In the UK the Labour Party is (or at least was) big on nationalisation of industry. It seem to me that this was one of their many downfalls in the midlands.
Is there any proven benefits to nationalisation of industry?
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We don’t have a lot of nationalization in the U.S. but one that comes to mind that might make sense to someone from the UK is our train system. Amtrak.
Passenger trains in the US were mostly private but after the building the highway system and increased reliance on cars, passenger trains started falling out of favor and losing money. The government deemed trains an important strategic resource so they created Amtrak. It’s basically been government supported ever since. Without it, it’s highly unlikely we would have passenger trains except in highly dense populated areas. So if you like riding trains, that is a benefit.
In order to make it not SEEM like nationalization they are a “for profit” company that the government is a major shareholder of but it’s only marginally different than something like the Post Office which is a nationalized parcel service from it’s inception.
Nationalization (or regulatory variants thereof) is a response to one of two problems.
The first is for the purposes of control. In many developing nations, there are natural resources the local populace lacks the expertise to properly exploit. Rather than turn over major parts of their national economy to foreigners, they nationalize the resource extraction industries and then hire those foreigners to do the work. Likewise, it’s common to nationalize defense industries since they’re only producing for a single client (the national government) anyway.
The second is natural monopolies. Certain industries tend to have features which discourage competitive markets. Consider roads. For a true competitive market to exist, you’d need multiple companies building redundant roads from place to place. Not only is this tremendously wasteful of land resources, but competition rarely results. Why build a road to compete with an existing road when you could build a road that runs between two previously unconnected destinations? So while you may have competition, it ends up being localized monopolies that have no incentive to improve or offer better service.
So it really depends on what you’re nationalizing and why. In general, if you can construct a competitive market, you’re better off for doing so because the market will create efficiency over time.
Maybe this will help, if I am wrong I’ll appreciate a heads-up.
Would you like basic necessities out if non government control?
E.g. water, power, information/internet, transportation?
You can privatize these and hope for a more efficient (thanks to a captialistic approach) operation, but you can also end up with … What was that aholes name? In the US? He lobbies against net neutrality?
There are generally successful examples but the conditions and nuances are important to understand. The “best” example might be Norway’s nationalization of their oil industry. The government takes the profit of the industry and invests it through a sovereign fund that benefits the entire society. This allows the government to internalize some of the external costs of that industry in a fair and responsible manner while at the same time ensuring the benefits of a “one time” extraction industry benefits all Norwegians.
Saudi ARAMCO might be another example (the trend here are extractive industries)
Many countries also nationalize their telecommunications and energy production and distribution industry, with varying degrees of “success”. Healthcare is also another common target of nationalization. It is hard to make claims one way or another since this almost always leads to a monopoly and lack of real alternatives to compare to within that particular context.
But nationalization inevitably increases the role of politics and decreases the role of purely economic motivation for the actions of the nationalized company. So this “shifted goalpost” is no longer as simple to analyze in terms of success or failure. For people with some ideological perspective, this might be a good result and for others, it is the major failing of nationalized industries.
in the UK, past governments have sold off (privatised) most of the formerly government run and operated utilities. (power, water, rail, etc).
in the past few years, it’s become very very obvious that the “capitalist america” model doesn’t work for utilities, as several train operators have gone bankrupt, and the ones that haven’t have totally failed to operate their services to anything like the levels that they actually need to in order to provide a “service”.
that’s because, before privatisation, money from ticket fares went into maintaining the lines, saving up for new rolling stock, paying wages, and everything that went into the business of actually running a rail service.
Since privatisation, the railway lines themselves (the iron rails) are owned and maintained by railtrack, who, in order to operate have to charge rail companies (who own the rolling stock) an amount for every tonne/mile, the companies who own the rolling stock are finding that they cant charge customers enough to a) buy new rolling stock, b) maintain the stock they have, and c) pay their shareholders.
the only solution that makes any sense is to re-nationalise all of the various parts of what used to be british rail, so that all of them can work together for the ultimate goal of running a rail service, not the ultimate goal of making shareholders richer.
Similarly, when the various regional electricity companies were privatised, the goal was to provide electricity to customers for less, by promoting competition. instead, prices have skyrocketed, and the various companies that now exist are functionally working as an oligopoly. despite legislation requiring/allowing small companies to buy and sell electricity, all of the small providers that exist have noted that they’re being priced out of the market by companies controlling both the price they can buy at, and the price of transmitting/maintaining the last mile. ..
Similarly, the first thing that most companies did after making a hostile takeover on the newly privatised electricity companies, was to immediately sell off the electricity generation arms (ie, the parts of the electricity companies that actually operated the actual power stations), and to sell off the transmission lines, to companies that now charge significantly more, per unit. again, the only way to get back to pre-privatisiation levels will be to re-nationalise all the various parts.
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