankruptcy of essential industry than the bailout of 2008.

Yes. Bailouts have moral hazard in them, nationalization does not.

Bailout The government rescues stock holders and industry with cheap loans. In bailouts government shares the risk with owners but not the profits.

Nationalization Government rescues the industry and stock holders lose their assets. Government can later arrange IPO and get rid of the companies and recoup at least part of the profits, sometimes making profit. In nationalization owners have risk and profits, when company goes belly up, government takes the risk and profits. It's clean cut.

Matt Levine has good article related to the issue https://www.bloomberg.com/opinion/articles/2020-03-17/the-go...

It doesn't have to be either-or. We could have some form of mandatory "bailout insurance" for companies - if you're "too big to fail", then you're big enough to pay into the rainy day fund.

Can you expand on that?

Nationalization to me isn't that different from a bailout, the government (and thus taxpayers) foot the bill. With nationalization I guess the government can exert greater control over how the company is run, but is that necessarily the best way to provide oversight?

We bailed out the car companies not long ago and they all paid us (the government) back. If they can guarantee something like that I think most people would be fine with it. But here's one guy's opinion on why airlines for instance should be different (low margin/high capital/generally much riskier but somewhat vital to nation): https://slate.com/business/2020/03/airlines-bailout-coronavi...

the better argument against nationalization is to reduce the consolidation of power (and money and corruption), not a government vs corporation pick-your-poison tradeoff.

the economy would be better off if nearly all capital/equities were tied up in small- to medium-sized businesses, not large corporations (or governments) and consolidated markets.

You raise another important point - which companies are nationalized will be a political games from the start. The gov't will basically decided which companies live and which ones die, and I have no doubt personal relationships between government and executives will help that process.

The best argument against nationalisation is that it makes it more difficult for companies or entire countries to raise capital.

Who wants to invest in an enterprise when it could all be taken away arbitrarily.

eh, that's not a great argument. entire nations can just print money to fund enterprises, no need for private capital investments.

which again makes my argument: avoiding consolidations of power that can devolve into fascism/corporatism to the detriment of citizens.

> nations can just print money to fund enterprises

I’m honestly not sure if you’re being facetious or not.

You can’t buy machinery with worthless banknotes.

The point of nationalization isn't oversight, the point is that if the public is an investor into a business, the public should receive a share of the profits generated by the business.

It also should allow the government to direct the business for the public good.

Problem is, that rarely happened because govs are generally bad (not skilled / trained) at running businesses. Pretty much the opposite.

To expand a bit; an ideal system, IMHO, would be a hybrid "state-backed but citizen-controlled" entity (half-way between nationalized and publicly traded) wherein shareholders involve citizens but not govs official (who have their own agenda, etc.); this is to maintain a sane separation between "the things belonging to citizens" and "the affairs of the State as a government").

It also follows a fundamental (but long-forgotten) principle of democracy that citizens should be able to control (as in audit, not "run" executively) the public things. You'd expect such a hybrid entity to be run by good commanders of industry, typical board / CEO but vetted by some citizen-backed legitimacy, in the shareholder voting process (this is a mild / hybrid form of "election", which is too strong as it is for this hybrid entity, but worth the "backed by sovereignty consent" value).

> Problem is, that rarely happened because govs are generally bad (not skilled / trained) at running businesses

These are businesses that have been run so poorly they're begging the government to force citizens to donate them money. I don't think there's any reason to believe the private sector has any particular genius here.

I think there's a fair argument to make that running a profitable business isn't government's core competency. They operate under different financial constraints. At the same time though, we've overspecialized in the private sector. We have people so specialized in running a business that the actual thing the business does is abstracted away. Putting them in positions of control turns the business into a social parasite.

When we see that the US airline business is asking for a $50 billion bailout, having engaged in $45 billion of stock buybacks, it appears that the sector is dominated by owners and execs who are either completely incompetent at risk management, or really in the business of robbing the public purse.

I'd definitely say the latter. But that's not surprising, really. A lot of the entities I've heard of that do government contracting aren't there to deliver value, but to rob the government. Companies doing quality work tend to get outbid.

There's plenty of services and industries that used to be private and are now either fully or controlled by the government, or have good competition by the government. Some examples in the USA:

- Firefighting [1] - Education - Broadband [2]

Outside the USA, many governments run other companies well enough too, from energy companies, to rail/transport, banking, etc.

[1]: https://en.wikipedia.org/wiki/History_of_firefighting [2]: https://en.wikipedia.org/wiki/Municipal_broadband

https://thenextsystem.org/learn/stories/crisis-next-time-pla...

Among other things, nationalization would all but eliminate institutional resistance to, and subversion of, public policy and regulations.

Government departments exhibit "institutional resistance to, and subversion of, public policy and regulations" all the time. Why would a govenrment-owned corporastion be any different?

Which is a good thing, provided that public policy is good and wise. That's not a given, though...

No, Venezuela is a poignant example of what nationalization does to companies and industries. They simply bog down in eventual corruption and massive inefficiency to the point of stopping or limping along.

The counter opposite example is China and their industries, but that implies an even worse kind of relationship that greatly exploits people and their labor.

Yeah, "nationalization" is ambiguous ... I think in this case, it's not nationalization as in "stealing" like Saudi Arabia nationalized Aramco or what happened in Venezuela, but as in "rescuing" after a bancrupcy (instead of "bailing out" - giving loans - i.e. rewarding investors into failed companies with really cheap credit).

I think we have have something between with a good, independent corruption watchdog.

You really can not compare Venezuela and France like this. I love both countries but they are worlds - ok, continents - apart in how they are governed and to what degree corruption is prevalent.

OP's argument is so cheap... "Nationalization failed in this corrupt country, therefore nationalization is terrible!".

It's like saying Ford are shit cars after a drunk driver crashes one..

The electricity providers in Denmark is a better example. All money stays in the company so no one gets rich. They also provide some of the best internet in the world.

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