5 ms·

Honest question: What, if anything, does a country gain from nationalizing mining over just taxing it - besides scoring political points that is? In other word

Honest question: What, if anything, does a country gain from nationalizing mining over just taxing it - besides scoring political points that is? In other words, would an economist be able to point out any benefits?

ozim 3y ago
You get board seats for your political buddies. If company is privately owned you cannot simply appoint someone to a board to get nice salary.
- intrasight 3y ago
  So no socioeconomic benefits. And likely drawbacks in terms of reduced revenue. So I assume that the next government will dispense with this nonsense.
  - FredPret 3y ago
    Too late. What investor will want Chile now? You make one peep about nationalization, and we all go stampeding the other direction. The whole place just went radioactive from capital’s perspective.
- bannedbybros 3y ago
  [dead]
geysersam 3y ago
The gain is not having to share profits with a private company. Another gain is more control over the investments the company makes. The profits can be reinvested in the country instead of in the neighboring country that just slashed their corporate tax. Another gain is reduced foreign influence over a critical portion of the nations economy. Of course there are also drawbacks. Reduced access to international knowhow and capital etc. It's a trade off.
- 908B64B197 3y ago
  > The gain is not having to share profits with a private company. Typically, it means the local warlord and his family get to pocket it.
  - sangnoir 3y ago
    Can you name one Chilean warlord, or are you uncritically regurgitating a meme about developing countries?
- trompetenaccoun 3y ago
  Your idea assumes the state will run it as efficiently as private businesses would. That sounds nice in theory but in the vast majority of cases isn't the reality of it.
  - bobthepanda 3y ago
    There’s a mixed track record. Saudi Aramco for instance became the largest oil operator generating lots of profit for its home country. Norway’s Statoil is another.
    - dmix 3y ago
      Wasn't Saudi Aramco a 50/50 arrangement with the private American company for most of it's history when it was developing the main oil fields? I believe the companies agreed to this because the Saudi's threatened to nationalize it completely. The Norwegian one was a gov corporation from the beginning though and was there from the beginning of exploration/development. There can also be a long-term benefit that post-nationalized orgs from their past state as private structures, living off the fat as they say. The existing talent/prior knowledge/industry relationships are still there, just with a new owner and more capital. Similar to NASA absorbing a well established and already highly productive private industry / university researcher pool, and merging them under one umbrella and then having a golden era of productivity before sliding back into a more normal public agency. That sort of productivity naturally fades over time as the gov bureaucracy increasingly takes over and the natural constraints of politicized funding. It helps if your business is a slow changing monopoly industry like oil/gas though.
UtopiaPunk 3y ago
Chile also has a leftist president now with a strong desire to protect the environment and lithium mining can be very harmful to the environment. Obviously a big reason Lithium is valuable is for EV batteries. Managing these resources to prioritize the the health of the planet will probably look very different than prioritizing profits, so it makes a lot of sense for the government to step in.
- cloverich 3y ago
  As long as the most important health of the plant factor isn't maximizing extraction, which given the climate crisis it _could_ be. Kind of an interesting juxtaposition in general -- normally we think of them going hand in hand.

ozim 3y ago

You get board seats for your political buddies. If company is privately owned you cannot simply appoint someone to a board to get nice salary.

intrasight 3y ago
So no socioeconomic benefits. And likely drawbacks in terms of reduced revenue. So I assume that the next government will dispense with this nonsense.
- FredPret 3y ago
  Too late. What investor will want Chile now? You make one peep about nationalization, and we all go stampeding the other direction. The whole place just went radioactive from capital’s perspective.
bannedbybros 3y ago
[dead]

geysersam 3y ago

The gain is not having to share profits with a private company. Another gain is more control over the investments the company makes. The profits can be reinvested in the country instead of in the neighboring country that just slashed their corporate tax. Another gain is reduced foreign influence over a critical portion of the nations economy. Of course there are also drawbacks. Reduced access to international knowhow and capital etc. It's a trade off.

908B64B197 3y ago
> The gain is not having to share profits with a private company. Typically, it means the local warlord and his family get to pocket it.
- sangnoir 3y ago
  Can you name one Chilean warlord, or are you uncritically regurgitating a meme about developing countries?
trompetenaccoun 3y ago
Your idea assumes the state will run it as efficiently as private businesses would. That sounds nice in theory but in the vast majority of cases isn't the reality of it.
- bobthepanda 3y ago
  There’s a mixed track record. Saudi Aramco for instance became the largest oil operator generating lots of profit for its home country. Norway’s Statoil is another.
  - dmix 3y ago
    Wasn't Saudi Aramco a 50/50 arrangement with the private American company for most of it's history when it was developing the main oil fields? I believe the companies agreed to this because the Saudi's threatened to nationalize it completely. The Norwegian one was a gov corporation from the beginning though and was there from the beginning of exploration/development. There can also be a long-term benefit that post-nationalized orgs from their past state as private structures, living off the fat as they say. The existing talent/prior knowledge/industry relationships are still there, just with a new owner and more capital. Similar to NASA absorbing a well established and already highly productive private industry / university researcher pool, and merging them under one umbrella and then having a golden era of productivity before sliding back into a more normal public agency. That sort of productivity naturally fades over time as the gov bureaucracy increasingly takes over and the natural constraints of politicized funding. It helps if your business is a slow changing monopoly industry like oil/gas though.

UtopiaPunk 3y ago

Chile also has a leftist president now with a strong desire to protect the environment and lithium mining can be very harmful to the environment. Obviously a big reason Lithium is valuable is for EV batteries. Managing these resources to prioritize the the health of the planet will probably look very different than prioritizing profits, so it makes a lot of sense for the government to step in.

cloverich 3y ago
As long as the most important health of the plant factor isn't maximizing extraction, which given the climate crisis it _could_ be. Kind of an interesting juxtaposition in general -- normally we think of them going hand in hand.