When the government nationalizes it in essence says to the victim, “ You are not running your business to our satisfaction so we are relieving you of your job and we will run it as we think it should be run ( because we have the guns and you don’t). In addition there will no one who can come in and tell us we are not running the business correctly as we are the owners (confiscators) of last resort. In other words if you don’t like the way we bank that is just too bad , there are no other choices.
How do I know how this works? I spent a few years on the finance committee of a credit union and saw this happen. The credit union had consolidated after a large business that had closed down left the credit union with many loans that the workers who had lost their jobs were falling behind on. Without warning a bunch of state hoodlums stepped in and took over the meeting and the credit union, dismissing all of the officers and ran the credit union until they sold it to a larger credit union.
Why should the state have the power to confiscate businesses that are not operating as they wish? When the state is bankrupt no one steps in and says ,“You are not running the business of government in a way we approve of and therefore you must get out of the way.” Why? Because there are too many people who have not asked themselves why government can allow itself to live by different standards than the citizens who employs the government? You know the only ones who daily meet and make decisions about the kind of world the people who work and support the government doesn’t have to be just the “appointed ones” especially if they are supporting agendas that are contrary to the citizen’s interests.
When a government nationalizes what it does is eliminate competition. When competition is eliminated the way to cut costs and establish inefficiencies disappears. Government can say it is working for efficiencies but it has no way to determine if it could be done better as it has eliminated the competition. The government says monopolies are unacceptable when established by the private sector which is why they have the S.E.C. Monopolies are not possible when competition is not restricted. No matter how big and efficient a private company gets it cannot force out competition. If it operates poorly a better idea or a better managed company will win market share and take away business until another upstart has an even better idea or a more efficient management system. Government doesn’t operate that way. When it nationalizes an industry it is the only game in town. Nobody can establish a business that competes with the government. If the government nationalizes the banks only government banks will operate. If the government nationalizes the newspapers only government approved newspapers can operate. Government is all about control. This doesn’t mean it is all about getting the best service at the lowest price which is what competition introduces into the economy. Nationalizing eliminates the private economy, the businessman, profits and freedom. Yet we hear grown up American political leaders endorse nationalization as if there just isn’t anything else to do and they must do something.
The obvious option to nationalization is to simply allow the free market to work. A distortion of credit instituted by the government cannot be corrected by the further distortion of pumping money we don’t have into the market. The companies that acted under the government dictates ended up with loans that went bad as any free market banker would have known. Paying off those bad loans with borrowed money only refinances more bad loans. This option that the government has chosen will not bring about a robust economy. It will only lead to further spiraling downward into a chaotic economic mess where money becomes worthless, nothing is produced, and riots from long lines precipitate pandemonium. Take a look at the Ukraine for a preview of out next stage of economic deterioration.
The politicians are still pretending they will be all right and keep putting more and more spending and regulations into the mix. They are only bringing more pain to the American people and they will not admit they started this mess or that they can remedy it by stopping the spending and regulations. They have to “do something” and they don’t know how to do anything but spend and regulate. When you play a game of chess you can advance and attack but if you are careless and lose too many pieces you have to rely on maneuvering to avoid losing. It may be that your only choice is to maneuver toward a stalemate in which case you haven’t lost but you have attained a tie. In the world of economics there are no ties when it comes to battling the government. If the government is faced with a maneuver that places it in a precarious position it simply generates an attack out of pieces it fabricates out of thin air ( i.e. it prints money ) and you lose. The money becomes worth less. That means it takes more to pay off debts the government has acquired and the debt grows, the cycle continues until the money is totally worthless and the government is no longer a protector of individual rights but a violator through such mandates as cleaner air, cleaner water, the public good and law and order. The standard of living degenerates into survival as trade is now gone . Government rations and quotas , price controls and subsidies , the dole are all that is left. No one tries to go into business and profit as the restrictions and regulations and taxes are too excessive to even try. The incentive of profit is gone and the only way to survive is to try to gain some political favor from someone who is in control of what is left of the meager supplies that are left to use.
This ugliness is the result of nationalization and what is hidden in it’s meaning. This part of the process is left out of the pundits and caviler comments of the politicians. They hope it won’t happen but it will. They hope they won’t be blamed , but they will. They hope they do not have to see the effects of their intellectual evasion, but they will and they should. Their names are on the laws that distorted the economy, implemented taxes, produced subsidies, installed price and wage controls and took incentive from the economy. They believed the economy could be improved by the distortions they insisted upon and they believed wrong. They are still believing they can control the economy as it slips lower and lower. Do something! Repeals taxes. Repeal regulations. Repeal regulations. Remove the barriers you’ve built and allow people to make money without trying to confiscate every penny you can get your grubby hands on and the economy will recover. Nationalize and see a far different result. It’s your move.