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One way to accomplish this would be to nationalize companies instead of bailing them out, right? If the taxpaying public bears the risks of your business, why s

by sirsar 7y ago

One way to accomplish this would be to nationalize companies instead of bailing them out, right? If the taxpaying public bears the risks of your business, why shouldn't it get to share in any of the rewards? I suspect the answer is something having to do with the overlap between the politically powerful and those with a great exposure to those risks and rewards.

malandrew 7y ago
Instead of nationalizing them, create an index fund run by the government. Capitalize the fund using taxpayer dollars and use the fund to buy out the companies at rock bottom. Then distribute the entirety of shares in the fund to all US tax payers. Taxpayers then win on the upside when things recover.
- jaggederest 7y ago
  That's just nationalizing them with extra steps, if I may deploy a cliché. I definitely agree with the idea, but it's effectively the same as taking them private with government money and re-IPOing them later.
- colechristensen 7y ago
  If you buy a troubled company, the company is still troubled, you just own it, no resources have been transferred into it. Give away the shares to the population then you don't have any influence on it any more.
  - hedora 7y ago
    If you buy it by purchasing newly issued shares, then the money does go directly to the company and the existing shareholders stakes are diluted. The effectively takes the bailout money away from the stockholders, which seems appropriate, since their shares would be worth even less if the company were allowed to fail.
    - colechristensen 7y ago
      If the company is allowed to fail shares usually come out worth zero after the bankruptcy. Dilution can't be worse than 0.
viksit 7y ago
Sadly India started with this assumption (nationalized a formerly private airline) and are now trying to unsuccessfully sell Air India to private buyers without much luck.
TheSpiceIsLife 7y ago
According to this comment https://news.ycombinator.com/item?id=22619102 https://news.ycombinator.com/item?id=22619102 something like that happened to some of the UK banks. It did happen in the UK. Banks that took bailouts traded shares for cash with the Treasury (this is a layman's understanding at least). RBS notably became 84% publicly owned. The real scandal is the government selling back the shares for less than they paid for them (when RBS was on the brink of collapse).
- hedora 7y ago
  Ideally, they’d be legally required to sell the shares to the highest bidder. If that bidder is the stock market, then so be it.
colechristensen 7y ago
Is this not what happened to GM? The treasury put 50 billion into the bankrupt company, shareholders wiped out, and eventually sold the stake in the new company for a moderate loss. It's up to the reader to determine how the net effects outside the investment/sale were profitable over all or not.

by sirsar 7y ago

malandrew 7y ago

Instead of nationalizing them, create an index fund run by the government. Capitalize the fund using taxpayer dollars and use the fund to buy out the companies at rock bottom. Then distribute the entirety of shares in the fund to all US tax payers. Taxpayers then win on the upside when things recover.

jaggederest 7y ago
That's just nationalizing them with extra steps, if I may deploy a cliché. I definitely agree with the idea, but it's effectively the same as taking them private with government money and re-IPOing them later.
colechristensen 7y ago
If you buy a troubled company, the company is still troubled, you just own it, no resources have been transferred into it. Give away the shares to the population then you don't have any influence on it any more.
- hedora 7y ago
  If you buy it by purchasing newly issued shares, then the money does go directly to the company and the existing shareholders stakes are diluted. The effectively takes the bailout money away from the stockholders, which seems appropriate, since their shares would be worth even less if the company were allowed to fail.
  - colechristensen 7y ago
    If the company is allowed to fail shares usually come out worth zero after the bankruptcy. Dilution can't be worse than 0.

viksit 7y ago

Sadly India started with this assumption (nationalized a formerly private airline) and are now trying to unsuccessfully sell Air India to private buyers without much luck.

TheSpiceIsLife 7y ago

According to this comment https://news.ycombinator.com/item?id=22619102 https://news.ycombinator.com/item?id=22619102 something like that happened to some of the UK banks. It did happen in the UK. Banks that took bailouts traded shares for cash with the Treasury (this is a layman's understanding at least). RBS notably became 84% publicly owned. The real scandal is the government selling back the shares for less than they paid for them (when RBS was on the brink of collapse).

hedora 7y ago
Ideally, they’d be legally required to sell the shares to the highest bidder. If that bidder is the stock market, then so be it.

colechristensen 7y ago

Is this not what happened to GM? The treasury put 50 billion into the bankrupt company, shareholders wiped out, and eventually sold the stake in the new company for a moderate loss. It's up to the reader to determine how the net effects outside the investment/sale were profitable over all or not.