Government as profit-making enterprise

Originally posted by Teinosuke
Well, if the state tries to sell things at above market price, then presumably some brave entrepreneur will step in, start a new company, charge cheaper prices and make a success of his business. Because that's how the market works.

And even if the government does do what you suggest, it would surely be no more coercive than raising taxes in the first place!

While I agree that government already is abusive with its exercise of taxation and other powers, I really have a problem with the government being rule maker, regulator and then also market participant. I believe that giving the government more "hats" only allows it additional opportunity to cross promote and crowd out the private market. You seem to have a great deal of confidence in government and thus wish to have extra powers. I however wish for more protections and checks and balances and therefore fear your approach.

Originally posted by Teinosuke
It's fair for the government to pay for advertising as long as it comes out of the profits of the business (i.e., not from supplementary taxation).

It's fair for the president and politicians to promote state franchises in exactly the same way that it's fair for the president of a company to pay for airtime to promote his business.

Companies already ...[text shortened]... ete, CocaCola starts donating part of its profits to fund research into new dental treatments...

Well if the president uses part of the State of the Union address to promote this pet project is that improper? If not its like having a prime time show with great ratings that is also covered on the front page of every major newspaper and every editorial page. Is simply isn't fair to be forced to compete against the government and thus I'd argue we need protections.

I believe there is a conflict of interest and a difference to itself when the government regulates itself (look at how more reluctant a prosecutor is to take action against a police office than an average citizen). Thus traditional non-governmental businesses would be at a disadvantage against governmental businesses. With governmental businesses this regulation bias will be furthered by the fact that the government itself is not neutral it is actually a market participant hoping for the success of one party over the other.

Originally posted by quackquack
While I agree that government already is abusive with its exercise of taxation and other powers, I really have a problem with the government being rule maker, regulator and then also market participant. I believe that giving the government more "hats" only allows it additional opportunity to cross promote and crowd out the private market. You seem to h ...[text shortened]... . I however wish for more protections and checks and balances and therefore fear your approach.

Beyond the odd presidential advertisement, what concrete steps could the government take to favour its business over others? It would be operating in the same market as everyone else.

I don't have a great deal of confidence in the government. The scheme I propose seems to reduce government power - under our present system, the government can levy taxes at will. In my system, the government's revenue-raising powers would ultimately become conditional on it supplying a product that its citizens wanted to buy. Citizens could withhold approval from the government, if they chose, by boycotting the state franchises in favour of private firms - indeed, they could even do so simply to express distrust of the government.

The scheme I propose seems very much to empower the citizen.

Originally posted by quackquack
Well if the president uses part of the State of the Union address to promote this pet project is that improper? If not its like having a prime time show with great ratings that is also covered on the front page of every major newspaper and every editorial page. Is simply isn't fair to be forced to compete against the government and thus I'd argue we n ...[text shortened]... neutral it is actually a market participant hoping for the success of one party over the other.

State enterprises sometimes already compete with private ones - in many countries, state-owned railways compete with privately owned coach or air services, for instance. The state services don't in fact seem to crowd out the private ones in these instances. Often, indeed, the state industries perform significantly worse - though this may be because they don't aspire to make a profit in the current system.

As a safeguard, market regulation would need to be outsourced to an independent body to ensure a level playing field. I guess the state franchises would have the in-built advantage that consumers know they are paying their own pensions and so on by supporting them, but as I think I mentioned a couple of posts back, the private firms could neutralise this advantage by devoting more of their profits to philanthropic activity.

Originally posted by Teinosuke
Well, I suggested starting with natural resources because I thought (though whodey proved me wrong) that the idea that the state could stake a claim to natural resources would be fairly uncontroversial. But the important and revolutionary point in my proposal is that the government would actively seek to acquire other profitable businesses. It's as if the ...[text shortened]... m the portfolio of state franchises are enough to pay for the necessary functions of government.

Mexico just denationalized their petroleum industry. What are your thoughts on this?

Originally posted by Teinosuke
People of a libertarian persuasion often have moral qualms about taxation. People on the left worry about the massive profits being made by corporate shareholders while ordinary citizens struggle to make ends meet.

How about a third model? It is designed to be a non-coercive model of "big government" that would harness capitalism to a programme of socia ...[text shortened]... and social democrats alike can be proud of!

Can someone explain to me why this wouldn't work?

This is brilliant and ultimately what socialism is all about and yes it will work. I have seen it happen in Scotland in a very small scale, for example a local leisure facility which has a gymnasium and a swimming pool, sauna, steam room et has a cafe on the ground floor, government run by the local authority, not only is the cafe highly profitable it provides a better variety of food, at cheaper prices than the local fast food outlets. The government charges people for the use of the facility and makes a healthy profit which it its able to utilise to provide more public services. Why this model cannot work on a national level I cannot say.

Originally posted by Teinosuke

but as I think I mentioned a couple of posts back, the private firms could neutralise this advantage by devoting more of their profits to philanthropic activity.[/b]

You seem to have a very different vision of what companies should be than I do. When I want a product I want a combination of good price/ quality product. I do not want to research how much of the profits goes to a cause; how much I care about the cause; do they administer it efficiently or not; do they favor groups in a different manner than I would etc. I'd rather have companies produce products and pay shareholders and let individuals give to the charities as they see fit.

Originally posted by quackquack
You seem to have a very different vision of what companies should be than I do. When I want a product I want a combination of good price/ quality product. I do not want to research how much of the profits goes to a cause; how much I care about the cause; do they administer it efficiently or not; do they favor groups in a different manner than I would e ...[text shortened]... produce products and pay shareholders and let individuals give to the charities as they see fit.

I don't think I have different priorities. In general, I want the best product at the best price. At times I pay a little over the odds for moral reasons (e.g., buying fair-trade coffee), but I guess I wouldn't do that if the coffee was bad. However, let's assume that the two products are identical and identically priced. The only difference is that the profits of one product go exclusively to the shareholders, while part of the profits of the other product go to a cause which you favour. Are you telling me this would make no difference to your purchasing decisions?

Or conversely, if you found that a company was giving money to a cause you considered reprehensible (e.g., making donations to the North Korean government), would you still go ahead and buy its products?

Overall, you seem to disapprove of this scheme because you think it gives too much power to the state. So purely on a practical level, do you actually think my proposal would fail (i.e., the state franchises would not prosper)? Or are you worried that it might, in fact, succeed?

Originally posted by AThousandYoung
Mexico just denationalized their petroleum industry. What are your thoughts on this?

Selling off the family silver?

Originally posted by Teinosuke
People of a libertarian persuasion often have moral qualms about taxation. People on the left worry about the massive profits being made by corporate shareholders while ordinary citizens struggle to make ends meet.

How about a third model? It is designed to be a non-coercive model of "big government" that would harness capitalism to a programme of socia ...[text shortened]... and social democrats alike can be proud of!

Can someone explain to me why this wouldn't work?

How would you deal with the growing income and wealth disparity that results from a "free market" system without government intervention? Progressive taxation combined with a welfare state (as per the New Deal era) is usually the best way. Do you see any alternatives, either in general, or that would fit with your proposed system in particular?

Originally posted by Teinosuke
People of a libertarian persuasion often have moral qualms about taxation. People on the left worry about the massive profits being made by corporate shareholders while ordinary citizens struggle to make ends meet.

How about a third model? It is designed to be a non-coercive model of "big government" that would harness capitalism to a programme of socia ...[text shortened]... and social democrats alike can be proud of!

Can someone explain to me why this wouldn't work?

Nothing new here. Government has claimed all resources, right up to the "air" that radio and TV are broadcast over.

Government has to lease drilling locations for oil and natural gas. It has to authorize land to be used for wind farms. It has named the largest clean coal reserves in the US as a national park. Government does extremely poorly in all of those endeavors, usually because the profit seeking is for the benefit of individual politicians who become wealthy while in office, with little or no interest in the public, except to the extent of buying their votes the next time around.

Originally posted by karnachz
How would you deal with the growing income and wealth disparity that results from a "free market" system without government intervention? Progressive taxation combined with a welfare state (as per the New Deal era) is usually the best way. Do you see any alternatives, either in general, or that would fit with your proposed system in particular?

Growing wealth disparity is not specifically a free market phenomenon. In Statist government, the differences don't grow, but nothing is produced. Eventually, two classes exist, the workers, and the politburo. The Marx hated bourgeoisie disappears.

In market driven economies great wealth can be created in every generation, and it can and often is lost by a subsequent generation, or even in the same generation. People can move between classes without government favor or coercion. The welfare state, progressive taxation, attempts to equalize, but always by knocking down the successful. Why not give and encourage the lower classes to move up, which happens anyway if government just gets out of the way. Stop spending future generations into debt and poverty via inflation. By the way inflation is the real reason the gap keeps growing.

Originally posted by karnachz
How would you deal with the growing income and wealth disparity that results from a "free market" system without government intervention? Progressive taxation combined with a welfare state (as per the New Deal era) is usually the best way. Do you see any alternatives, either in general, or that would fit with your proposed system in particular?

The distribution of the profits from the state franchises would be the business of the state. Those profits could be used in the same way as traditional taxation has been used. My aim in making this proposal was to find an alternative to taxation in paying for the welfare state, as well as the other duties of the state.

The state could, of course, still introduce laws (minimum wage, supplementary benefits, etc) to reduce inequality. But I also think that with the state as an active market participant, private companies might be obliged to compete with state firms to provide greater job security, better pension schemes, more egalitarian salary structures, etc.

Originally posted by normbenign
Stop spending future generations into debt and poverty via inflation. By the way inflation is the real reason the gap keeps growing.

Can this possibly be true? Inflation means that accumulated wealth loses its value, so surely it encourages the wealthy to spend rather than to hoard.

Originally posted by normbenign
Government has to lease drilling locations for oil and natural gas. It has to authorize land to be used for wind farms. It has named the largest clean coal reserves in the US as a national park. Government does extremely poorly in all of those endeavors, usually because the profit seeking is for the benefit of individual politicians who become wealthy ...[text shortened]... e or no interest in the public, except to the extent of buying their votes the next time around.

Generally government does poorly in these endeavours because it has motives other than profit. Often it will take over already failing industries, for instance. My proposal attempts to reconcile the profit motive with the social functions of the state - the more profit that is made, the more revenue there will be for the state to fulfill those functions.

The claim over natural resources was merely the starting point of my proposal. The major innovation was the idea that the government would seek in the medium term to buy up profitable enterprises and replace taxation gradually with profit.