If public ownership is such a good idea – and it is, for things like utilities, the mail, the health service, and public transport, where competition makes no sense (see Is property theft? Is profit a dirty word?) – how should we go about taking things that have been “privatized” back into public ownership?
The obvious objection is that the current owners bought the businesses from the government, and that in fairness the government ought to buy them back, rather than simply taking them back. I’ll go along with that, but can the government afford it? And what would be a fair price? Of course my opponents will say, “No,” to the first question, and “The current market value,” to the second. But are they right?
No, they are not.
These national assets were sold off at below market price by corrupt governments. Yes, corrupt is the only word for them. They pretend they have an ideological belief that private ownership is better, but that’s a pretence. There are two real reasons why they want to sell them at a big discount: firstly, because many of the people who buy them are their friends (or they expect them to become so); and secondly, because it plugs a hole in today’s budget. They’ll worry about tomorrow’s budget when they come to it. It may not be their problem anyway.
So it would be only fair to buy them back at below the current market value, too. Exactly what the formula should be is something for discussion. I have a few ideas (see below).
Whatever the actual price, can the government afford it? Actually, governments can afford whatever they want, if what they want already exists (or indeed, if it’s feasible to produce). Currency isn’t anything physical, of which there is a fixed quantity; it’s purely conceptual, and the concept belongs to the public represented by the government. The government can write cheques for whatever sum it likes. (Currently, the government gives this right to private banks, which is also a corrupt practice, effectively giving away public property to their friends. See Quantitative Easing.)
Creating money like that isn’t without side-effects whoever does it, of course; in particular, it’s a primary cause of inflation. Inflation in moderation is actually a good thing: it helps to lubricate the readjustment of relative prices of different goods and services in response to changing conditions. Obviously it’s not good if it gets so rapid that people want to spend everything they get quickly before it loses all its value! But the sums involved in renationalizations shouldn’t be anywhere near enough to cause that kind of inflation. Some money creation is necessary to prevent deflation, in general: the quantity of goods and services is generally increasing (this need not always be the case, indeed other than increases due to technical advances, it’s not sustainable in the long term) and the quantity of money in circulation should be proportional to that.
So – what should be the price? I see three main options. The choice could be some combination of part of each:
Perhaps the last option seems a little harsh? There’s an argument that we’re dealing with stolen property here. The receiver of stolen property cannot expect to be compensated for their loss when the property is returned to its rightful owners. (If they were unaware that the property was stolen, then perhaps they might have a claim against the thieves – certainly not against the original owners.)
The other two options could be adjusted (up or down) for changes in what is actually involved in the transaction. They could also be reduced by the value of whatever dividends have been paid.
And don’t worry that the pension funds might lose money here: the government should guarantee the pensions, up to limits similar to those that apply to the government guarantees of savings in banks and building societies. (There are more issues here, but that’s another essay I’ve not written yet.)