4 ms·

How exactly would a state nationalize a company?

by yucky 4y ago

photochemsyn 4y ago
Look at your local police or fire department. Imagine if they were private companies. You need to buy the necessary equipment, pay the salaries of the staff, fire the board of directors, and cut out the shareholders.
- gamblor956 4y ago
  Fire departments and police departments began as private companies; see the history of NYC. They were nationalized to limit the massive corruption associated with private fire departments (i.e., fire departments deliberately setting fire to rivals' customers). But to the point: a U.S. state can't nationalize a private company. It simply lacks that power. The closest it can get is buying a private company, or creating a public agency or public-private partnership, all of which California has done before.
  - gumby 4y ago
    > But to the point: a U.S. state can't nationalize a private company. It simply lacks that power. The closest it can get is buying a private company, or creating a public agency or public-private partnership, all of which California has done before. Or build its own competition. Quite a few califonia cities run their own utilities; Palo Alto started and ran its own phone company (sold to Pac Bell in the late 50s) and cable system (foolishly and destructively sold to crapcast in the '00s) but runs its own water, electricity, and gas system. Several counties run their own utility systems, often in cooperation. However the high speed rail project suggests that this is not the time for California to enter into such projects. A century ago progressivism flourished, building water, road, and other crucial infrastructure that we still depend on. But the "revolution" of the late 70s and 80s cut away all the maintenance and support for further such projects in the name of ideology.
  - nitwit005 4y ago
    > But to the point: a U.S. state can't nationalize a private company. It simply lacks that power. Eminent domain is in both the US constitution and the California state constitution. You usually have to provide compensation of course, but they made a list of exceptions that includes utilities: https://law.justia.com/constitution/california/article-i/section-19/ https://law.justia.com/constitution/california/article-i/sec...
    - yucky 4y ago
      That is for seizing land, not seizing and nationalizing a private business.
  - smorrow 4y ago
    The fire conventional wisdom thing is just that: conventional wisdom. Debunked in this week's Tom Scott video.
- yucky 4y ago
  What is the actual method that a state government such as California (or Arkansas for that matter - I'm sure they would love to own Walmart) can use to seize control of a private company, fire the board of directors, cut out shareholders and then take ownership etc.? The closest I can find is eminent domain which they can use to obtain privately owned land, but nothing that gives them the power to do what you're describing. Can you point me in the right direction?
  - toomuchtodo 4y ago
    If PG&E requires taxpayer subsidies, withhold them and buy the assets out of bankruptcy (negating the need to negotiate with a board, shareholders, or the C-level). Show up to bankruptcy court prepared to wire the funds to the trustee. You want to avoid paying top dollar to people who have a proven track record of mismanaging the enterprise, in order to not reward the behavior. As a last resort, eminent domain offering fair market enterprise value and an orderly transfer of control.
    - singleshot_ 4y ago
      In bankruptcy, wouldn’t all their assets be encumbered by security interests owned by their creditors/hand holders? Wouldn’t any normal bankruptcy just be a reorganization around the interests of the secured parties? I’m having trouble seeing how an obligation to pay subsidies, be it executory or not, would give the subsidisor any leverage in bankruptcy. Is the idea that the secured creditors need the subsidy too?
      - toomuchtodo 4y ago
        You have a lot of wiggle room to make what you want happen when you're the government, and arguing the finer points until an insolvency event occurs requires copious amounts of speculation. One of the country's largest utilities entering insolvency isn't a normal bankruptcy is a fact I hope we can agree on.
        singleshot_ 4y ago
garbagecoder 4y ago
There are already public utilities in California. LA, San Diego, and (I believe?) Sacramento already have them. San Diego performed better in both of the brownout times, including 20 years ago-ish.
- dredmorbius 4y ago
  Palo Alto as well: electricity, natural gas, water, sanitary sewer, and commercial fiber optic services. <https://www.cityofpaloalto.org/Departments/Utilities https://www.cityofpaloalto.org/Departments/Utilities>
- yucky 4y ago
  An existing public utility is nothing remotely close to seizing an existing private company and nationalizing it.
dredmorbius 4y ago
The more accurate term would be muncipalisation. This is commonly practiced in various city and county services: fire and police services, ambulance, public transit (virtually all extant bus and rail services began as privately-owned companies), school bussing, schools, childcare, parks and recreation, utilities (water, rubbish, electricity, gas, Internet, sewerage, ...), etc. There's a long history of this, in California and elsewhere. The Wikipedia article unfortunately doesn't dive much into the details of mechanism though it does point out numerous instances and issues. <https://en.wikipedia.org/wiki/Municipalization https://en.wikipedia.org/wiki/Municipalization>
ezfe 4y ago
Where I live, my electricity is maintained and provided by my town. I pay less than nearby towns that use National Grid. That's how.
- yucky 4y ago
  You seem to have misread the sentence. Having a municipality that runs a utility is not at all related to how a US state could seize the assets of a private company, fire the Board of Directors and steal the ownership shares from all of its investors (large or small) in order to make it a state run enterprise. So no, that's not how.
  - ezfe 4y ago
    I did misinterpret the point of issue. However, lets say that California couldn't seize PG&Es assets directly (transmission lines, etc.) - that doesn't really matter as California can force PG&E's hand, given that they could easily put them out of business. California is in control, it just doesn't have the political capital to do what's needed.

How exactly would a state nationalize a company?

by yucky 4y ago

How exactly would a state nationalize a company?

Look at your local police or fire department. Imagine if they were private companies. You need to buy the necessary equipment, pay the salaries of the staff, fire the board of directors, and cut out the shareholders.

gamblor956 4y ago
Fire departments and police departments began as private companies; see the history of NYC. They were nationalized to limit the massive corruption associated with private fire departments (i.e., fire departments deliberately setting fire to rivals' customers). But to the point: a U.S. state can't nationalize a private company. It simply lacks that power. The closest it can get is buying a private company, or creating a public agency or public-private partnership, all of which California has done before.
- gumby 4y ago
  > But to the point: a U.S. state can't nationalize a private company. It simply lacks that power. The closest it can get is buying a private company, or creating a public agency or public-private partnership, all of which California has done before. Or build its own competition. Quite a few califonia cities run their own utilities; Palo Alto started and ran its own phone company (sold to Pac Bell in the late 50s) and cable system (foolishly and destructively sold to crapcast in the '00s) but runs its own water, electricity, and gas system. Several counties run their own utility systems, often in cooperation. However the high speed rail project suggests that this is not the time for California to enter into such projects. A century ago progressivism flourished, building water, road, and other crucial infrastructure that we still depend on. But the "revolution" of the late 70s and 80s cut away all the maintenance and support for further such projects in the name of ideology.
- nitwit005 4y ago
  > But to the point: a U.S. state can't nationalize a private company. It simply lacks that power. Eminent domain is in both the US constitution and the California state constitution. You usually have to provide compensation of course, but they made a list of exceptions that includes utilities: https://law.justia.com/constitution/california/article-i/section-19/ https://law.justia.com/constitution/california/article-i/sec...
  - yucky 4y ago
    That is for seizing land, not seizing and nationalizing a private business.
- smorrow 4y ago
  The fire conventional wisdom thing is just that: conventional wisdom. Debunked in this week's Tom Scott video.
yucky 4y ago
What is the actual method that a state government such as California (or Arkansas for that matter - I'm sure they would love to own Walmart) can use to seize control of a private company, fire the board of directors, cut out shareholders and then take ownership etc.? The closest I can find is eminent domain which they can use to obtain privately owned land, but nothing that gives them the power to do what you're describing. Can you point me in the right direction?
- toomuchtodo 4y ago
  If PG&E requires taxpayer subsidies, withhold them and buy the assets out of bankruptcy (negating the need to negotiate with a board, shareholders, or the C-level). Show up to bankruptcy court prepared to wire the funds to the trustee. You want to avoid paying top dollar to people who have a proven track record of mismanaging the enterprise, in order to not reward the behavior. As a last resort, eminent domain offering fair market enterprise value and an orderly transfer of control.
  - singleshot_ 4y ago
    In bankruptcy, wouldn’t all their assets be encumbered by security interests owned by their creditors/hand holders? Wouldn’t any normal bankruptcy just be a reorganization around the interests of the secured parties? I’m having trouble seeing how an obligation to pay subsidies, be it executory or not, would give the subsidisor any leverage in bankruptcy. Is the idea that the secured creditors need the subsidy too?
    - toomuchtodo 4y ago
      You have a lot of wiggle room to make what you want happen when you're the government, and arguing the finer points until an insolvency event occurs requires copious amounts of speculation. One of the country's largest utilities entering insolvency isn't a normal bankruptcy is a fact I hope we can agree on.
      - singleshot_ 4y ago

garbagecoder 4y ago

There are already public utilities in California. LA, San Diego, and (I believe?) Sacramento already have them. San Diego performed better in both of the brownout times, including 20 years ago-ish.

dredmorbius 4y ago
Palo Alto as well: electricity, natural gas, water, sanitary sewer, and commercial fiber optic services. <https://www.cityofpaloalto.org/Departments/Utilities https://www.cityofpaloalto.org/Departments/Utilities>
yucky 4y ago
An existing public utility is nothing remotely close to seizing an existing private company and nationalizing it.

dredmorbius 4y ago

The more accurate term would be muncipalisation. This is commonly practiced in various city and county services: fire and police services, ambulance, public transit (virtually all extant bus and rail services began as privately-owned companies), school bussing, schools, childcare, parks and recreation, utilities (water, rubbish, electricity, gas, Internet, sewerage, ...), etc. There's a long history of this, in California and elsewhere. The Wikipedia article unfortunately doesn't dive much into the details of mechanism though it does point out numerous instances and issues. <https://en.wikipedia.org/wiki/Municipalization https://en.wikipedia.org/wiki/Municipalization>

ezfe 4y ago

Where I live, my electricity is maintained and provided by my town. I pay less than nearby towns that use National Grid. That's how.

yucky 4y ago
You seem to have misread the sentence. Having a municipality that runs a utility is not at all related to how a US state could seize the assets of a private company, fire the Board of Directors and steal the ownership shares from all of its investors (large or small) in order to make it a state run enterprise. So no, that's not how.
- ezfe 4y ago
  I did misinterpret the point of issue. However, lets say that California couldn't seize PG&Es assets directly (transmission lines, etc.) - that doesn't really matter as California can force PG&E's hand, given that they could easily put them out of business. California is in control, it just doesn't have the political capital to do what's needed.