How did the British win the Battle of Britain? It was looking extremely tentative at first. The Luftwaffe was sending wave after wave of bombers that were focused on air fields and radar stations which really wore the British down. The air fields were caught unprepared taking heavy losses with one big issue being the advanced warning systems to allow for the pilots to get into the air to defend against the bombers. It was really tight for a while where the British had a hard time getting planes into the air fast enough and getting them assembled fast enough in order to be able to replace the losses that were taken in the beginning of the battle. Due to the Nazis having near air superiority over Britain it was decided that aircraft production would be splintered into pieces of industry that were scattered across Britian which would serve to lower losses when the factories were targeted. One of the costs of assembling in pieces scattered is that the logistics of moving the pieces so they...
What are the potential drawbacks of nationalizing an industry?
It depends on what industry and what the purpose of nationalizing it is. The industries that it makes the most sense to nationalize have some criteria in my opinion:
They should be static industries that do not change very much or very quickly in terms of the core of it’s business.
It should be an industry that is key to public security, public safety, or the public’s interest.
It should be something that is mammoth in size so that it doesn’t affect any small businesses by having it nationalized.
It should add value by nationalizing it - such as continuity, consistency, stability etc. There should be a pain point that is needing to be addressed that centralizing that industry under the government addresses it.
It should be specialized enough that there is not a lot of competition. It wouldn’t be small business or medium businesses getting put out of business - it should be an industry where it would be cost prohibitive for anyone from the lower class, or middle class, or even the upper lower class from venturing into.
It should be to provide the service with bottom dollar prices for the people. It’s the peoples company so they should enjoy the benefit of having the lowest rates in that industry.
I know where I live we have auto insurance nationalized so to speak. What I pay for car insurance in a year people are paying per month in the state next to us. I pay around a grand per year and I’ve got friends paying 900 per month.
Our energy and power prices are pretty low considering we have 157,000 km of power line where Texas has 74,800km with ERCOT, California has 106,681 km with PG&E. 7.6 people per km of line where i live, versus 367 per km in California and 394 people per km in Texas. Where I live its 0.14 per kWh, California is 0.40 per kWh, and Texas 0.20 KWh.
So that 157,000 km of powerline to maintain with 7.6 people per km at 0.14 kWh
California 106,681 km with 367 people per km at a rate of 0.40 per kWh
Texas is 74,800 km with 394 people per km at a rate of 0.20 kWh
That there above is why you nationalize big industries that are in the public interests as it provides the lowest possible price against companies that basically hold a monopoly because there are so few of them out there. The significance of the breakdown I provided shows the amount of maintenance line that must be maintained and the tax base or the rate base in how many people per km of line will be paying for that maintenance and then the rate that those people have to pay. As you can see, privatization is great for industries that need to be flexible, agile, and strive for maximum innovation but in static industries they just are cash cows for the rich.
The drawbacks are that you have to stick pretty closely to that rule set or you’ll risk stagnating the economy or at least that industry because nationalized companies tend to provide service for rock bottom prices but they often tend to lack in innovation. They also are at risk for being scavenged from the Government when they miss their budget numbers and have to make up the money before election time.
Elections and public issues and scandals tend to slow business right down and at times nearly handicap them because the government wants nothing controversial in the election period so they can often order business to stop some activities temporarily in order to make sure there is no scandal or problem during the election. So, public companies certainly have their drawbacks as well but, all in all - in the right industry they are a good thing for the people.
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